Blog on the Run: Reloaded

Saturday, October 17, 2009 12:51 pm

Financial roundup, or, The road to perdition

Filed under: I want my money back.,We're so screwed — Lex @ 12:51 pm
Tags: ,

A quick run through some financial/economic items, searching for an overarching theme:

  • Elizabeth Warren, the TARP overseer, on how we got into this:

    Thanks, Hank.
  • Well, sure, the stock market’s up. “Giving people $23 trillion in taxpayer money, especially the banks, it makes their stock price go up.”
  • The criminal complaint against billionaire Raj Rajaratnam for $20 million in insider trading, supposedly one of the largest such cases ever, merited a brief inside today’s News & Record. But it included a detail that should have been front-page news everywhere: the inside information apparently came from the securities-rating firm Moody’s, which has a government- granted near-monopoly on rating the safety and quality of investments — and which rated quite highly some mortgage-backed securities that turned out to be crap. Here’s the thing that worries me: The odds are heavily against this being an isolated case; corrupt organizations are seldom just a little bit corrupt. And if it has happened at Moody’s, it probably also has happened at Standard & Poor’s, the other big securities rater. Say it with me, kids: Rigged. Game.

    UPDATE: McClatchy Newspapers opens up a can of whupass on Moody’s, and it’s at least as bad as you thought:

    As the housing market collapsed in late 2007, Moody’s Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

    A McClatchy investigation has found that Moody’s punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

    Instead, Moody’s promoted executives who headed its “structured finance” division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: “toxic assets.”

  • The banks continue to behave like suicide bombers, threatening to blow up the economy if we don’t allow them to keep lying for years about how much their busted investments are worth. It’s past time to call their bluff.
  • I can’t tell if this is actually happening — surely it’s illegal for a real-estate agent to do this — or if it’s an Onion wannabe, which probably says something about the times in which we live, but here’s a guy who’s short-selling his neighbor’s house.
  • The Securities & Exchange Commission has just hired a former Goldman Sachs employee as — wait for it — chief operating officer … of its enforcement division. A 29-year-old former Goldman Sachs employee. Well, we’re definitely gonna be locking up some banksters now. Right?
  • And, finally, Matt Taibbi points out what anyone who doesn’t work on Wall Street or in Washington already knows: The health of Wall Street no longer has a damn thing to do with the health of Main Street:
  • I watched carefully the reporting of the Dow breaking 10,000 the other day and not anywhere did I see a major news organization include a paragraph of the “On the other hand, so f—— what?” sort, one that might point out that unemployment is still at a staggering high, foreclosures are racing along at a terrifying clip, and real people are struggling more than ever. In fact the dichotomy between the economic health of ordinary people and the traditional “market indicators” is not merely a non-story, it is a sort of taboo — unmentionable in major news coverage.

Once upon a time, the health of Wall Street was determined by the health of Main Street. Somewhere along the way, we as a country decided it was a good idea not only to decouple the two but also to let the health of Wall Street be, really, all that matters. You don’t hear or see any discussion in the mainstream media about the need to alleviate the current unemployment crisis, in which the real unemployment level is substantially higher than the official number. In fact, you hear official Washington accepting as if it were fact that there’s nothing to be done and that unemployment must stay this high for years.

Maybe that’s the overarching theme of these disparate anecedotes and data points: The class war is over, the rich have won, screw you, Jack, you’re on your own.

  • Regular readers know I believe we didn’t get where we are without massive amounts of fraud. Someone who knows a lot more about this stuff than I do agrees — and says that, despite all the optimism you’ve been hearing (and the absolute joy about the Dow cracking 10,000 again, albeit with the dollar worth 25% less than when it happened the first time), this stuff is nowhere near over:

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    2 Comments

    1. That’s a lot better than what I had. Note to self: never use Glenn Beck to make my point.

      Comment by Fec — Saturday, October 17, 2009 7:41 pm @ 7:41 pm

    2. Fec, Glenn Beck is nothing more or less than The Onion’s most audacious and successful project to date. They have infiltrated a major cable-news network and made it an object of (even more) intense ridicule. You weren’t the only one punked by this, so don’t feel bad.

      Comment by Lex — Sunday, October 18, 2009 12:26 pm @ 12:26 pm


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