My Bank Is Involved in State-icide


As Greece’s financial condition has worsened,
undermining the euro, the role of Goldman Sachs and other
major banks in masking the true extent of the country’s
problems has drawn criticism from European leaders. But
even before that issue became apparent, a little-known
company backed by Goldman, JP Morgan Chase and about
a dozen other banks had created an index that enabled
market players to bet on whether Greece and other European
nations would go bust.



What The Stress Tests May Show

I think stress tests on the banks are going to be a continuing saga of gloom that will further sour the public on high salaries for incompetent management. This from Obsidian Wings is conclusive, even if it is extreme. FULL SOURCE

Hilzoy writes:

I have been hearing for years and years about how the financial services sector pays such exorbitant wages because the people who work there are so immensely talented that they are cheap at $50 million a year. I never particularly bought that line before. But I never imagined that all those Masters of the Universe would do quite this badly. If we had paid them $50 million a year to go far, far away and leave our financial system alone, it would have been a bargain.


Food for Thought on The Banks

From Simon Johnson, quoted by Economist’s View:

How then do we really privatize? By exercising leadership: take over insolvent banks and immediately reprivatize them. … The taxpayer retains a significant number of shares (or the option to buy common stock) as a way to ensure upside participation…

Above all, we need to encourage or, most likely, force the large insolvent banks to break up. Their political power needs to be broken, and the only way to do that is to pull apart their economic empires. It doesn’t have to be done immediately, but it needs to be a clearly stated goal and metric for the entire reprivatization process.



Best Film Review of The Day: The International



The timing of the film’s release is interesting, in light of the current banking crisis and the plethora of financial scandals. From what I understand, screenwriter Eric Singer (no relation to the drummer from Kiss) based certain elements of the story on the real-life B.C.C.I. scandal. I predict that this will become the ubiquitous new trend in screen villains-the R. Allen Stanfords and Bernie Madoffs seem heaven-sent to replace Middle-Eastern terrorists as the Heavies du Jour for action thrillers. You can take that to the bank.


What? Nationalize Everything?

OK, so Greenspan is now saying nationalize the banks? If so, what else? Amazing. Hmm. Follow Once. Follow Twice. What is Third? Who’s on first? Are you confused? Join the club.