ΩΩThe ripples from the Icelandic volcano’s eruption is spreading throughout the entire financial system of the world as much of free trade commerce moves via air freight. The hazards of Nature disrupting the plans and schemes of mere humans is a long and ancient story but the counterstory of how humans screw up human-designed systems is of great interest since these can be 100% prevented in the first place. The reason why humans screw up human systems is simple: they want something to go to infinity.
ΩΩThat is, no limits to ‘growth’ and a need to ‘profit’ while producing nothing. That is, funny money created magically from nothing and using this to gain everything is a human failing that is virtually impossible to constrain. So we pass laws rendering illegal, many schemes for getting infinitely rich. If there are no restraints, all human created systems will crash and burn due to uncontrollable greed.
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ΩΩThe poster child for greed happens to be Goldman Sachs. They first created the situation which caused the collapse of international finance and then got even richer off of this collapse due to playing a double game whereby they hedged their own junk so that they would make even greater profits if things they created crashed and burned! This, of course, MUST be totally illegal. And evidently, it was. Before we go into today’s news about the SEC and Goldman Sachs, first, a little filler about the Derivatives Beast and its many appendages such as the CMO game which is the one that got the Goldman Sachs villains in so much hot water:
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ΩΩThe Associated Press: Obama to veto bill without controls on derivatives: It seems that Congress, beholden to the very rich scam artists, is dragging its centipedic (I made up this word) feet in reforming the derivatives market. Since it can’t be reformed, I say, outlaw it entirely. Otherwise, everyone should become slightly more serious and cease treating this as a goofy way to get infinitely rich, quickly. Arresting Goldman Sachs executives and then executing them might motivate Congress to fix this. Executives should accept being executed. This is inherent within the very name of their own occupation.
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Collateralized Mortgage Obligation (CMO)
Investopedia explains Collateralized Mortgage Obligation – CMO
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Here is an example how a very simple CMO works: The investors in the CMO are divided up into three classes. They are called either class A, B or C investors. Each class differs in the order they receive principal payments, but receives interest payments as long as it is not completely paid off. Class A investors are paid out first with prepayments and repayments until they are paid off. Then class B investors are paid off, followed by class C investors. In a situation like this, class A investors bear most of the prepayment risk, while class C investors bear the least.
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ΩΩSo, the ‘Class A’ guys are the dupes. The ‘Class C’ must mean ‘class clown’. The class clowns work for Goldman Sachs and sell what looks to be nifty deals to the A guys who are usually clueless. ’Trust me,’ says the Goldman Sachs class clowns, ‘I’m in this deal, too.’ Well, the GS clown collects his fees and percentages and gets some goodies from the interest payments which always are nearly 100% the value of any payments during the first several years of any bond…only after half way through, does the principal really begin to be paid down.
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ΩΩSo….if all of these mortgage deals go bad after just 2 years or even less, the class clowns still get a fistful of money while the class ass guys get to suck down all the losses. Here it is, plainly speaking: any losses in interest payments is simply zeroed out. But any losses in PRINCIPAL has to be paid in FULL! The only way for the guys funding this to pay for this is often to go bankrupt, too. This leads to one bankruptcy causing another and another in many areas, one after the other which is why these sorts of insane deals were illegal until Congress decided to legalize this sort of insanity.
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Here is an old DTCC paper about the nifty new CMO paper market http://www.dtcc.com/downloads/leadership/whitepapers/cmo.pdf
EXAMINING THE GROWTH OF THE COLLATERALIZED MORTGAGE OBLIGATION MARKET . January 2003 The rapid growth of collateralized mortgage obligations (CMOs) in combination with low interest rates have increased the volume of related principal and income payment processing handled by The Depository Trust & Clearing Corporation’s (DTCC) depository.
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The lack of industry-agreed standards or consistency in the procedures for handling such payments, together with the extremely tight time frames for processing them, have exacerbated existing problems. The high volume of late notifications on paydowns handled through partial calls and the resulting “post-payment” adjustments have adversely impacted the depository and the industry….
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This study was made at the very beginning of the housing bubble. The super low interest rates were introduced by Greenspan right when the price of world oil shot upwards. Never, does this lead to deflation, higher and higher energy costs cause inflation and so the mismatch between inflation and interest rates meant that the Fed was literally giving away money. Plus the Japanese ZIRP rates fueled an international carry trade market which flooded the planet with easy lending.
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BACKGROUND AND RECENT TRENDS The CMO is a multiclass bond backed by a pool of mortgage pass-throughs or mortgage loans. The issuer or servicer of these pass-through securities collects the monthly payments from the homeowners whose loans are in a given pool, and “passes through” the cash flow to investors in monthly payments that consist of both interest and repayment of principal.
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As we see from the news story I previously cited here, this is the Goldman Sachs CMO deal: the homeowners pay 90% potential accumulated interest and 10% principal and anyone who is getting the ‘pass through’ of the interest money gets tons of money while the poor class A chumps who wait for the fruits of the principal payments get only 10% of the costs. A bad deal.
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As the payments on the underlying mortgage loans are collected, the CMO issuer, through its paying agent, pays a coupon rate of interest to the bondholders along with all scheduled and unscheduled principal payments generated by the collateral, as loans are repaid or prepaid.
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This is the trip wire point which Goldman Sachs exploited and which is probably getting them in tons of well-deserved trouble. That is, they were running these CMOs and gamed the payment system which is rather complicated compared to traditional mortgages which are generated by a bank and then HELD by the same bank and not passed along like some viral infection.
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As with other fixed income securities, interest rate movement has an impact on CMOs because it affects prepayment rates, which in turn affect yields. When interest rates decline, prepayments generally increase as many homeowners choose to refinance their mortgages at a lower interest rate and thus reduce their monthly obligation. Conversely, rising interest rates may decrease the volume of prepayments.
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The idea that NO ONE would pay ANYTHING doesn’t occur to the DTCC guys! Nope, they recklessly assume that most people would pay up. Of course, this was at the very beginning of the housing bubble. No one worried about defaults since prices were climbing so people could simply wait a while and then sell their homes and pay off any debts this way. Mostly, they refinanced.
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Recent historically low interest rates have translated into a greater number of mortgage refinancings. As a result, the volume of principal distributions has skyrocketed for CMO issues. In the past two years, the average distribution of principal and interest payments on the 25th of the month, through DTCC’s depository, has gone from $9.5 billion to $26.4 billion, with a high of $38 billion on November 25, 2002. Consequently, the processing challenges associated with CMOs, which have always existed, have been exacerbated by these larger than normal amounts of principal repayments. Adding to the problems is the nearly 95% increase in the dollar value of new CMO and other asset-backed issues coming to market through DTCC, when comparing 2002 with 2000.
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ΩΩThis was the insane ‘double every year’ Derivatives Beast market business. Jumping from $9.5 billion to $38 billion in TWO YEARS is INSANITY. Instead of saying, ‘OMG, we have to stop this freight train,’ the DTCC and the bankers and Goldman Sachs all yelled, ‘Get aboard the CMO express! Whoo-hoo!’ Now, I visited the official Goldman Sachs website to see what they are, that is, how they view themselves.
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We have a responsibility to our clients, our shareholders, our employees and our communities to support and fund ideas and facilitate growth. We do so by investing in people, businesses and our communities around the world.
. Financial institutions have an obligation to the broader financial system. Our industry has much to do to regain the public’s trust and to help mend the financial system. We are working to restore stability and soundness, and to address the underlying causes of the global financial crisis so that growth can resume.
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What GS wants to ‘grow’ is….the Derivatives Beast! And globalization which leads to deindustrializing the US even further, of course. And they want to profit from this fake growth. This is more like a cancer or a poison rather than healthy growth of a living entity.
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Our industry must review its role in the financial crisis, working with regulators to strengthen the financial system and reduce systemic risk.
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Note that Obama has to threaten both the GOP and DNC that if they don’t restrain Goldman Sachs and control the Derivatives Beast, he will veto the finance reform bill. Obviously, GS attempts at reform seem to be preventing this, not enabling this. As for reducing risk: the entire reason we have a Derivatives Beast was to ‘reduce risk’ and it didn’t do this at all.
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The causes of the crisis are complex, but it is clear that financial institutions did not raise enough questions about whether some of the trends and practices in our industry served the public’s long-term interests. Our industry has much to do to regain the public’s trust and to help mend the global financial system.
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HAHAHAHA. I die laughing. Industry practices led directly to this collapse, 100%. Thus, the need to control the Derivatives markets and pass harsh reforms.
. Safe and effective financial markets are essential to global growth and prosperity. We are working with regulators to make the financial system safer. We also need to improve the system’s ability to perform two critical functions: allocating capital to where it will be used most effectively and giving investors the opportunity to participate in markets in an equitable fashion.
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Goldman Sachs is committed to strengthening the financial system.
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ΩΩThey must have gritted their collective fangs to stubs while writing all of this tripe. Obviously, they hope we are fooled. We are neither fooled nor amused. Indeed, they say over and over, they want our trust. Well, do we trust sharks? Or rampaging polar bears? Or politicians? All this whining about trust isn’t making investors happy.
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Goldman drops as much as 15.6% after SEC charge Financial Stocks – MarketWatch
The SEC alleges Goldman (GS 160.49, -23.78, -12.91%) and one of its executives defrauded investors “by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter,” the agency said in a statement.
. Friday’s sell-off in Goldman was the stock’s steepest one-day decline in a year. The last time Goldman shares posted a daily loss of even 10% was April 14, 2009, according to FactSet Research.
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The SEC’s charges are related to a synthetic collateralized debt obligation, or CDO, that Goldman structured and marketed. Those vehicles were among the complex derivatives that played a major role in the financial crisis.
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ΩΩEver since the late 2008 rescue of these criminals when the Federal Reserve sucked down most of the bad paper sold by GS and the other Derivative Beast owners, GS stocks shot up from a low of $50 a share to more comfortable $200 a share levels. Now, it is plunging down by nearly $50 a share. A lot of people who are very, very rich, boarded the GS Polar Express train and thought they were very clever, leaving all the Class A chumps to freeze to death while they all ride first class to eternal wealth. Here is the GS reply to the SEC complaint:
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Goldman Sachs | Media – Goldman Sachs Responds to SEC Complaint
Goldman Sachs Responds to SEC Complaint April 16, 2010 New York, NY, April 16, 2010 — The Goldman Sachs Group, Inc. (NYSE: GS) responds to a complaint filed by the SEC today.
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The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.
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ΩΩThere, that tells it all, doesn’t it? HAHAHA. ’Not guilty!’ says GS. But where are the facts here? I see no information at all. Time to sell any GS stocks, eh? We are often told that this person or that is some sort of genius because they get rich all the time. Nothing could be further from the truth. They are lucky, perhaps. Or unethical. Some actually create wealth via funding and encouraging industrial growth and expansion of markets. But GS is all about making money while even destroying markets or wrecking businesses.
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Buffett’s Goldman Warrants Drop by Almost $1 Billion on Lawsuit – Bloomberg.com
The value of Warren Buffett’s options to buy Goldman Sachs Group Inc. shares dropped by $950 million after regulators sued the bank for misleading clients on the sale of securities tied to the subprime mortgage market.
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The warrants, which give Buffett’s Berkshire Hathaway Inc. the right to buy New York-based Goldman Sachs common stock for $115 a share, were worth about $2.06 billion at 1:48 p.m., down 32 percent from $3.01 billion yesterday. Goldman Sachs dropped $21.97, or 12 percent, to $162.30 in New York Stock Exchange composite trading.
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Buffett, Berkshire’s chief executive officer, got the warrants on $5 billion of Goldman Sachs stock as part of an agreement that extended financing to the bank during the depths of the 2008 credit crisis. The deal reflected Buffett’s belief in “not just the strength of Goldman but its integrity,” Ronald Olson, a Berkshire director said this week in an interview.
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ΩΩHAHAHA. Buffett decided to ‘save’ Goldman Sachs and thought this would make the Oracle of Omaha even more oracular. Instead, he was taken for a ride just like all previous Class A chumps. Warrant (finance) – Wikipedia, the free encyclopedia
In finance, a warrant is a security that entitles the holder to buy stock of the issuing company at a specified price, which is usually higher than the stock price at time of issue.
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Warrants are frequently attached to bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or dividends. They can be used to enhance the yield of the bond, and make them more attractive to potential buyers. Warrants can also be used in private equity deals. Frequently, these warrants are detachable, and can be sold independently of the bond or stock.
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ΩΩThe Buffett warrant is like the entire Derivatives Beast’s Over the Counter business: secretive. And between buddies. Let’s call these guys, Mr. Class A and Mr. Class Clown. The ripples from this particular OTC deal will reverberate throughout the system since Mr. Buffett has lots and lots of money to lose and this is one of a billion reasons why governments should not encourage, allow or enable massive building of wealth held in fewer and fewer hands. I found a DTCC news bulletin which I missed three months ago:
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DTCC › DTCC Receives Fed Approval for Warehouse to be Member of Federal Reserve System
New York, February 10, 2010 – The Depository Trust & Clearing Corporation (DTCC) announced today that the Federal Reserve Board had approved its application to establish a DTCC subsidiary that is a member of the Federal Reserve System to operate the Trade Information Warehouse (Warehouse) for over the-counter (OTC) credit derivatives.
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The new DTCC subsidiary will be called the Warehouse Trust Company LLC (Warehouse Trust). Its regulation is an important step forward in furthering regulatory and industry objectives to bring greater transparency and added risk mitigation to the global OTC credit derivatives market. While the Warehouse Trust will be directly regulated by the Federal Reserve and the New York State Banking Department, it is also expected to be subject to a global cooperative oversight framework involving other U.S. and non-U.S. regulators. DTCC fully supports such a cooperative oversight framework and embraces the concept of regulatory harmonization across borders.
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ΩΩThe name, ‘The Warehouse’ sounds like something from the Mafia. ’Da gang’s gonna use da warehouse in Joisey City to hold da stash,’ type of warehouse. I can hear the sea gulls crying while tug boats float past. If course, Goldman Sachs and the other Mafia families were enraged about their Buffett Class A chump games being regulated or even being noticed and fought furiously to prevent most OTC operations from being put on the register at the Warehouse. Instead, it is being held at the Whorehouse or the Gambling Joint.
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ΩΩI said in the past, all OTC deals stink to high heaven and should be outlawed. The Derivatives market is killing everything except GS:
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Saint-Etienne Swaps Explode as Financial Weapons Ambush Europe – Bloomberg.com
The worst global financial crisis in 70 years arrived in Saint-Etienne this month, as embedded financial obligations began to blow up.
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A bill came due for 1.18 million euros ($1.61 million) owed to Deutsche Bank AG under a contract that initially saved the French city money. The 800-year-old town refused to pay, dodging for now one of 10 derivatives so speculative no bank will buy them back, said Cedric Grail, the municipal finance director. They would cost about 100 million euros to cancel today, he said.
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Funny, how the desperate trap wasn’t explained right off the bat. If anyone noticed these traps, they were told, ‘Don’t worry, there is zero chance of this happening.’ And then, a mere 2 or 3 years later, it happens. ’Oops, sorry, you got to pay up, big time, hahaha, or we will have Vinny break your kneecaps and you will swim with the fishes,’ says the GS sales staff.
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“It’s a joke that we’re in markets like this,” said Grail, 38, from the 19th-century city hall fronted by an arched facade and the words Liberte, Egalite, Fraternite. “We’re playing the dollar against the Swiss franc until 2042.”
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ΩΩAnd all of this boils down to one horrible thing: the floating fiat currency market which props up the totally unbalanced and noxious international free trade scheme. Everyone is gaming the systems and doing this in dangerous ways. The honesty levels have dropped like a rock due to there being no fundamental basis for anything’s value. The entire system is now 100% human-created and is now nearly totally detached from any real things of any intrinsic value, the hedging of one’s bets has led to everyone being exposed to bad bets and the only people who make money this way are the crooks and Mafia guys who bribe politicians to keep these illicit games going so more Class A chumps can be rolled. And pennies can be stolen from orphans and widows via various cruel schemes.
The Brown Shirts were out in force yesterday in Louisville, Kentucky:
“Tea partiers bearing rifles, flags fill park on Tax Day”
“Hundreds of tea party followers, many wearing “Don’t tread on me” flags and carrying signs decrying President Barack Obama’s “socialist agenda”, filled a downtown park….
The largely white, middle-age crowd — including conservative politicians, right-wing radio hosts, vendors selling anti-Obama bumper stickers and camouflage-clad militia members carrying rifles — roared their approval as speakers railed against taxes and spending on government programs to aid the poor.
‘We want our children to inherit a country we still recognize,’….”
Ok, see, this is what I meant by white Jews organizing and preparing for a war against non-Jews. The leaders of the Tea Party and the militias have already been replaced or “reformed” and now they are openly declaring enemies — who are not really the rich and powerful, but the weak and helpless.
The America these people want their children to inherit is a largely white middle-class type of country that is no more, and they are clueless as to how it disappeared.
Note how easily they become putty in the hands of politicians and other warmongering powerfreaks. Those in other states ignore this at their own risk.
I will email the entire article from the Courier-Journal to Elaine.
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ELAINE: I knew it was all over when FOX news took over. When they began pushing this Tea Party thing they turned it into the Mad Hatter’s Tea Party.
I’m sorry. Just go to:
http://www.courier-journal.com
to see the whole story with more photos of gun-toting militiamen and flag-waving “patriots”.
These people are angry not because of the trillions spent on the military, wars, the CIA, dictators, construction boondoggles, and a host of other pork projects, but because their way of life is ending and they cannot connect the dots as to why.
another slap on the wrist from liberal babysitter huffpo
http://www.huffingtonpost.com/2010/04/16/goldman-sachs-fraud-expla_n_540938.html
here’s the real news elaine and crew-
http://www.zerohedge.com/article/swiss-watch-witchhunts-are-here-blankfein-fuld-bernanke-geithner-and-schaprio-all-testify-co
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ELAINE; As time passes, I think Zero Hedge is crazier and crazier. This is a very stupid editorial. The GOP is working hard for Wall Street to prevent any reforms in particular, to the OTC Derivatives Beast. I think the reforms are not nearly enough, I want this business terminated.
China and Russia are continuing to trim their holding in US treasuries as well. This news has been overshadowed by SEC and Goldman announcement also.
http://www.ustreas.gov/tic/mfh.txt
Notice today how like some sci -fi monster, GS when threatened tightens its grip [at least on the mdeia], all markets fell today including the $Cdn .
”on increased risk aversion after regulators charged U.S. investment bank Goldman Sachs with fraud.”
Try to make sense of that ,something that actually has some inherent safety is threatened by threatening GS.
As for derivatives, how about 3/4 of a canadian bank like BNS is securitized mortgage stuff , or ‘financial instruments’ as they are referred to in the annual report, the banks ‘business is to deal in them”.
Of course those are Canadian mortgages that are as good as gold.
Ziff.. Canadian mortgages are not as good as gold. I do not know if you want to research the last time that Canadian RE went stratospheric, but the early nineties was a wipeout in Toronto, from levels that were less bubblicious. The Dearest One thinks that Canada will ride on energy and hydropower. Power utilization is sinking like a stone, and that is after obama threw two trillion of our money into the deficit. What happens when that crack wears off? Real estate in Canada is overpriced by a factor of five. The MBA cowboy and his Flatulence at the ministry of finance bought votes from the block Quebecois by looting Canadian pension with the Halloween Massacre and selling off the looted natural resources to Abu Dabi and China, while tamping the dying manufacturing out East with their globalization idiocy. Mind, that they stole directly from the pensioneers and fenced the loot to foreigners who are far from allies. Also, they cynically played the antipathy between Quebec and Ontario by stuffing the All Hat, no Cattle cowboy from the West down Canada’s throat.
Today, obama finally had enough of Goldcrap’s backstabbing in the crude markets. obama actually thought that Goldcrap was going to put the Helicopter bucks into developing industry. Good call. He knows that the jig is up, unemployment is back and even the lying sacks of shit at the Bureau of Labor statistics can not keep the charade going into the summer. There is no way that we can function with 85 dollar oil, nor can the rest of the world, without printing fake money. How ya doing Hu. They took it as far as they could, but 85 crude is about to break into foodstuffs with a vengeance. Even obama is smart enough to know that we are in planting season, and that people can’t afford to run their combines with diesel at $3.50.
I have thought about what you said. I am here because this site is consistently against free trade and the financial kleptocracy. Her other positions need a little enlightening, imho.
at last the bastards have to answer for something
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had a party at my house today was a blast…
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couple is married 2 kids… both work 40hrs a week do side jobs till 12AM or so in the morning… odd jobs sundays… and HAVE TO GIVE PLASMA so they can buy gas to get to work cuz they dont get paid for 4 MORE DAYS thx to health insurance ‘for the kids 1 is pretty sick’
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they rent and have like 20 bucks till the 20th… I bot the ribs and was like… so you guys glad the bankers are still pulling down 100+k a year in new york to help you pay your bills… shrug…
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shrug omfg eat shit goldman
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http://www.cahrecords.com
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nothing like a bowl of hot soup
Tea Party Patriots are growing by leaps and bounds. We had 40 some Tea Parties just in Pennsylvania last Thursday.
TPP have no leaders, talking heads, nor anointed pundits. The movement speaks for itself. Tea Party Patriots are not for sale.
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ELAINE: How delusional is this???? Huh??? FOX tv runs these tea parties and they are now merely funnels for GOP discontent. As for leaders: hello, Palin, your master who has you on a very short leash.
According to American Public Health Association (APHA – the largest, oldest, and most diverse organization of public health professionals in the world), life expectancy of Americans is 69.3 years old.
Life expectancy in 2003 was 77.6 years old.
We’ve lost 8 years of life in the last six years.
http://tinyurl.com/5qzpcy
The Tea Party is rife with agents provocateur, plovering. These come both from the “commies” and the “fascists.” Remember, the Global Monitary Elite seek, first and foremost, to preserve their position at the top of the humanity heap.
To Ed-M & DeVaul @ April 16 at 10:06 pm
This is the film I referenced several weeks ago. Pertinent to several previous discussion threads and very appropriate today.
It’s called “Don’t Be a Sucker” and was produced by the U.S. War Department in 1947, at at the beginning of the Cold War.
http://www.archive.org/details/DontBeaS1947
Elaine,
Odd that you show the clip from The Godfather. I’ve mentioned a number of times throughout the years how shocked I was to learn that “America was about money – making lots of money.” The first time I’d ever heard that was when I saw this movie as a young adult.
This was so radically different than the America I grew up in and understood. But I was a product of the ’50′s and 60′s – the height of FDR’s New Deal post-WW2 America. We landed on the moon for cryin’ out loud! We had livable one wage-earner incomes thanks to opportunity and genuine reward for innovation, hard work and productivity – nurturing company loyalty and shared purpose. Labor laws were enforced and unions were not regarded as socialist enemies. Our governments and municipalities functioned under responsive democratic taxation systems. Fascism had been defeated so corporatist governance was unthinkable. Genuine separation of church and state existed and televangelicals seemed more like amusing carnival sideshows.
Maybe it was always as “the Godfather” said. Maybe the assassination of JFK, MLK, Bobby K, the Civil Rights Movement, the draft and the Viet Nam War was not a time of great change…only the loss of my youthful innocence. But my loss was shared multi-generationally.
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Congress dragging its’ “centripedic feet”…perfect metaphor!
I heard the term “buckets” on the news a few nights ago referring to Goldman Sachs putting their garbage in separate tranches to peddle to the unsuspecting. There are “anti-bucket laws” on the books, created after the ’29 crash. Will they be enforced? (Goldman Sachs was a lawless pariah after the ’29 crash too.) Just because the Bush administration suspended law enforcement against financial fraud, doesn’t mean the fraudsters got a permanent free pass.
Perhaps GS tanking stock prices are a very good sign. I hope they go a lot lower. Time will tell. Justice is slow and hope springs eternal.
Just heard that Canadians are spending @ 1.45 X income, i respect what Elaine is saying but my question is, how far can a country leverage its advantages. Debt /GDP ? but doesn’t GDP go up with stimulus.
High Frequency Friday: The WSJ Finally Catches On
Has the world gone sane?
I would not be surprised
if GS knew this was coming
and made money shorting
their own stock LOL
After all, they came out
and said they had been
hiding Greek debt and
voila, EMU crisis.
Never let a good crisis
go to waste! In fact generate the crisis, plan
it all out and profit all
the way.
http://seekingalpha.com/article/199122-high-frequency-friday-the-wsj-finally-catches-on
In respect of stimulus and GDP, here is the approximate deal: govt do not create wealth, they take wealth. From Sprott: via ZeroHedge
I still have a deep, deep concern about the leverage in the banking system. I look at the inability of governments who are spending vast amounts of money to generate much growth in GDP. I can give the example of running a $1.5 trillion deficit last year and GDP goes up $200 billion. So we are not getting much bang for the buck but we still owe the buck at the end of the year. I also worry about what’s going on in China. The Chinese government has asked the banks to cool down their lending, the latest data in March show that lending has gone down from $300 billion per month to $100 billion. That’s $2.4 trillion a year less. And obviously it has to have an effect on their economy as the lending of $2 trillion did positively last year. When you look back at China in 2009, they had a $4 trillion economy, they lent $2 trillion to people, they had a $600 billion stimulus: those should generate some GDP growth. I am not even convinced that 10% growth which would be $400 billion is a good response to all the measures that were taken.
@Ziff
Ziff you´ll go mad if you´re trying to think it through GDP
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Look at it this way:
Canada 2009:
Total revenue C$224.9 billion
Total expenditures C$258.6 billion
Deficit C$33.7 billion
Debt C$492.4 billion
Debt interest C$29.5 billion
Deficit 13% of budget
Interest out of revenues 13%
Debt to GDP 72,3%
US 2009
Total revenue $2 105 billion
Total expenditure $3 518 billion
Deficit $1 413 billion
Debt 12 311 billion
Debt interest 381 billion
Deficit 40% of budget
Interest out of revenues 18%
Debt to GDP 86,9%
Greece 2009
Revenues $109 billion
Expenses $145 billion
Deficit $36 billion
Debt $406 billion
Debt interest 20 billion
Deficit 25% of budget
Interest out of revenues 18%
Debt to GDP 108,1%
GDP gives an idea how much is available through tax increases (US can raise taxes 20%, Canada 10% and Greece 0%).
US is worse off than Greece by 2012 without tax increases, Canada doesn´t look as bad. Greece cannot increase taxes so it is the end of the line.
This is my oversimplification
.
Play this Game!
Crack Shack
or
Mansion
http://www.crackshackormansion.com/
typo? if A investors are paid out first
they have LEAST risk. C tranche has
more risk (of not getting interest/principal).
Gt. reporting/website.
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ELAINE: It is truly hard to understand but I will try yet again: the C group collect INTEREST PAYMENTS on loans that pay nearly ONLY interest during the first 5 years. After five years, more and more principal is paid by the people paying mortgages so the A group gets the money the most after 5 years. But if loans go belly-up in less than 5 years, the A group gets ZERO, that is, zilch, while being held for paying ALL of the principal on defaulted mortgages! While the C group pays none of the lost principal. See?
If the crackshack or mansion website is to be believed, this is the worst property madness I have ever seen, makes ours in Australia look normal.
The Trojan horse with the Derivatives Beast inside it has been invited through the gates of the Chinese Dragon…
http://www.reuters.com/article/idUSTRE63F1FS20100416
Oh, you don’t live in Sydney?
JT thanks for the numbers, i think Canada’s deficit is 63 bil. + for 2010. but you are right the mind does glaze over and those numbers somehow understate the problem for the US at least. What bothers me is the Vancouver RE graph is the usual parabola.
Ot; wanna see something creepy?; from Boston Dynamics [like 'massive dynamics' from Fringe]
I imagine Billy more as a resident of the Northern Territory who comes into Darwin once a month to get supplies.
payAttention,
It seems your familiar with the outback?
Good call.
Few things tick me off more than to hear someone say this:
“Everything I know about life I learned from watching the Godfather.”
I cannot tell you how many times I have heard or read someone say that, and each time I want to just blow them away (godfather style, of course).
Those who take pride in having no knowledge of life other than mafia type knowledge should be blown away because they contribute nothing to a sane society and actually work to destroy it.
Most of what I know about life I learned from my grandfather, who survived the Great Depression and WWII. He was the opposite of the Godfather, in almost every way.
DeVaul,
You comments are outrageous, ignorant, and offensive.
If you have a problem with the tea party protesters, you should
argue with their political positions, and lay off the ad hominem attacks.
DeVaul said:
“The Brown Shirts” … Oh, so the tea party people are a bunch of Nazis???
Last time I checked, the Brown Shirts were leftists!
“roared their approval as speakers railed against … spending on … aid to the poor.”
LIAR. The vast majority of tea party protesters are ordinary decent Americans.
Falsely claiming they don’t care about the poor is a DEFAMATORY SMEAR.
“white Jews organizing and preparing for war against non-Jews.”
That is HATE SPEECH. HELLO?????
It would seem that DeVaul, not the protesters, would be the racist here!
“want their children to inherit … a largely white middle-class type of country”
Really? How many of them did you talk to? Last time I checked, they were
complaining about the outrageous government spending, and passing on the
bill as high taxes. Nice of you to put words in their mouths, to make them
look like rubes. Class act, dude.
“These people are angry not because of the trillions spent on … pork projects”.
LIAR. That is EXACTLY what they are mad about.
————————–
To anyone else, I will say that watching this unfold is heartbreaking to me.
Bush/Paulson/Pelosi/Reid outrageously bailed out rich bankers and gave the
bill to the American working class. Obama/Geithner/Bernanke continued the
policy of enriching the banks at the expense of the American people. I would
think that everyone would be hopping mad, and show up in great numbers to
register their disapproval with both parties. The right showed up. The center
showed up. But the left was strangely absent.
Most people on Earth today live under oppressive governments. In the history of mankind,
the majority of people down through the ages have lived under oppressive governments.
What we have in the U.S. – government by the consent of the governed – is VERY
RARE and VERY PRECIOUS. It remains to be seen whether our governmental
form will hold up, or whether it will change back to oppression. Our governmental
form has been highly successful. Women were able to demonstrate and gain the
right to vote. Blacks were able to demonstrate and get rid of segregation. Our
people were able to stand up to our government and get rid of oppression where it
occurred.
All of this is under threat today. Once, we had a one wage earner family, and a
large and healthy middle class. Today, often both partners work, and struggle to
make ends meet. The middle class has kept shrinking year by year under both
Republican and Democrat administrations and congresses. We are moving toward
a society of hyper-rich and poor, and a loss of rights and increase of oppression.
We are changing from a democratic republic into a plutocracy / corpocracy.
A peaceful middle class uprising is exactly what we need to force Washington
to stop serving the special interests and enact legislation that will restore the middle
class. If the middle class changes to be a lot less white, and a lot more hispanic
and black, that is wonderful and only to be expected from the demographics. But
if the middle class disappears, and our government reverts to oppression, then our
generation has dropped the ball, and thrown away the greatest gift given by our
ancestors.
And yet many on the left still seem to believe that their congressmen represent
them and not a bunch of special interests. Even as basic things like tort reform
are kept out of health “reform”. Even as congress bails out the big banks, and
raises the debt sky high while failing to create actual permanent jobs. Even
as we are all screwed. Still somehow, they think that if Democrats retain control
of the legislative and executive branches, everything will be wonderful. If you
believe that, go live in the Chicago slums for awhile, and see what generations
of one-party rule means in practice.
With the current financial crisis, and 9.7% unemployment, we have the perfect
impetus to get all of the electorate marching together. Many people are rightly
angry with both our government and the big banks. It would have been wonderful
to have everyone come together and dictate to congress what legistation they WILL
pass if they expect to be reelected. Rather than letting the special interests decide
on the legislation, and then the politicians putting facades on it to make it look like
they are helping the environment or the middle class. Obama says, “they should
be thanking me!”, even as Bernanke and Geither run the economy off a cliff.
(And the tragedy is that Obama is a LOT smarter than this, and might do the
right thing if he woke up, but is dropping the ball…)
The tea party started out as an independent movement, led by people that previously
did not have a background of political involvement. Some Republicans wanted
to speak at some of the early rallies, and were told no, this is the people’s turn to speak,
and Washington’s turn to listen. Yes!!! But the left wing media attacked the tea
party movements, did not address their concerns, and instead used dirty ad hominem
attacks and vulgar insults to try to discredit a bona-fide grass roots movement. With
the left’s unpopular health care legislation, the movement picked up more people from
the right, moving it farther to the right. While Republicans tried to divert the movement
into GOP support, the Democrats spurned the movement and insulted and denigrated
it. Once the Dem legislators claimed the N word had been used 14 times, even though
with zillions of video cameras everywhere, not one instance of that happening was
found. And so, more and more, the movement has been pulled and pushed into the
Republican camp. Instead of everyone uniting and demanding fundamental changes
from Washington, regardless of which party they are from (bipartisan anyone?),
what we are probably looking at is a hammering of the Democrats in the next election,
and a replacement of Democrat crooks with Republican crooks. All the power of the
movement has been wasted. It breaks my heart.
We have truly let a good crisis go to waste. And it was the left that was asleep at
the switch, not the right or the center. And we may not have that many more
opportunities left. But I am still hopeful. You never know.
Concerned Citizen at 12:08 am
“the Brown Shirts were leftists!”
Actually no they were rightists – corporatists or “fascists” as Mussolini proudly renamed them. Anti-democratic government.
The Brown Shirts were Hitler’s private army that rounded up the leftists – “liberal” socialist college professors and trade unionists – after disbanding Germany’s young constitutional government and its’ army.
What little “liberal” media that does exist today holds no candle to main stream media which is owned by a handful of global corporations.
The Tea Party is the Mad Hatter Party run by that negligent mom, Palin. And she is that party, 100%, thanks entirely to FOX TV and she now openly works for FOX TV and anyone who imagines the Tea Party is anything but a tool of Murdoch should go visit a Tea Party and see how insane these ‘demonstrations’ have become.
The saddest thing about the teabaggers is they are looking to the Republicans for help. That’s kind of like the chickens looking to the Fox (pun intended) for help. Republicans can bankrupt the country with their deficit spending and STILL Republicans can get away with being called fiscal conservatives. It’s all the fault of the liberals. George W. Bush can pass a Medicare “reform” package that prohibits cost controls on prescription drugs and the folks who need this service blame the liberals. I don’t know…maybe the teabaggers deserve their fate.
Both liberals and conservatives make ideological as well as practical mistakes.
Quote from article:
“As for reducing risk: the entire reason we have a Derivatives Beast was to ‘reduce risk’ and it didn’t do this at all.
Comment:
Actually derivatives were supposed to spread risk, which I guess is a form of risk diversification. Like when you diversify investments it can reduce the risk of failure. This Beast was Greenspan’s baby. It was not long after in 2002 Buffett had a conversation with him at a dinner party about these. Buffett knew derivatives tied banks’ risk together and not long after he wrote in his annual letter about them being “financial instruments of mass destruction.”
Poor Greenspan. He’s a broken man. You can see it in his face. Ten years ago they were calling him Maestro and now his name is mud. His name evokes even more negative emotion than does Goldman Sachs. It was inevitable though. Even the wisest man running an economy will fail eventually. Everyone has blind spots. Yet another reason why fiat currencies always fail.
Dibbles said: We landed on the moon for cryin’ out loud
Hahahahah, Hollywood studio is NOT the moon my friend, it’s a studio
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ELAINE: There are many people on this planet who are lunatics. A way to tell if one is sane or insane is to see what people believe. For some reason, people are able to believe in all sorts of insane things while claiming to be ‘skeptics’. A common example is, people who believe aliens from outer space come to our planet to run around, flashing lights while at the same time, these same people believe that humans didn’t go to the moon and walk there!
This sort of thinking is odd in that it is the exact opposite of reality. I figured Wu is of this sort of crazy thinking, I thought I spooked off all the crazy people who used to post crazy stuff.
Wu Wei,
I don’t know how young you are, but I’m old enough to have lived through the Space Race. Stop with such silliness. You sound like an ignorant fool.
@Concerned Citizen,
Now, see, this is exactly what I mean about Jewish Nazis coming out of the woodwork.
My comparison of tea baggers to the brown shirts is my opinion, protected by the First Amendment, but I am guessing Concerned Citizen is really only interested in the Second Amendment, and that is exactly what the militia members always talk about at the rifle range where I often meet them. They do not talk about the First Amendment or any other amendment.
Notice also the screaming of the words “LIAR!!!!” over and over again. If he had said that the Courier-Journal, the newspaper from which I quoted, was lying, then fine, but me?
Under neo-nazi law, if you quote a pro-business, pro-corporate, pro-republican, pro-conservative newspaper like the Louisville Courier-Journal, then you are a “liar”. Not the newspaper, but YOU!
Jews who follow Jehova, god of the Jews, do not like to be called Jews because they reserve this name for a tiny number of orthodox Jews who mostly live in Israel. The fact that they worship the same middle-eastern death god is something they do not want others to know or see. If someone dares to point this out, then he is a racist, an anti-semite, a hatemonger, or any of a hundred other different names.
Jews call me names all the time: pagan, heathen, infidel, satanist, devilworshiper, and so forth, but this does not make them “racists”, does it?
Why?
Jews can always be identified by two rules they always follow:
1) Might makes right, and
2) Do as I say, not as I do.
Everything else is like snow on a TV. You can just tune it out and simply watch what they do. It’s all you need to know.
Elaine,
is the small SEC attack against one of the many crimes of Goldmann Sachs a diversion from this?
http://www.cnbc.com/id/36601719
The SEC was ‘dumbed down’ for many years coinciding with the rise in power of the bankers who used money to influence the government. This is why laws restricting banking were eliminated and note that Stanford is a PIRATE who operated out of a BRITISH ISLAND run by Queen Elizabeth II.
“The Securities and Exchange Commission knew that Allen Stanford was involved in a Ponzi scheme as far back as 1997″. “the scheme was able to continue for so long due to “institutional influences” within the SEC, and the agency’s desire to chase after slam-dunk cases”.
———————————
After having slept for so many years, the SEC suddenly launch an accuation on Goldmann Sacks on the same day that they released a report that revealed their own corruption and turpitude. Methink they hope to deflect the eyes of everyone away from them.
http://www.sec.gov/news/press/2010/2010-60.htm
This is due to the GOP running things for so many years during the bubble. Now, the Democrats will clean it up enough to make it all presentable again.