Here are three articles related to the subject line.
You might find the first two interesting
and the third one amusing (… or not).
1) By Ezra Klein, Washington Post, 23 April 2010
2) By James Kwak, BaselineScenario, 4 May 2010
3) By Anonymous (parody?), FTAlphaville, 30 April 2010.
-RichardH
In the late 1960s, I was in a cafeteria in Texas that specialized in Mexican food. A lady behind me in line asked me for my recommendations for food.
When I told her that I didn’t have any better ideas about the food than she did, she became irate. She said that she was proud of her heritage and I should be proud of mine. What do you suppose she was thinking?
Good thing she didn’t have a badge
Follow this link to the AP story run in the Worcester T & G on April 10, 2010.
This story was the subject of a misinformed letter to the editor published on May 4, 2010.
My response to the letter was:
You can depend on the AP’s unbalanced summary of Daniel Mudd’s testimony, you could depend on my unbalanced selection of quotes, or you could read his prepared remarks in their entirety at http://fcic.gov/hearings/pdfs/2010-0409-Mudd.pdf.
Here is my selection of quotes.
Maintaining the delicate balance between profitability as a private company and service to the public mission became impossible.
The GSE’s role in the housing market is not to originate mortgages – their role is to acquire mortgages originated by others in order to provide liquidity, increase stability, and to assist in providing affordable housing to the American people.
That balance included a fiduciary responsibility to our investors – the shareholders to whom the government sold Fannie Mae in 1972 …
… Fannie Mae’s market share fell from its historical level of approximately 40% to nearly 20%, as the private sector including banks, Wall Street and mortgage specialists entered the market.How could an entity whose market share was cut in half be the cause of the problem?
Fannie Mae did not accept every type of mortgage that was originated by the market. Wall Street and other private subprime and Alt-A mortgages have default rates that have significantly exceeded those of Fannie Mae-guaranteed subprime and Alt-A loans.
Perhaps we should have gone to the government and gotten a clear answer to the question: Do you want more capital or more lending?
The GSE’s were asked to take a lead in providing modifications. They were asked to provide warehouse loans by lenders who had previously screamed ‘foul’ at the idea of Fannie or Freddie entering the market.
The story is more complex than I have been saying (or the AP has been saying), so it does pay to read the entire testimony.
In the 10 May 2010 issue of The New Yorker, Malcolm Gladwell writes Pandora’s Briefcase, a review of Ben Macintyre’s book, “Operation Mincemeat.” It is the retelling of the “William Martin” story and the deceiving of German Intelligence during WWII.
“They know you know they know you know.”
In my youth, I first read about “Operation Mincemeat” in Ewen Montagu’s 1953 book, “The Man Who Never Was.” Montagu was one of the “creators” of “William Martin.”
Note: New Yorker links eventually disappear behind its paywall.
-RichardH
Follow this link to the article in OpEdNews.
Can any of my readers verify the description of European capitalism as found in this article?
The article highlights the role that workers play in the management of European companies. It also highlights the standing of European companies in the global economy.
Much of what is presented here is a surprise to me.
Is it a surprise to you?
If we tried to adopt some of the policies that has made Europe a success, the Tea Cuppers would throw one mean hissy fit. That probably means we are doomed to suffer with our current system because we wouldn’t want to upset the 18% who have the guns.
Follow this link to the story posted on the McClatchy web site.
This is a two parter. The first is a video on the practices of granting so-called “liar loans” mortgages. The second is the text of the article about Goldman Sachs’ short bets on the mortgage market.
Goldman’s “short” bets, which it began to place as early as 2005, were carried out using insurance-like contracts known as credit-default swaps. Goldman would pay an annual premium that usually amounted to 1 to 2 percent of the face value of the contract but collect big if the securities collapsed.
There is one connection that the article fails to make. I suspect that a good part of the credit-default swaps were bought from AIG. If you recall, AIG did not set aside enough capital for the amount of insurance it sold. The federal government had to bail out AIG to the tune of many billions of dollars. The recipients of those billions were companies like Goldman Sachs.
So not only did Goldman Sachs sell junk investments to its clients, but it also made even more profits from its credit default swaps eventually funded by the taxpayer.
According to Wikipedia
Henry Merritt “Hank” Paulson, Jr. (born March 28, 1946) served as the 74th United States Treasury Secretary. He previously served as the Chairman and Chief Executive Officer of Goldman Sachs.
Also to be noted is that it was Henry Paulson, in his role as Treasury Secretary, who insisted that the clients of AIG had to be made whole to prevent a world-wide disaster. Paulson certainly knew how much Goldman Sachs stood to benefit. It was well known publicly. Does it matter whether or not he knew how Goldman Sachs came to be in this situation?
I wonder if there is any way for the taxpayers to get some of this money back.