Defaulting banks - where will it stop?

[Jan Klimkowski]

Market Ticker's Karl Denninger has been busy.

A long screed with charts here:

Welcome To The Collapse Of 2011

A headline that says it all:

German Banks Have $1 Trillion In Hidden Losses?

Say it isn't so.... nobody would ever lie about asset values, would they? If that's true in Germany what are the hidden losses in France?

A shorter analysis here:

So How Much "Capital" Really Exists?

We're about to find out, I suspect.

There was a wire blurb from FT that claimed the ECB said they're going to "rapidly" recapitalize banks in Europe.

Wait a second - we were told, just days ago, that the European Banks were ok and didn't need capital!

So again investors were lied to. Again.

How many people have gone to jail for this? None.

You want to know where panic comes from in the markets? It comes from this sort of crap, where one day we're told everyone has plenty of capital, where we're told that Bank of America and Morgan Stanley are "fine" along with all the banks in Europe and then we get an announcement that basically says oops, we lied, we'll recapitalize the banks.

You can't have this both ways.

Either there is enough capital or there is not.

Either the banks are financially sound or they are not.

Since the balance sheets they present all say they are, either they're lying or they're not.

So which is it folks? This is a confidence problem and it's self-inflicted. As I have repeatedly noted you cannot trust a balance sheet any longer in any financial, and this has been true since 2007 when this crap started with WaMu. When people believe the financials are "safe" the market rallies.

When they believe they're not the market crashes because the expectation becomes that of a credit seizure. Then you add to that the Fed making two successive statements that the economy sucks and we expect it to continue to suck for two or more years.

We have erased eighty points - more than 7% in the S&P 500 - in the last day and we are not alone in the US - this is a global problem. The market internals are fifty to one on down volume. This is effectively a two-day crash.

It's also going to remain a global problem until the authorities here and overseas say the following to each and every financial institution:

You will identify every asset on your balance sheet at current market value, and you will demonstrate you are solvent at that market value. If you claim to have "hedges" through credit default swaps or other instruments, you will prove the counterparty has the money to pay. If you cannot or will not you will be closed and liquidated tomorrow morning.


You will continue to maintain this accounting on a forward basis and you will make it publicly available on a daily and forward basis.


If you need to be recapitalized to meet these requirements we (will/will not) do (x, y, or z) exactly one time, but every member of your board and senior management will be fired and, if there has been any material misstatement of your financial position, prosecuted.
If this happens the crisis and market crash ends that same day.

If it does not then the market will continue to "discount" the value of these alleged assets and rotate from Greece to Italy to Portugal to Spain and then here in the United States until "it" happens.

Eventually someone is going to come up crying poor mouth when they have to make a payment to someone and then we have a repeat of Creditanstalt. Today we are not able to deal with it, having spent all of our ammunition in 2007 and 2008 foolishly allowing these same institutions to cover up their capital holes!

I've been warning of this for four years folks. It has now officially "jumped the pond" in that Morgan Stanley claims no net PIIGS exposure but the market does not believe them and is pounding their stock to the tune of 7% today alone..

Either these firms are lying or they are not.

This question - both for Morgan Stanley and the rest of the financials - must be answered right now and if this means that some number of financial institutions must be closed and liquidated with their bondholders taking hits and the stockholders being wiped out so be it.

[Greg Burnham]

by Anthony Hall [UPI]:

It was all of 18 weeks ago the U.S. economic recovery looked at least semi-solid -- but with reports trickling in that hinted of a backslide.

That would be way back in late April, with the Dow Jones industrial average closing at 12,810 points. This week, having spent January through July ahead for the year, the DJIA skidded off September's high above 11,500 to a low of 10,733, triggering renewed talk of a second global recession.

Back in May, manufacturing reports kicked it off. In New York and Philadelphia, there were signs of manufacturing gains flat-lining. The housing market, an economic cornerstone, was not helping. The trade gap indicated the United States was more broke at the end of each month than at the start, to the tune of $50 billion or so per month. Then, job gains promising for four months, hovering just above a break-even point, started to flat-line as well. Trouble was on the way.

How quickly did that trade deficit number enter one ear and exit the other?

Even under debate in jaded Washington, $50 billion would turn a few heads. It happens to be five Environmental Protection Agencies paid for in one month with a little left over -- a Congressional Budget Office, perhaps.

It is almost the size of the Department of Transportation's annual budget, which hovers between $70 billion and $75 billion.

What could New Jersey do with $50 billion -- or California? Here's something funny: $50 billion in North Dakota? Funny, right?

What would Miami do with $50 billion? How about Minneapolis? How about handing it to Montpelier, Vt.? How absurd is that?

How about giving it to another country? Each month, the United States hands the Organization of Petroleum Exporting Countries roughly $12 billion. The trade deficit with China lately hovers between $25 billion and $30 billion.

How many jobs is that?

Currently, it would seem out of place to revisit President Barack Obama's pledge to double the size of U.S. exports within the next five years given the problems everywhere else.

On the other hand, as overly simplistic as this sounds, isn't $50 billion each month at least the start of a solid jobs program? And one that is tax-free, to boot?

In international markets Friday, sharp losses from the past two trading sessions moderated in most markets. The Nikkei 225 index in Japan lost 2.07 percent and the Shanghai composite index in China fell 0.41 percent. The Hang Seng index in Hong Kong lost 1.36 percent and the Sensex in India dropped 1.22 percent.

In Australia, the SP/ASX 200 index lost 1.56 percent.

In midday trading in Europe, the FTSE 100 index in Britain gave up 0.32 percent, while the DAX 30 in Germany shed 1.92 percent. The CAC 40 in France lost 1.69 percent and the Stoxx Europe 600 index lost 1.18 percent.

ANTHONY HALL || United Press International


(Source: UPI )
(Source: Quotemedia)

[Jan Klimkowski]

Greg- the UPI article is financially illiterate though.

Only a financial correspondent who is a fantasist or a lackey could start an article with the following phrase:

It was all of 18 weeks ago the U.S. economic recovery looked at least semi-solid

The figures and premises presented by the institutions, corporations, central banks and ratings agencies of global financial capitalism belong to the world of fiction, not fact. Yet this author seems to take them seriously.....

[Greg Burnham]

Greg- the UPI article is financially illiterate though.

Only a financial correspondent who is a fantasist or a lackey could start an article with the following phrase:

It was all of 18 weeks ago the U.S. economic recovery looked at least semi-solid

The figures and premises presented by the institutions, corporations, central banks and ratings agencies of global financial capitalism belong to the world of fiction, not fact. Yet this author seems to take them seriously.....

Ok, that clears it up. I suppose, if true, that would make the article about defaulting banks then? Never mind, it's not important.

[Peter Lemkin]

JUAN GONZALEZ: The release of an explosive new book that draws a searing portrait of the Obama administration's failings and early management of the economic crisis has been met with sharp objections from officials within and outside of the White House. In his book Confidence Men, veteran journalist Ron Suskind writes that U.S. Treasury Secretary Tim Geithner ignored an order from President Barack Obama to consider dissolving the debt-ridden banking giant Citigroup as part of a reconstruction of major banks in March 2009. Suskind goes on to say that Citigroup was one of several incidents where President Obama's authority was, quote, "systematically undermined or hedged by his seasoned advisers." He also reports Larry Summers, former chair of the National Economic Council, once said at a meeting, quote, "We're really home alone. There's no adult in charge. Clinton would never have made these mistakes."

Earlier this week, White House Press Secretary Jay Carney responded to some of the allegations in Suskind's book.

PRESS SECRETARY JAY CARNEY: I, too, have not read the book, although I've read a lot about it. What we know is that very simple things, facts that could be ascertaineddates, titles, statistics, quotesare wrong in this book. So I think thatin fact, one passage seems to be lifted almost entirely from Wikipedia in the book. I think, based on that, I would caution anyone to assume that if you can't get those things right, that you suddenly get the broader analysis right. That analysis is wrong.

AMY GOODMAN: That was Press Secretary Jay Carney, speaking about Pulitzer Prize-winning journalist Ron Suskind's new book, Confidence Men: Wall Street, Washington, and the Education of a President. Suskind says the book is based on interviews with more than 200 people, including former and current members of the Obama administration, as well as the President himself.

Well, we are joined by Ron Suskind right now. His previous books include the New York Times bestsellers The Way of the World, The One Percent Doctrine, The Price of Loyalty and A Hope in the Unseen. From 1993 to 2000, Suskind was the senior national affairs writer for the Wall Street Journal, where he won the Pulitzer Prize. He now lives in Washington, D.C., writes for Time Magazine, The New York Times Magazine, Esquire and the Wall Street Journal.

Ron, what most surprised you in your research for this book, Confidence Men?

RON SUSKIND: It did surprise me when I began to discover how much the President faced in those first days, how significant the challenges were, but also how much he was ceding authority to a small group of advisers, many of whom, of course, had long experience with one another, dating back to the Clinton years. That was the most surprising thing. And as well, when I found that out, of course, you know, Ias you know, as the Bush administration pointed out, I am a lifelong Democrat, and, you know, some of the things that you're finding in reporting often, as a reporter, are unsettling. I was very, very ardent about making certain that the book really was true to the idea of the evolution of the President, rather than a snapshot of any place in time, which was the prime driver to the final interview with the President, where he speaks, I think with great strength, about how he has evolved across these tumultuous years.

AMY GOODMAN: At a press briefing on Monday, the director of the Management and Budget, Jack Lew, asked Treasury Secretary Tim Geithner about your book. Here's how Geithner responded.

TREASURY SECRETARY TIMOTHY GEITHNER: I haven't read this book, but, to borrow a phrase, I live the reality. And the reports I've read about this book bear no resemblance to the reality we live together. No resemblance.

REPORTER: Specifically, though, Mr. Secretary, did you slow-walk on the President's effort to reorganize banks?

TREASURY SECRETARY TIMOTHY GEITHNER: Absolutely not, and I would never do that. I've spent my life in public service. My great privilege to serve this president, and I would never contemplate doing that. But again, I lived the original, and the reality I lived, we all lived together, bears no relation to the sad, little stories I heard reported from that book.

AMY GOODMAN: Tim Geithner, the Treasury Secretary. Ron Suskind, those "sad, little stories," respond to him, and particularly talk about what you learned about Citigroup, what Geithner did or didn't do when it came to Obama's instructions.

RON SUSKIND: Let mebefore I get into, I want to just offer something that I think readers are now finding out, is that Tim Geithner responds to the whole Citigroup incident across two pages of long quotes, all taped, obviously, where he deals with it step by step, what he knew, what he didn't know.

AMY GOODMAN: Because you talked to him.

RON SUSKIND: Of course. Thirty-five-minute interview prior to publication, to make certain that the Treasury Secretary had a chance to respond to this in full. And certainly, "full" is not what we're seeing here. It is in the book. I suggest readers read that.

I think what happened here is something that I point out in the book, that is as much about circumstances as personal conduct. It was a difficult time. Everybody points that out. At this juncture, however, the President, a month and a half into office, was quite focused on getting his arms around what was clearly the great twin crisis of his presidency: a dropping economy, a collapsing economy, and a collapsed financial system. It is a historic set of crises. Coming through February, as I point out, from many, many meetings that are revealed in the notes and the tapes from interviews with participants, the President was getting an architecture of Japan versus Sweden. He said that in many of his public interviews. He says, "I don't want to be Japan. I want to be Sweden." Sweden dealt with its banks. It took tough medicine. Japan supported the banks, much the way the United States is now supporting them. It resulted in two decades of stagnation economically in Japan. The President got this. He's not an economist, as I point out. But he's learning quickly.

He comes to fullness in mid-March in this large meeting with all the key combatants there. Interestingly, in this meeting, the President has evolved even more pointedly as to what he wants to do. He is very, very focused on how to resolvemeaning close and reopen and restructurethe major banks, who have an overhang of toxic assets that he feels is really a central problem to economic recovery. In the meetings prior to, he telegraphs this. It's set up as a showdown, so-called, inside of the White House between two teams. Tim Geithner and his team, they're in favor of something called the stress test, which started in early February. That essentially was a way the government would rate the banks, almost like Moody's, and then would publish those ratings with some data, and then investors could invest in the banks, essentially based on the government's judgment. The view was that if you were such an investor, that would be essentially a guaranteed investment. That was the view, how to get investors to give money to the banks, and guaranteed by the government. Many people felt that wasn't going to be timely or effective, that we're in a crisis, we can't wait until May to have the stress tests come to their conclusion in this way. In the meeting, actually Larry Summers, who was usually allied with Tim Geithner on a first-do-no-harm, more Wall Street-focused and supportive way, was actually against Tim Geithner in the meeting. He was with Christina Romer. The two of them fought, the two teams, Geithner and Lee Sachs, someone from Treasury, versus Romer and Summers. They hashed it out. Geithner said, "Stress tests are plenty. We've got what we're doing. This is not inaction." Romer and Summers were quite focused, though, saying, "That's not enough. This is watchful waiting. We need radical surgery."

And the President agreed with that second view. After several hours, the President said, "This is what I want to do. I want to look at how to restructure these banks, how to resolve them, how government can show accountability flowing in both directions. They messed up. That's important, that they face consequences. And importantly, we need to show government acting on this, rather than just backing away."

After the meeting, then the President left and came back. In the interim, Rahm Emanuel stepped up and said that "There's no way we're going to be going back to Congress to get money to do anything like this, that everybody needs to" and he used, you know, severalsome strong language. "Everybody needs to get in line to give the President some more modest and pragmatic cause for policy." When he came back, Larry Summers began, saying, "Mr. President, Rahm Emanuel pointed out when you were away, sir, that we're not going to get more money from Congress, but there's $300 billion left in the TARP fund from the previous fall, the bank bailout fund. We can use $200 billion to resolve one bank, Citigroup." The President took to this after a bit, I think a little reluctantly, according to those there, and said, "All right. But if we take down Citibank, if we do Citibank first, I want to do it right. That will show that we can have a bank closed without a kind of Lehman-style disaster. That will build confidence. It will kill off fear, because that fear we're feeling right now, just the economic meltdown just in the past few days, is really a fear-driven one." That's the President trying to get at that, which of course we all now understand. "We'll do it right. We'll do Citigroup right, and then we'll go back to Congress for more money." That's where the meeting comes to its end. The President says, "Tim's stress tests will move forward, but I want a plan for how to resolve Citigroup." He's quite ardent about it.

Three weeks later, at an early April meeting in the Oval Office, the President is discussing this. He mentions, "What about the resolution plan for Citigroup?" And this is a key part of the arsenal. Christina Romer looks over at Larry Summers. Tim Geithner is not at this meeting. And they exchange glances, and she says, "Excuse me, Mr. President, there is no plan for Citigroup." The President is agitated. He says, "There better be." After the meeting, Larry Summers huddles with Rahm Emanuel. Rahm is displeased. He says to Summers, "She should never have said that about Citigroup to the President without Tim here to defend himself." Larry said to TimLarry said to Rahm Emanuel, "But she's right."

This long series of events and conversations was confirmed by all of the participants. All of them heard this, and none of them disputed it prior to publication of the book. At the end of the day, Tim Geithner responds to all of this in the book, but, as well, the President does in his interview. And that interview, of course, is rendered at the end of the book. The President doesn't dispute any of it. He says, "I'm trying to remember. OK, I don't know if 'agitated' was the right word. This was a difficult time." His expression of what happened is in the book, in paragraph after paragraph, from the tapes. Readers are going to decide for themselves. I think the evidence laid out in this book, as such, shows, with some singular clarity, that this was a slow-walking incident, where the President was slow-walked, so to speak, by his Treasury Secretary.

Now, importantly, in the book, as well, on page 379 of the book, there is a memo, an internal memo which was very important in this White House. It's from February of 2010. At this point, we've had a year-plus of situations not dissimilar to this, and Pete Rouse, who is something of a shadow chief of staff, was the chief of staff in the Senate office, and is quite skilled at sort of management analysis, has been writing notes in meetings. He now writes a memo to the President, a year one review. And in some ways, this memo says, in memo-speak, here's how you can take control of your White House. In two items in the memo, the second and the fourth items, he says, "When the economic team," Rouse to the President, "does not like a decision by the President, they have on occasion worked to re-litigate the overall policy." This is memo-speak for slow-walking: they disagree with the President, let's just argue it over and over again until the President sees that we're right and he's not. As well, "once a decision is made," the fourth point, "implementation by the Department of the Treasury has at times been slow and uneven. These factors all adversely affect execution of the policy process." "Execution" meaning carrying out the orders of the President. That is in the memo. My point here in putting it in the book is to not say that this is currently the case. I have no evidence that this is the current situation, but it is part of the evolution of the President to get control and direction of his White House, so it better expresses his will, as we discuss in his interview with me.

AMY GOODMAN: We're talking to Pulitzer Prize-winning journalist Ron Suskind. His new book, Confidence Men: Wall Street, Washington, and the Education of a President, a book that the Obama team does not like. When we come back, we're going to talk about women in the White House, what they have to say, and also why Tim Geithner was so tied to Citigroup, why they did not want it to be dismantled. This is Democracy Now!, democracynow.org, The War and Peace Report. Back with Ron Suskind in a minute.

[break]

AMY GOODMAN: Our guest is Ron Suskind, Pulitzer Prize-winning journalist. His book is Confidence Men: Wall Street, Washington, and the Education of a President. Juan?

JUAN GONZALEZ: Well, Ron, I was struck in reading the book that theyou talk obviously not only about the presidency itself, but that year of the campaign and how Obama began to develop his confidence in different folks, especially in the financial world. I was struck by the degree of reliance that he had on the advice of so many folks on Wall Street. And one of the people that features prominently in the book is Robert Wolf, the head of UBS Americas, who most Americans really didn't know anything about until he became the first golf partner in the first vacation that Obama took on Martha's Vineyard. Talk about Bob Wolf's role, his importance to Obama inbefore he got elected and then in the presidency.

RON SUSKIND: Yeah, Robert Wolf was sort of the key man for fundraising for the President in New York, primarily on Wall Street, in early 2008 through 2008. Theyexcuse me, starting in 2007. And they, you know, became close as friends.

But what's interesting is that, at one point in the book, at the beginning of the book, in early August of 2007, when the economy is shuddering, but people are not yet clear, for the most part, even in the financial industry, largely, what's happening, and certainly not in the political community, Wolf gets a glimpse of the future. He's on a yacht in Long Island Sound, a 110-foot yacht owned by a friend of hishe used to work for himwho's a hedge fund manager. And this hedge fund manager is also very early to feel the credit crisis hit. His fund is melting down while they're on the boat. He is, of course, very agitated, yelling into his phone. Wolf, at that point just a contributor to the President and very affectionate toward the President, says, you know, "I need to tell this to Barack." He goes up to the flying deck of the boat, called The Dream in French, and calls Barack Obama and says, "Barack" it was Obama's birthday, his 46th birthday and says he said, "This is a once-in-a-lifetime event. This is a market-driven disaster coming that will melt the U.S. economy, and maybe the global economy."

Obama is startled. He had just received economic briefings, which I have in the book, as well, showing the underlying fragility of the U.S. economy, so much of it burdened by leverage and hollowed out at its core, especially because of men in such a difficult shape in the middle and lower working classes. Wages have been flat for 30 years. And Obama gets a glimpse of the future, a hard glimpse. At that momentand Obama discusses this some in the interviewhe begins to move very forcefully, seeing that Wall Street needs to be reformed. He's ahead of everyone on this. He's ahead of not only people on Wall Street, but even some in the progressive community. This is what needs to happen. We need to essentially bring probity to this financial industry.

All the way through into the fall, the community that gathers around Obama is an ecumenical, bipartisan communityPaul Volcker; Bill Donaldson, the SEC chairman under George Bush; Robert Reich; Laura Tyson; you know, Robert Wolf, an executive from Wall Street ready to do virtually anything for the President and speak real candor. This group is important to Obama, because it is, in many people's minds, the kind of group you want in a crisis: nothing in terms of a dog in the fight for any of them, and speaking clearly to Obama. This group, all the way to the fall, is primary and central, at which point, however, they are replaced, for the most part, washed away, certainly by the time the administration starts, by a different group, which are mostly those who are tied in some ways to Robert Rubin and the Clinton administration.

In fact, something I found in the book, which is one of its many disclosures, is that Robert Rubin, the Citigroup chairman and once Treasury Secretary, was offered a dollar-a-year job to have an office in the White House, actually in the administration. He ended up not taking that because Citigroup collapsed and Rubin essentially became toxic. But the primacy, the centrality of the Rubin group, Larry Summers and Tim Geithner, end up in the two key positions of the presidency as economic advisers: Larry Summers, economic adviser; Tim Geithner, Treasury Secretary. And in some ways, the die are cast, at least significantly, at that point. I think that's clear, looking back.

AMY GOODMAN: Ron Suskind's book has elicited harsh reaction from the White House since it was published. Current White House Communications Director Dan Pfeiffer said his book is full of, quote, "drama, palace intrigue and salacious details based on anonymous accounts."

Meanwhile, top economic adviser, Larry Summers, said, "the hearsay attributed to me is a combination of fiction, distortion and words taken out of context. I can't speak to what others have told Mr. Suskind, but I have always believed that the president has led this country with determined, steady and practical leadership in the economic area."

And former White House communications director, Anita Dunn, has flat-out denied Ron Suskind's claim that she said the White House is a "hostile workplace to women." Speaking to the Washington Post Friday, Dunn said she had point-blank told Suskind that the White House was not a hostile environment.

Ron Suskind, your response? And talk about why you're saying that.

RON SUSKIND: Yeah, well, Anita Dunn, of course, talked to me extensively about especially the gender issues in both the campaign and in the White House. Her quotes are in the book. Again, the women's issue is not central, I don't think, to the flow of the book. It's important.

AMY GOODMAN: It may not be central to you, but to many it is.

RON SUSKIND: To many people, it is white-hot stuff. Anita discussed, especially, when she arrives at the White House, what she found, in terms of real tension between men and women. What we did hereand let me just sort of describeyou know, the general issues we'll talk about in a minute, but let me first deal with the Anita Dunn issueis that she said initially, discussing this, that she discussed with Valerie Jarrett in the White House. She said, you know, if it were not for the President, we would be in court for a hostile workplace, because the place actually fit the legal definition of a hostile workplace toward women.

With Anita Dunn, as with all or most of the other key subjects, I went back, if they have a quote like that that's going to be defining and attached to their name, I call them back, and I say, "Look, you should know what's going in the book next to your name." I did that with Anita Dunn. We discussed the quote. She pushed back at the end, saying, "Look, my husband was general counsel" this was right before publication "during this time. If I identified a legal issue in this area in the White House, in present tense, I would have to have told my husband. It will cause difficulty for me and my husband." I said, "Well, what are you suggesting?" And she says, "Well, I'm talking to you in the spring of this year, and it is a recollection looking back, is where I stand when I say it." So she said she would think it would be more appropriate and accurate, in her mind, to say, "Looking back, I felt it fit the legal definition of a hostile workplace for women." I said, "Alright."

I said, "Well, what about this thing about 'if not for the President'?" It didn't actually make much sense in the original quoteI meant to talk to her about thatmeaning, if it was a different president, but the same hostile workplace, it would somehow be different legally? That doesn't seem to make sense. She said, "No, no. You're right. That is confusing. What I meant was that we all had great affection for the President. We would have walked across hot coals for the man." And I said, "Fine. So the way this quote will appear in the book is that will be a paragraph prior to the quote, because it's actually not really related to your thoughts about the hostile workplace. And the hostile workplace quote will be from your lips, 'Looking back, this place fit the legal definition of a hostile workplace.'" That's our discussion prior to publication. So she knew exactly what was going in the book on that issue, on that quote.

When the book came out, you know, understandably, there is a moment where people are stunned. And I've been through this many times; many reporters have, journalists. They talk to you. They spend a lot of time with you. I go back to make sure they'll know exactly what's going in the book. But, you know, we live in difficult, partisan times. And when the lights come up, and they're blinding, all sorts of things happen in terms of what's often called the "Washington walk back" or "non-denial denials."

I think we would put Larry Summers' denial in that category. I would also say, I think quite pointedly, that Larry, just like Anita, was told about the Home Alone quote, in its full, three parts Home Alone, there's no adult in charge, Clinton wouldn't make these mistakes prior to publication. His response is in the book, in a rather full paragraph that responds directly to the quote, rather than just sort of says, you know, I don't know.

JUAN GONZALEZ: And Ron Suskind, the title

RON SUSKIND: Yes.

JUAN GONZALEZ: Confidence Men. Why did you settle on that, and its importance in terms of the themes you bring out in the book?

RON SUSKIND: Well, can I just finish up with the women, and I'll get to that in one second? Is that I think it's very important to note that the White House pushed me toward Anita Dunn to give voice to the women's issues, because their viewand I think it is largely true and reflected as such in the bookis that the President did engage on this and certainly ameliorated those issues inside of the White House. That was the reason the White House said Anita Dunn is a person you should talk to who can give it shape and a voice.

The President met with the women in November in the residence. They aired their grievances. The President was sympathetic and attentive. And many of the women, though not much action emerged from that meeting, felt that the President's empathy was sufficient to ease the situation. The women's group then met later amongst themselves for support. And so, I think it's important that people see the evolution of that issue, because the point of this book, in significant and central ways, is the evolution of the person we care most about, the President, the central actor of this period.

Which brings me to the title, Confidence Men. The book never calls anyone a con man. It's a play on the word "confidence," because throughout American history, confidence has really been the coin of the realm, all through our difficult moments and our comebacks in America from difficult times. It is often about a leader instilling confidence in the people of the country. Certainly Roosevelt does this to establish his legacy during the Depression. Kennedy, in his way, brings a kind of confidence upon his arrival. Reagan, as I point out in the book, was a master at projecting confidence. And that's why this issue of confidence is central, and central to the interview with the President. He speaks eloquently about how he sees confidence being more aptly used, now that he has learned what he's learned.

AMY GOODMAN: Ron Suskind, I want to thank you for being with us. We're going to go to part two of this interview in our post-show, and we'll put it up as a web exclusive at democracynow.org. Ron Suskind is a Pulitzer Prize-winning journalist, author of his latest book, Confidence Men: Wall Street, Washington, and the Education of a President.

[Jan Klimkowski]

Shock horror.

For three whole minutes, a trader tells the truth on MSM, and the BBC lackey anchors are completely and utterly out of their depth, ending with a lame joke.

"Savings Of Millions Of People Are Going To Vanish"

"I'm a trader, I just care about making money"

"This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!"

"Goldman Sachs and the big funds do not care about this rescue fund"

Here.

And here.

[Ed Jewett]

Don't know if the controversy got over there yet, but...

Alessio Rastani is Not Andy Bichlbaum

Posted on September 27, 2011 by willyloman

by Scott Creighton
Yesterday I posted a video from the BBC in which a supposed trader was quite frank in his discussion about the pending collapse of the global economic system. This story is all around the internet today with the MSM outlets trying to claim that the guy is a hoax, another attempt by the "Yes Men" to scam the media with yet another of their crank interviews like the one they did back in 2004. In fact, the Huffington Post is going so far as to claim the guy from yesterday's BBC interview is actually Andy Bichlbaum, the guy from the 2004 interview.
They aren't the same guy. The trader's name is Alessio Rastani and he's a day trader living in England I think.
Here's a look at the two of them side by side one still is taken from the "trader" interview and the other is taken from the 2004 hoax interview with Bichlbaum.

Here's a picture of him working in a room in his girlfriend's house.

These guys did a better photo comparison than I did and they researched and found out what the 2004 video guy from the Yes Men is doing now. Definitely not the same guy.

[Ed Jewett]

The Trader on BBC

September 28th, 2011I'm a bit baffled by the level of interest in this one. I watched this and thought, *meh*, "Maybe he has been reading Cryptogonzerohedgeautomaticeartheconomiccollapseblogetcetc" HAHA. I also wondered if he was trying to shill the thing down so he could go long… Because, for as many times as this was submitted, nobody mentioned what happened the next day:
FTSE 100 +204.68 +4.02%
DAX +282.88 +5.29%
CAC 40 +164.04 +5.74%
Anyway, here you go.....[BBC footage as above embedded here]..

http://cryptogon.com/?p=25153

[Magda Hassan]

Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.
Derivatives are highly volatile financial instruments that are occasionally used to hedge risk, but mostly used for speculation. They are bets upon the value of stocks, bonds, mortgages, other loans, currencies, commodities, volatility of financial indexes, and even weather changes. Many big banks, including Bank of America, issue derivatives because, if they are not triggered, they are highly profitable to the issuer, and result in big bonus payments to the executives who administer them. If they are triggered, of course, the obligations fall upon the corporate entity, not the executives involved. Ultimately, by allowing existing gambling bets to remain in insured retail banks, and endorsing the shift of additional bets into the insured retail division, the obligation falls upon the U.S. taxpayers and dollar-denominated savers.
Even if we net out the notional value of the derivatives involved, down to the net potential obligation, the amount is so large that the United States could not hope to pay it off without a major dollar devaluation, if a major contingency actually occurred and a large part of the derivatives were triggered. But, if such an event ever occurs, Bank of America's derivatives counter-parties will, as usual, be made whole, while the American people suffer. This all has the blessing of the Federal Reserve, which approved the transfer of derivatives from Merrill Lynch to the insured retail unit of BAC before it was done.
Contrary to popular belief, which blames the global financial crisis on subprime borrowers, it was the derivatives, based upon the likelihood that those borrowers would pay their debts, that were the primary catalyst triggering the global economic crisis of 2008. Back then, the derivative obligations of AIG (AIG) imploded the insurer. Under the pressure of fear-mongering from the Federal Reserve and the financial industry, the U.S. government committed hundreds of billions of dollars to bail out AIG's counter-parties, including the biggest banks of Europe and America. Had the government not stepped in, virtually all the banks on Wall Street would have gone bankrupt. A host of European and Asian banks would have followed.
AIG was not FDIC insured. It could have been allowed to fail, and should have been allowed to fail. All the banks on Wall Street that would have failed should have failed. Their speculator counter-parties should have been bankrupted, and their retail depositors should have been made whole. The retail divisions could have been temporarily nationalized and sold off as soon as possible to more prudent management. Had thisoccurred, America would have experienced a deep but very temporary economic downturn, and, by now, the downturn would be over. But, with derivatives obligations tied intimately with FDIC insured depositary units, the debt will need to be paid by the government, as a matter of law. We will have no legal choice except to default, or pay them off.
In 2008, politicians in Washington D.C., and Trojan horse operatives within the financial organs of our government, bailed out imprudent managements of big casino-banks. Bank executives not only didn't need to go bankrupt, as they should have, but collected huge bonuses. Later, in response to the abuse, Congress passed the Dodd-Frank legislation and the Volcker rule. These were supposed to insure that such bailouts were not needed in the future. Supposedly, this would prevent further abuse of the American taxpayer.
The most recent abuse-event, involving BAC, illustrates the uselessness of such laws. Bank of America NA is FDIC insured, and has the blessing of the Federal Reserve, in spite of such a transaction being prohibited by Section 23A of the Federal Reserve Act. Specifically, the section reads in relevant part:

"A member bank and its subsidiaries may engage in a covered transaction with an affiliate only if--
1. in the case of any affiliate, the aggregate amount of covered transactions of the member bank and its subsidiaries will not exceed 10 per centum of the capital stock and surplus of the member bank; and
2. in the case of all affiliates, the aggregate amount of covered transactions of the member bank and its subsidiaries will not exceed 20 per centum of the capital stock and surplus of the member bank ..."

The Federal Reserve is an institution largely controlled by those who are probably the counter-parties to the Merrill Lynch derivatives. No doubt, its approval of the transaction, in spite of the prohibitions of section 23A arise out of a claim that Merrill is not a "bank" as defined under the Act, and, therefore, not an affiliate.
But, the Act also provides that:

For purposes of applying this section and section 23B, and notwithstanding subsection (b)(2) of this section or section 23B(d)(1), a financial subsidiary of a bank--
1. shall be deemed to be an affiliate of the bank; and
2. shall not be deemed to be a subsidiary of the bank.

So, Merrill Lynch is clearly an affiliate of Bank of America, and the Federal Reserve is clearly violating the law by approving this particular transaction. But, here is the kicker. Congress has given ultimate power to the Federal Reserve to ignore its own enabling Act legislation. The law also reads:

The Board may, at its discretion, by regulation or order exempt transactions or relationships from the requirements of this section if it finds such exemptions to be in the public interest

The FDIC opposed the move, but there is nothing the FDIC can do, except file a petition for a writ of mandamus in court, against the Federal Reserve, seeking a declaration that the approval was illegal. But, the FDIC would lose, because Congress has given the Federal Reserve Board ultimate power to do whatever it wishes.
So, the bottom line is this: When something bad happens, and the derivative obligations are triggered, the FDIC will be on the hook, thanks to the Federal Reserve. The counter-parties of Bank of America, both inside America and elsewhere around the world, will be safely bailed out by the full faith and credit of the USA. Meanwhile, the taxpayers and dollar denominated savers will be fleeced again. This latest example of misconduct illustrates the error of allowing a bank-controlled entity, like the Federal Reserve, complete power over the nation's monetary system. The so-called "reforms" enacted by Congress, in the wake of the 2008 crash, have vested more, and not less, power in the Federal Reserve, and supplied us with more, rather than less instability and problems.
This is not an isolated instance. JP Morgan Chase (JPM) is being allowed to house its unstable derivative obligations within its FDIC insured retail banking unit. Other big banks do the same. So long as the Federal Reserve exists and/or other financial regulatory agencies continue to be run by a revolving door staff that moves in and out of industry and government, crony capitalism will be alive and well in America. No amount of Dodd-Frank or Volcker rule legislation will ever protect savers, taxpayers or the American people. Profits will continue to be privatized and losses socialized.
http://seekingalpha.com/article/301260-b...l-approval

[Ed Jewett]

Didn't you hear or feel the "thud!" Down Under?! :flames: