Ridiculous MSFM Headline of the Day
 

...Courtesy of Bloomberg, which has some GREAT NEWS for believers in the permanently-nascent economic recovery:

[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=alrXUewdmOKs&pos=3]Unemployment Fell in Nine U.S. States as Michigan Made Headway[/url]

Hey, that sounds pretty gosh-darn good ... but what`s that in the fine non-headline print deep in paragraph 4? Here, let's first [u]underline-highlight
[/u] all the bullish spin which precedes it:

[quote]March 10 (Bloomberg) -- [u]Unemployment decreased in nine U.S. states[/u] in January, [u]led by an improvement in Michigan that demonstrates factories are driving the economic rebound.[/u]

[u]Michigan’s jobless rate fell to 14.3 percent[/u], still the highest in the nation, from 14.5 percent in December, according to figures issued today by the Labor Department in Washington. [u]New York and New Jersey were among the eight states where unemployment decreased[/u] by a tenth of a point.

The [u]“most stable economies are those more exposed to manufacturing,”[/u] said Steven Cochrane, director of regional economics at Moody’s Economy.com in West Chester, Pennsylvania. [u]“This is a recovery that’s really kind of concentrated.”[/u]

[u]Efforts to stabilize inventories and rising exports are prompting companies like General Motors Co. to call back some dismissed workers.[/u][/quote]
[i]My Comment:[/i] Ah, the fine art of propaganda .. even the negatives are described in positive-sounding words, e.g. instead "local pockets of stabilization in the hardest-hit areas indicating that you simply can't further kill what's already dead", we have "a recovery that’s really kind of concentrated", with "concentrated" being a word that sounds positive even though in the present context it describes something negative.

Now to the "niggling detail" which caught our eye ... we'll boldface-highlight it for the benefit of our readers:
[quote][b]The jobless rate climbed in 30 states at the start of 2010, signaling the thawing of the labor market is not broad-based and indicating it will take years to recover the 8.4 million jobs lost the recession began in December 2007.[/b][/quote]
[i]My Comment:[/i] In other words, the headline would more-accurately have read, [i][b]"Unemployment Rose in Thirty U.S. States, Fell In Nine: California Hits a New Record"[/b][/i]. I know, it`s really a minor quibble with an otherwise-smashingly-good article.

[QUOTE=garo;207809]Of course they are financial assets. It is stupid to pretend otherwise. The problem was the ease with which people were allowed to leverage these assets and the lack of consideration given to the basic principle that what goes up must come down.[/quote]
They are *also* financial assets ... when ultra-low interest rates and a complete abdication of lending standards leads to the kind of speculative frenzy we had in which people who either don't need or can't afford to do so are bidding up properties with the sole intention of flipping them for a quick profit, then they are little better than speculative instruments like late-90s-vintage dotcom stocks. and bad things are bound to happen. The *primary* purpose should always be the roof-over-your-head-and-place-to-raise-your-kids one.

[quote]BTW, James K Galbraith is NOT the type of person who approves of any of the banker shenanigans and you can see the ideologue in KD coming out in his criticisms. It is morally very satisfying to say liquidate, liquidate, liquidate but we don't really know if it would be a better solution. Oh wait! We do. That's what Hoover's Treasury Sec. did from 1929 to 1932 and look how effective it was in tackling the depression. The problem with right-winders like KD (and ZH and Mish) is that they don't really come up with a clear plan of what to do after liquidating/de-leveraging. They think that growth will return as if by magic once all the bad debt is out of the system.[/QUOTE]
You're assuming here that the ~2 years between the great crash and FDR`s ascendancy were long enough for much of the bad debt to work its way out of the system: Note that in fact the time interval was even shorter - as is human nature (and as the Bush administration, Paulson, Bernanke et al did in 2007-2008), the Hoover administration first tried mightily to pretend that this was strictly a speculative bust-and-panic, and that once "confidence was restored in the markets", all would be well. And in fact late 1929 and most of 1930 saw a big rebound in the equity markets,which lulled most everyone into believing that better times were nigh at hand once again (sound familiar?) and thus prevented serious efforts to address the systemic rot which had permeated the system during the go-go 20s.

This is not in any way to defend the Hoover administration`s "curious inaction" (in the words of [url=http://www.amazon.com/Great-Crash-1929-Kenneth-Galbraith/dp/0547248164/ref=pd_sim_b_3]Galbraith[/url] the Elder) ... as I`ve said, the major role I can see for government intervention in such crises is fourfold:

1) To oversee the segregation of viable from irreparably insolvent financial institutions and to supervise the orderly wind-down of the latter, with a view to stemming the self-reinforcing tendencies of financial panics. Of course in modern times common-sense regulation of derivatives (e.g. by forcing these to trade in transparent fashion on public exchanges, and to be [url=http://market-ticker.denninger.net/archives/2059-When-The-Gun-Is-In-YOUR-Mouth....-CDS-Merkel.html]subject to actual backing-capital requirements[/url] - something folks like Denninger have been agitating for for years);

2) To keep capital flowing to [b]productive[/b] enterprises and sectors of the economy, if necessary by providing direct support and even funding to said sectors and the (relatively small portion of the overall) capital markets which support them;

3) To provide for a minimal - but not overly generous - social safety net for out-of-work citizens, preferably one which requires those who are able to "earn their keep" by way of some productive activity (FDR had this part of the equation mostly right, but of course in the following decades this seems to have morphed into the "entitlement society" we have degenerated into today);

4) To take whatever prudent regulatory, legal and even prosecutorial actions are necessary to prevent the conditions that led to the crisis from recurring.

Nowhere in the above do you see e.g."keep zombie banks and businesses alive at taxpayer expense," or "allow systemically-risky financial institutions and practices to become even more so", or "refuse to aggressively go after white-collar-criminal activities by Big Finance", or "address the financial crisis by trying to push some other item on one`s pet political agenda" (like, say ... [url=http://www.nytimes.com/2010/03/09/opinion/09herbert.html?ref=opinion]health-care reform[/url]), or "reward speculators by reimbursing their losses at taxpayer expense", etc.

Actually, I admit that on the "never let a crisis go to waste" front, FDR did push through one pet project which was not directly related to helping the economy out of the depression, namely the [url=http://en.wikipedia.org/wiki/Prohibition_in_the_United_States]repeal of prohibition[/url]. But this was a masterstroke on at least two levels, one of which was economic: It brought the huge "shadow economy" which had sprung up around bootlegging into the light, allowing it to flourish legally, and to provide both jobs and tax revenue. And it certainly helped to "raise the spirits" of the nation, both literally and metaphorically. Most importantly, these effects were both rapid and required little government assistance (beyond the repeal itself) to happen. As the animated spokesmen in the Guinness ads like to say, "brilliant!"

For a concrete example of the "boost to the spirits" that resulted, here`s a snip about St.Louis from the above Wikipedia entry:
[quote]As Prohibition became increasingly unpopular, especially in the big cities, "Repeal" was eagerly anticipated. On March 23, 1933, President Franklin Roosevelt signed an amendment to the Volstead Act known as the Cullen-Harrison Act, allowing the manufacture and sale of "3.2 beer" (3.2% alcohol by weight, approximately 4% alcohol by volume) and light wines. The original Volstead Act had defined "intoxicating beverage" as one with greater than 0.5% alcohol.[1] Upon signing the amendment, Roosevelt made his famous remark; "I think this would be a good time for a beer."[11] The Cullen-Harrison Act became law on April 7, 1933, and on April 8, 1933, Anheuser-Busch, inc. sent a team of Clydesdale horses to deliver a case of Budweiser to the White House. The Eighteenth Amendment was repealed on December 5, 1933 with ratification of the Twenty-first Amendment.
...
Prohibition was a major blow for the alcohol industry and repeal was therefore a step towards the amelioration [sic] of one sector of the economy. A perfect example for this is the case of St Louis. The city had been one of the most important alcohol producers before prohibition started and was ready to take back its position as soon as possible. Its major brewery had "50,000 barrels" of beer ready to be sent in the cities since March 22nd. It was the first alcohol producer to refill the market but others followed and slowly allowed stores to obtain alcohol after of course having obtained a license. The restart of beer production allowed thousands of workers to find a job again and St Louis brewery was only one of many alcohol factories.[13][/quote]
[i]My Comment:[/i] In an interesting echo of the pre-repeal exemption allowing 3.2% beer (derisively termed "near beer" by many later beer drinkers), growing up the Midwest, 3.2% beer was the only kind of booze you could buy on Sundays. (I don`t know if that's still so.)

On the flip side of the ledger, "right-wingers" like Mish like to point to many of FDR`s social-safety-net and pro-union-labor initiatives as now being key elements of [url=http://globaleconomicanalysis.blogspot.com/2010/03/miami-dade-hospital-in-death-spiral.html]What's bankrupting America[/url]:
[quote]Ironically, this depression is bound to unwind the devastatingly parasitic measures FDR used to combat the last depression.[/quote]

[QUOTE=ewmayer;207992]...Courtesy of Bloomberg, which has some GREAT NEWS for believers in the permanently-nascent economic recovery:

[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=alrXUewdmOKs&pos=3]Unemployment Fell in Nine U.S. States as Michigan Made Headway[/url]

Hey, that sounds pretty gosh-darn good ... but what`s that in the fine non-headline print deep in paragraph 4? Here, let's first [u]underline-highlight
[/u] all the bullish spin which precedes it:


[i]My Comment:[/i] Ah, the fine art of propaganda .. even the negatives are described in positive-sounding words, e.g. instead "local pockets of stabilization in the hardest-hit areas indicating that you simply can't further kill what's already dead", we have "a recovery that’s really kind of concentrated", with "concentrated" being a word that sounds positive even though in the present context it describes something negative.

Now to the "niggling detail" which caught our eye ... we'll boldface-highlight it for the benefit of our readers:

[i]My Comment:[/i] In other words, the headline would more-accurately have read, [i][b]"Unemployment Rose in Thirty U.S. States, Fell In Nine: California Hits a New Record"[/b][/i]. I know, it`s really a minor quibble with an otherwise-smashingly-good article.[/QUOTE]

"Fell" == "Inched Backward by a hair"

Jonathan Weil on Scapegoating the Messenger
 

Bloomberg`s Jonathan Weil - one of the dwindling number of non-shill BBerg columnists, to be contrasted with morons like those who gave us yesterday`s featured Idiotic Headline of the Day - has a nice column about latest round of scapegoating of short sellers and "greedy speculators" in the sovereign-debt CDS markets:

[url=http://www.bloomberg.com/apps/news?pid=20601039&sid=aUarzyz7QgQ4]Greece Lifts a Page From Citigroup’s Playbook: Jonathan Weil[/url]
[quote] March 11 (Bloomberg) -- Is it too much to ask for the world’s titans of government and finance to speak credibly when they open their mouths? Some of them sure seem to think so, judging by the latest news from the financial-crisis front.

To hear Vikram Pandit tell it, Citigroup Inc. was a healthy institution when it got bailed out by the U.S. government. The problem back in November 2008, Citigroup’s chief executive officer told a congressional oversight panel last week, was that short sellers were driving down its stock price in spite of the bank’s fundamental strength.

At the same hearing, Herb Allison, the assistant Treasury secretary for financial stability, said “there is no too-big- to-fail” guarantee by the U.S. government for Citigroup or any other financial company. He dodged other questions about Citigroup by noting, with no apparent sense of irony, that the Treasury is now its largest shareholder.

Not to be outdone, Greek Prime Minister George Papandreou traveled to Washington this week to complain how unfair it was that “unprincipled speculators” were tearing down his country’s markets. Sure, Greece had lied for years about the size of its budget deficit. But what needs to be fixed urgently, he said, is the scourge of credit-default swaps that let investors bet on whether Greece will default on its debt, while European nations mull a possible bailout.

This all has a certain mid-2008 ring to it. Back then, in the months between the U.S. rescues of Bear Stearns Cos. and the government-backed mortgage financiers Fannie Mae and Freddie Mac, the talk from Wall Street kingpins and regulators was much the same.

‘Worst is Behind Us’

In April 2008, Lehman Brothers Holdings Inc. CEO Dick Fuld declared the “worst is behind us,” while blaming short sellers for his bank’s faltering share price. (In a short sale, an investor sells borrowed shares in hopes of buying them back at a lower price later and pocketing the difference.)

By July, the Securities and Exchange Commission had unveiled the first in a series of emergency short-selling rules that made it harder for investors to bet against the stocks of Lehman and 18 other “substantial financial firms.” Instead of helping the companies, the move wound up highlighting which financial-services companies the government was worried about the most, including Fannie and Freddie.

That same month, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke testified in Congress that Fannie and Freddie were adequately capitalized. Two months later, Paulson directed the government to seize both companies because they were insolvent.

Assigning Blame

[b]Neither short sellers nor rumors spread by speculators were to blame for any of these companies’ collapses. Bogus balance sheets and incompetent regulators were[/b], along with the panic that ensued once investors decided they couldn’t deny the reality any longer.
[b]
One lesson government officials and CEOs alike should have learned is that they only undermine market confidence when they try to deflect attention from their own organizations’ failings by making preposterous claims or blaming trumped-up bogeymen[/b]. That some of them keep reaching for the same tired playbook speaks to their capacity for deluding themselves into thinking that others will believe them when they say ridiculous things.

Meantime, the financial system has seen little substantive regulatory change since its near-meltdown in late 2008. In Europe, the one significant effort underfoot in response to Greece’s fiscal crisis is to possibly ban traders from selling credit-default swaps on some countries’ sovereign debt. ... Likewise, in the U.S., the only financial-regulatory change of note has been a new round of SEC restrictions on short selling. In Congress, reform legislation has gone nowhere.

The U.S. government has done nothing to address too-big-to-fail, except to dispatch underlings like Allison to deny its existence. The way the government measures banks’ regulatory capital remains broken. (Citigroup, which reported a $27.7 billion net loss for 2008, was deemed “well capitalized” when it got bailed out.) Credit-rating merchants such as Moody’s and Standard & Poor’s are as entrenched and conflicted as ever.

‘Unsustainable’ Debt Growth
[b]
Then there’s the fiscal health of the U.S. itself. Absent policy changes, “the federal government faces an unsustainable growth in debt,” the Government Accountability Office said in a January report. Within 10 years, the national debt held by the public, as a share of gross domestic product, could exceed the peak it reached in the aftermath of World War II, the GAO said.
[/b]
[i][EWM: Actually, if you remove the "held by the public" clause, we surpassed our [url=http://en.wikipedia.org/wiki/United_States_public_debt]post-WW2 peak[/url] sometime this spring, and are adding more than 10% GDP per year to it as I write this - with no end in sight, especially now that a "double dip" recession is inevitable ... it was only an unprecedented money-printing binge by the government which bought us the illusion of the much-touted "nascent recovery" to begin with. Also, the GDP growth implied by the 2010-and-beyond estimates in the "History" table at the foregoing page are simply ludicrous ... they imply that GDP is "estimated" to grow at 10% or more for years to come beginning later this year. WTF were the folks who came up with that smoking, and where can I get some?][/i]

Someday, should the rest of the world ever begin to question the U.S. government’s creditworthiness, don’t be surprised if the geniuses running our financial system find a way to blame short sellers and speculators for that, too.[/quote]
[i]My Comment:[/i] Note that my "defense of CDS traders" here may seem hypocritical at first glance, but in fact there is no conflict with my point (1) in the above post on "role of governments in financial crises": CDSes and other hedging instruments are extremely valuable when properly used, and a key part of making sure they are properly used is to properly regulate them as I described there. And despite the current lack of transparency in the CDS markets, we do know the net notional *amounts*, and those in the case of e.g. Greece are small enough to be explained by normal hedging rather than rampant "piling on" speculation. Don't blame the messenger...

[QUOTE]You're assuming here that the ~2 years between the great crash and FDR`s ascendancy were long enough for much of the bad debt to work its way out of the system:[/QUOTE]

Not at all. I never assumed that. But a recovery can be started before all the bad debt is purged. My problem with Mish and ZH and KD is that they don't really have a plan after the debt deleveraging is done. They just assume that everything will automagically be hunky dory after all the bad debt is out of the system and we are back on a gold standard!

[QUOTE=garo;208100]Not at all. I never assumed that. But a recovery can be started before all the bad debt is purged. My problem with Mish and ZH and KD is that they don't really have a plan after the debt deleveraging is done. They just assume that everything will automagically be hunky dory after all the bad debt is out of the system and we are back on a gold standard![/QUOTE]

You left out "...and once all the parasitic unions have been busted." ;)

One quibble: Mish and ZH (collectively) are the big gold bugs ... KD is big on flushing the bad debt, but I don't recall him being dogmatic about a "hard money" standard. He accepts that the modern economy is credit-based, and that fractional reserve banking is not inherently evil if done prudently, with honest accounting standards.

[b]Breaking: Lehman Engaged in Large-Scale Accounting Fraud[/b]

Here is the related Bloomberg article, "hard hitting" by their lapdog-media standards:

[url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aH2GbcSnGE9Q]JPMorgan, Citigroup Helped Cause Lehman’s Collapse[/url]: [i]JPMorgan Chase & Co. and Citigroup Inc. helped cause the collapse of Lehman Brothers Holding Inc. by demanding more collateral and changing guarantee agreements, a bankruptcy examiner said today in a report.[/i]
[quote]Lehman’s chief [Dick Fuld] was “at least grossly negligent in causing Lehman to file misleading periodic reports” while its risks were rising because of long-term assets financed with short-term debt, [U.S.-appointed bankruptcy trustee Anton] Valukas said in the report.

Lehman’s executives engaged in conduct ranging from “non- culpable errors of business judgment” to “actionable balance sheet manipulation,” as they used “accounting gimmicks” to move assets off the balance sheet without disclosing that to the government, rating agencies, investors or Lehman’s board.

Fuld’s lawyer, Patricia Hynes, disputed the examiner’s claim that the Lehman estate has a colorable claim against him relating to transactions called “Repo 105 transactions.”

“Mr. Fuld did not know what those transactions were -- he didn’t structure or negotiate them, nor was he aware of their accounting treatment,” Hynes said in a statement. Hynes also said none of Lehman’s senior financial officers, lawyers or outside auditors raised concerns about the transactions with Fuld.

Valukas said in his report that Ernst & Young, Lehman’s auditing firm, failed to question inadequate disclosures by the Lehman executives. [/quote]
[i]My Comment:[/i] Ah, the classic Sergeant Schultz "I know nothing ... I see nothing!!" defense...

..and the same story detailed on ZeroHedge:

[url=http://www.zerohedge.com/article/repo-105-scam-how-lehman-fooled-everyone-including-allegedly-dick-fuld-and-how-other-banks-a]The "Repo 105" Scam: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now[/url]
[quote]Presenting a detailed look at "Repo 105" - the next soundbite sure to fill the airwaves over the next weeks and months, as more and more banks are uncovered to be using this borderline criminal accounting gimmick to make their leverage ratios look better. This is the first time we have heard this loophole abuse by a bank, be it defunct (Lehman) or existing (everyone else). There should be an immediate investigation into how many other banks are currently taking advantage of this artificial scheme to manipulate and misrepresent their cap ratio, and just why the New York Fed can claim it had no idea of this very critical component of the Shadow Economy.
...
Stunningly, nobody at the SEC was aware of Lehman's Repo 105 program. And guess what: NEITHER DID DICK FULD. This is unbelievable - the criminality reaches to the very top, yet the very top denies all knowledge.[/quote]
[i]My Comment:[/i] The ZH piece goes on to cite relevant sources which make it appear highly implausible that Fuld and then-NYFed-head Tim Geithner had no clue about the balance-sheet shenanigans. But hey, this sort of thing is an accepted part of life in the banana-republican kleptocracy which is the latter-day United Bankrupt States of America.

But perhaps this is all part of some kind of "way edgy" viral-promotion campaign for [url=http://www.imdb.com/title/tt1053424/]this film[/url]? (Not to be confused with its cult-classic singular-form [url=http://www.google.com/url?q=http://www.imdb.com/title/tt0087995/&ei=opGZS9-0LZHSMvijoXo&sa=X&oi=spellmeleon_result&resnum=1&ct=result&ved=0CAYQhgIwAA&usg=AFQjCNGpyTdIapKbrsylcv3eCz3DWjpgCg]predecessor[/url].)

Repo105 Redux | Hank Paulson's Autohagiography
 

Spotted today on ZeroHedge:

[i]"Reality is a trailing indicator."[/i]

---------------------------

Some followups from various sources about the Lehman/SEC/FRBNY accounting-fraud scandal (at least we hope that even by the jaded standards prevailing in the U.S. with regard to corporate-governmental criminality,this one actually eventually makes it to MSM "scandal" status):

NY Times:

[url=http://www.nytimes.com/2010/03/12/business/12lehman.html?ref=business]Report Details How Lehman Hid Its Woes[/url]: [i]It is the Wall Street equivalent of a coroner’s report — a 2,200-page document that lays out, in new and startling detail, how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing.[/i]

[url=http://dealbook.blogs.nytimes.com/2010/03/12/the-british-origins-of-lehmans-accounting-gimmick/?ref=business]The Origins of Lehman's 'Repo 105'[/url]: [i]DealBook explores the British origins and basis of Lehman Brothers' now-infamous "Repo 105" accounting practice, which helped the firm mask how over-indebted it really was.[/i]

ZeroHedge:

[url=http://www.zerohedge.com/article/and-lehman-disclosure-hits-just-keep-coming]And The Lehman Disclosure Hits Just Keep On Coming; If Fuld Has Not Yet Left The Country, Doing So ASAP May Be A Very Good Idea[/url]

[url=http://www.zerohedge.com/article/lehmans-repo-105-counterparties-barclays-mizuho-ubs-deustche-bank-and-kbc-may-have-attempted]Lehman's Repo 105 Counterparties Barclays, Mizuho, UBS, Deutsche Bank, And KBC May Have Attempted To "Squeeze" The Bank[/url]

[EWM: The fact that Barclays later acquired Lehman at fire-sale prices is surely unrelated to any forced-collateral-calls Barclays may have made of LEH in the 11th hour pre-collapse.]

Barry Ritholtz:

[url=http://www.ritholtz.com/blog/2010/03/accounting-fraud-short-sellers-the-sec/]Accounting Fraud, short Sellere and the SEC[/url]

[url=http://www.ritholtz.com/blog/2010/03/did-jpm-and-citi-cause-lehmans-collapse/]Did JPM and Citi Cause Lehman`s Collapse?[/url]

Bloomberg:

[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=aGeWL3bkusWQ&pos=3]Fuld ‘Negligent’ as Lehman Hid Leverage, Report Says[/url]: [i]Lehman Brothers Holdings Inc. used off-balance-sheet transactions to understate its leverage in late 2007 and 2008, deceiving shareholders about its ability to withstand losses, a bankruptcy examiner’s report said.[/i]

A.k.a. "The accounting firm Ernst & Young is to Lehman Brothers as Arthur Andersen was to Enron"

---------------------------

[b]Hank Paulson's Autohagiography[/b]

[i]The New Republic[/i]'s Simon Johnson reviews Henry Paulson`s "Henry Paulson`s misleading, self-justifying memoir" of the late, great financial crisis:

[url=http://www.tnr.com/print/book/review/inside-man]Inside Man[/url]: [i]Review of "On The Brink: Inside the Race to Stop the Collapse of the Global Finance System"[/i]
[quote]Paulson really needs you to believe that once the crisis broke, he did what was necessary to save the world’s financial system. As Mrs. Thatcher liked to say, “there is no alternative.” This part of the story has been told much better by Andrew Ross Sorkin in [i]Too Big To Fail[/i]. But the great conceit in Paulson’s book is still fascinating. He wants to convince you that the only way to save the American financial system and—by implication—the world’s economy was by keeping Wall Street essentially intact. To be sure, he says that “the Wall Street I knew had come to an end.” But what he means is that the remaining investment banks—including Goldman Sachs—became bank holding companies and therefore, for the first time in history, acquired effective government backing.
[b]
So leading financial institutions were saved, which is not by itself an unusual event in some countries. It happens with some regularity in places with serious governance issues and endemic corruption. But even in troubled middle-income countries, such as South Korea, Turkey, Argentina, or even Russia, it is extraordinary to keep management in place when providing such support. Perhaps a few financial executives might be deemed beyond reproach and unfortunate victims of a system-wide panic. But to keep them all, with their base pay and their bonuses and their pensions? That is essentially unheard of. Perhaps there is a poor and benighted country somewhere that saved its massively incompetent financial firms in this manner, but you can search the historical records long and hard for a parallel to what Paulson pulled off.[/b]
...
It is not hard to save a financial system: you can just throw money at the problem, providing various kinds of unconditional guarantees. This is in effect what Paulson and his colleagues did. Banks will, of course, recover on that basis. If you put the balance sheet of the United States behind any group of firms, investors will stand up and salute. But the point is to save the financial system while not worsening the underlying problems. If “hubris” and “too big to fail” attitudes lurked before 2008, where are they now?

Paulson has the answer, and on this final point he has a moment of clarity, “The largest financial institutions [today] are so big and complex that they pose a dangerously large risk.” Exactly right. So [i]On the Brink[/i] turns out to be an interesting and important book, but not at all for the reasons its author thinks. It is really a memoir of modern American power, an account of how we messed up and how our so-called leaders put it all back together—with the same underlying problems now made worse.[/quote]

[QUOTE=ewmayer;208201][i]"Reality is a trailing indicator."[/i][/QUOTE]Employment is a trailing indicator and subnational government employment is even further trailing.

Greeks Strike While Iron is Hot / UK Brown-nosing
 

[url=http://www.nytimes.com/2010/03/12/world/europe/12greece.html?ref=world]New Strike Paralyzes Greece[/i]
[quote]Most international travel was halted and public services thrown into disarray on Thursday as thousands of Greek workers protesting austerity measures staged a general strike and joined demonstrations in the capital that turned violent.

Thursday’s strike was the latest and most disruptive in a series of protests that have unsettled Greece in recent weeks as the country grapples with a debt crisis that has fanned fears of spreading financial instability across the 16 countries that use the euro.

All scheduled flights into and out of the country were canceled, international trains were not operating, bus and subway service was suspended and ferries remained in their ports. Tax offices and courts shut down, and hospitals were operating with only emergency staff members. The streets were littered with mounds of trash as a strike at the city’s main landfill entered its sixth day.

The general strike was called by the country’s two main labor unions, which represent about 2.5 million workers and have led resistance to the new austerity measures that raise taxes and reduce civil servants’ vacation pay by 30 percent.

The measures, approved by Greek lawmakers on Friday, are expected to raise $6.5 billion and help plug a budget deficit that stands at 12.7 percent of the gross domestic product.

“They keep trying to make the workers pay the price for this crisis — that’s not fair and we won’t accept it,” Yiannis Panagopoulos, the leader of the country’s main labor union, said Thursday.[/quote]
[i]My Comment:[/i] Strangely, you didn`t hear "the workers" complain when the government was paying them the kinds of wages and benefits (coupled with yearly raises which caused public-sector pay to double in the past decade) which helped cause the crisis ... where were the "we cannot afford this, as it will bankrupt the country" strikes?


[url=http://www.bloomberg.com/apps/news?pid=20601109&sid=at2Ty68anpgo]Brown Tries to Turn Double-Dip U.K. Threat to Advantage[/url]
[quote]The British prime minister, whose Labour Party is narrowing the gap in opinion polls with the opposition Conservatives, is arguing that the economic recovery is too “fragile” to justify cutting the U.K.’s record budget deficit right away.

Brown is seeking a fourth term for Labour as Britain struggles to recover from its worst slump in six decades. While jobless claims are at the highest since the party came to power in 1997, opinion polls show that Brown has made up so much ground that David Cameron’s Conservatives will fail to gain a majority in the election, which must happen by June.

“A weak economy might perversely be good for Labour,” Jonathan Loynes, an economist at Capital Economics Ltd. in London, said in a telephone interview. “To a degree it would support the government’s position that it shouldn’t try to tackle the budget deficit too quickly, and at the same time undermines the Conservatives’ position.”
[b]
Reports this week showed factory production fell for the first time in five months in January, exports dropped the most in 3 1/2 years and evidence is mounting that a rebound in house prices is faltering after prices fell in February.
[/b]
“Although the economy is now growing, recovery is still in its early stages and remains very fragile,” Brown told business leaders in London yesterday. “We’re not going to withdraw the stimulus until [strike]national bankruptcy[/strike] the recovery is assured.”[/quote]
[i]My Comment:[/i] Based on the highlighted paragraph right before his "nascent/fragile/incipient/delicate/pre-embryonic/still-just-a-glimmer-in-my-chief-economists-eye recovery" blurb, Mr. Brown has an exceedingly curious notion of the definition of economic "growth".

Great article by Yves Smith at nakedcapitalism.

[URL="http://www.nakedcapitalism.com/2010/03/indefensible-men.html"]Indefensible Men[/URL]

[quote]Although the word “entitlement” fits, it’s been used so frequently as to have become inadequate to capture the preening self-regard, the obliviousness to the damage that high-flying finance has inflicted on the real economy, the learned blindness to vital considerations in the pay equation. Getting an education, or even hard work, does not guarantee outcomes. One of the basic precepts of finance is that of a risk-return tradeoff: high potential payoff investments come with greater downside.[/quote][quote]Wall Street jobs have long been the prime objective at the top of the MBA food chain, and that has always been a function of the money. Aside from looking for people who are well groomed, articulate and reasonably numerate (image is important, given the fees charged to corporate clients), firms screen job candidates for money orientation and what is politely called drive. At Goldman, the word “aggressive” was used frequently a term of approbation.
But the firms are white-collar sweatshops with glamorous trappings. [B]You do not know how hard you can work, short of slavery, unless you have been an investment banking analyst or associate. It is not merely the hours, but the extreme and unrelenting time pressure.[/B] Priorities are revised every day, numerous times during the day, as markets move. You have many bosses, each with independent demands and deadlines, and none cares what the others want done when. You are not allowed to say no to unreasonable demands. The sense of urgency is so great that waiting for an elevator is typically agonizing. If you manage to get your bills paid and your laundry done, you are managing your personal life well. Exhaustion is normal. On a quick run home en route to the airport after an all-nighter, a co-worker tried to shower fully clothed.
A setting that would seem to reward, nay require, cutting corners has another striking feature: intolerance for error. A computation mistake or a typo in a client document is a career-limiting event. Minor miscues undercut the notion that your firm can execute the more complex and risky elements correctly
And the dynamic doesn’t change much over the course of one’s career. The drill of being a medical resident (or pre-Iraq, a tour of duty) has a known endpoint. But investment bankers have signed a Faustian contract: You have no right to personal boundaries. The business says how high to jump, and you are expected to deliver. Yes, more senior people have more dignity, but the idea that your needs are second to those of the business never changes.
[B]In my day, it wasn’t uncommon for the firm to ask associates to reschedule weddings if they conflicted with a deal.[/B] It wasn’t that firms were opposed to marriage; indeed, the partners knew a young man was theirs once he procured a wife and, better yet, kids. He was tied hopelessly into a personal overhead structure that would keep him in the business.
Not that there was any real risk that someone would leave voluntarily. Exhaustion and loss of personal boundaries are an ideal setting for brainwashing, which is why people who have spent much of their career in finance have such difficulty understanding why their firm and their worldview might not be the center of the universe, why they might not be deserving of their outsized pay.
[/quote]

It's a good idea to periodically review how balanced ones life is. :-)