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Thursday, November 8, 2012

From Matt Wuerker

Copyright 2012 by Matt Wuerker. Used by permission.

Comments (36)

Let see how long that smile stays on. Lockheed-Martin just announced it's laying off 123K people, Boeing said it's laying off 30% of it's management force. A friend of mine that works for one of the largest banks in the country just scrapped a $30 million dollar project due to the additional taxes expected in the new year, and the costs of Obamacare. Steve Forbes estimates between 200-400K lost jobs in the new year, and a new recession (because of it.) Enjoy your Hope and Change folks...

The news cycle is slow catching up with that. Meanwhile there's this from Snopes: "Lockheed Martin never announced that it was planning to lay off 123,000 workers (a number which represents the entirety of the company's workforce).
Read more at http://www.snopes.com/politics/business/lockheed.asp#rbwpjkh14aPRQuGC.99 "

Of course, the prospect of sequestration of defense spending or, heaven forbid, peace, is troubling to the merchants of death.

Non-partisan CBO says that raising taxes on the 1 or 2% will have the least impact on the economy of all the sequestration actions. Oh, and this meme about a return to the Clinton-era tax rates (remember how bad those times were?) somehow resulting in "small businesses" hiring less workers? The rate in question is applicable to personal income taxes where taxable income begins with the net from the business after all employee expenses, wages and benefits, (and a whole lot of other stuff) gets deducted. How, again, does a return to the Clinton-era tax rate for folks with net taxable of over $250k cost a lot of jobs?

Let see how long that smile stays on.

You are one cranky old b***ard. Which is why you lost.

It's funny how all the righties are now insisting that Obama "has no mandate" - I don't recall ever hearing them say that about W, who didn't even win the popular vote the first time around, and whose re-election vote was even closer than Obama's. And he went on a six-year ideological tear that made Reagan look moderate by comparison.

The thing the Obama people have to figure out is that for the next two years, they hold all the cards. O has the White House and a majority of the Senate. If the Republicans want to shut down the government, let them do it. Otherwise, they need to play a lot nicer than they have lately.

And screw right-wing radio. Obviously, that crowd is washed up, unable to get anything done. This was their election to lose, and they lost it, badly.

But POTUS won't stand up to them. He and barnacles like Gatsby Wyden will sell the middle class out, time after time. Oh, well. At least we won't get three more cavemen on the Supreme Court.

The Latinos claim having given Obama the win and now they want an Illegal Alien amnesty as payback or else.

Look, the last mass immigration amnesty was 25 years ago - so what, exactly, is unreasonable about another one? Let's be adults about this and put aside the fantasy of "self-deportation." Millions of undocumented people have built families and lives here since the '80s - they're not going away, so let's get them into the system and then come up with a sensible policy for admitting law-abiding people in an orderly way that acknowledges the political and economic realities on both sides of the border.

Age of Supreme Court Justices at the end of Obama's second term, January 2017:

Antonin Scalia 80Y 10M
Anthony Kennedy 80Y 5M
Clarence Thomas 68Y 6M
Samuel Alito 66Y 9M
John Roberts 61Y 11M

Good health to all of you, gentlemen.

"Lockheed-Martin just announced it's laying off 123K people"

Bullcrap. 123,000 is the entirety of its worldwide workforce. What's your source for that?

Lockheed Martin Not Giving Layoff Notices

"Steve Forbes estimates between 200-400K lost jobs in the new year, and a new recession (because of it.)"

Steve Forbes (prediction genius) 24-hours before the fat lady sang :

Romney Will Win Decisively - Forbes

Gee, I wonder if any segment of the economy is getting bigger? Here's something from the online version of the Progressive Review:

In the United States, five banks control half the economy: JP Morgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs Group collectively held $8.5 trillion in assets at the end of 2011, which equals roughly 56% of the U.S. economy. This data was according to central bankers at the Federal Reserve. In 2007, the assets of the largest banks amounted to 43% of the U.S. economy. Thus, the crisis has made the banks bigger and more powerful than ever. Because the government invoked “too big to fail,” meaning that the big banks will be saved because they are very important, the big banks have incentive to make continued and bigger risks, because they will be bailed out in the end. Essentially, it’s an insurance policy for criminal risk-taking behaviour. The former president of the Federal Reserve Bank of Minneapolis stated, “Market participants believe that nothing has changed, that too-big-to-fail is fully intact.”

Keep banging that drum Bill. Someone needs to.

Wait...Lockhead is going bankrupt? Have we shut down our war machine in order to address the debt? FANTASTIC!

Bill McDonald-----collectively held $8.5 trillion in assets at the end of 2011
JK----------------Who owns those "assets"?

Bill McDonald-----the assets of the largest banks amounted to 43% of the U.S. economy.
JK--------------------Why are they comparing Bank assets to the economy instead of the asset value of the entire country?


A smart man I used to work with, one of those Harvard Phd types, liked to say how odd banks are because they claim as assets what any other business calls liabilities. The assets of banks are fundamentally the proceeds of loans, deposits and investment accounts where there are equal and offsetting liabilities. These days those "assets" are overwhelming moving into US government issued and backed debt, more so than investments producing real economic value.

As Mr. Karlock suggests, it is misleading to compare assets (a stock) to the size of the US economy (a flow). They are entirely different concepts. I would love for my economy (approximated by my income) to equal my assets (home equity, the value of retirement accounts, investments and bank deposits), but if it did I would be broke tomorrow, kind of like the path we are headed down with the all conquering hero in the Oval Office.

CBO doesn't do dynamic scoring. They assume every tree falls in the middle of a forest and nobody notices. If you pay attention to their forecasting record, CBO's predictions are actually atrocious.

As for where the economy is headed, it is obviously weak. The most recent tidbit that caught my eye was that McDonalds' same store sales were down last month -- worst monthly performance in 9 years. No doubt the foodies (who think no one notices them sneaking along the drive-thru) will claim a cultural shift but shifts to that degree don't happen overnight.

Newleaf, you're overlooking a major factor impacting those figures: the new Doritos nacho cheese shell for tacos at Taco Bell.

Got to admit ignorance on that Jack. We are a Taco Del Mar family -- influence of the kids.

I figured someone would call me on the methodology. I don't understand it either or vouch for it. I just took it as a sign that whatever the size really is, it has grown since the crisis. My sense was that this article makes it sounds like the banks are much healthier than they really are.

That dovetails with other data I've seen: specifically that the size of the derivatives balloon has grown from 600 trillion to 700 trillion since the crisis started.

Here's the link:


Iran's fighter jets fired on a USAF Predator Drone in international air space on November 1st. The news was released November 8th due to national security concerns. To wit, the campagin to re-elect President Obama.

American security and the safety of Americans abroad suffer when an Ambassador is murdered and aircraft are shot at without consequence.

"American security and the safety of Americans abroad suffer when an Ambassador is murdered and aircraft are shot at without consequence."

Pfft - no evidence of this whatsoever. Here's another talk radio point that has absolutely no substance.

I've noticed, over the decades, that most people don't understand anything about the banking business or finance in general. Which is, I suppose, why a very few are able to make money so easily in that area.

Not to leave you out: I think the mystery in the article is when it says the banks "control" over half the economy.
I think what this says is that the size of the banks is such that 5 of them control the markets. They don't just play the markets. They run the markets. They control the markets. They can decide how the markets will act so they can benefit from that information to continue getting even bigger.

Looking for more information I stumbled on a nice little paragraph that says it all about derivatives:

On the issue of complicated financial products developed by Wall Street firms to manage risk, Stiglitz was blunt: "I cannot find a social good in complex derivatives. They were designed to manage risk, but they actually increased risk." Some countries, he notes, don't allow them.

This is an article about Nobel Prize winner Joseph Stiglitz from several years back. It also says:

Stiglitz blasts the use of complex derivatives, which he says go against "the social good," and he reserves special contempt for Goldman Sachs and the $13 billion injection it received from the U.S. as part of AIG's counter-party bailout last year.

This is why they should have taken James Carville's line and modified it to get the American People headed in the right direction on understanding what has befallen us: "It's the derivatives, stupid."

That should have been on car bumpers around the country.

"You are one cranky old b***ard. Which is why you lost."

Romney wasn't cranky. Reagan was a chipper gipper; they said that's why he won. Personally I did not like him, his policies, or the GOP since. Wasn't that where the religious right sowed its roots, also the rise in military spending?

Of course I don't like the DP either, not much of a whit. So I guess I really am a cranky old b***ard.

I've decided to cheer myself up by cheering China on. That ancient civilization may well bury us without a single bullet or shovel.

How's that for cheery.

Wow, everyone's up this morning. I've got a case of comment hop when you seem to be ignoring someone right above you:

David E Gillmore,
As far as "people not understanding anything about the banking business or finance in general" - I understand more than I did when this started.

My attitude has always been that I really resent the suits for screwing this up. I had no desire to learn about it, but felt compelled to when I noticed that the credit markets had frozen up completely just before TARP.

I would have preferred that all you people out there who did know about this stuff, had done a better job of protecting us from chaos. Frankly, when I first learned about the size of the derivatives exposure (600 trillion) I thought that couldn't possibly be true. Nobody would be stupid enough to let that happen. But it turns out all the hot-shot financial experts did, and I resent the hell out of them for doing their jobs so poorly.

I also sensed that if we didn't prosecute the people behind the biggest fraud in history, things would only get worse, and they have.

Yesterday's discussion made me think of a whole new angle. It's based on the ratio of results to costs. For example, all these derivative sales were driven by a bunch of greedy Wall Street types just trying to get sales commissions and big annual bonuses. That's what drove the whole thing.

President Obama probably figured that he'd need the Clintons help to get re-elected. He certainly needed to protect the Democrats brand. Maybe Obama didn't go after derivatives fraud because Bill Clinton would have his image damaged as this great president who did everything right, and the Democrats would suffer. Could it really be so petty and political?

Just a theory.

Bill, Obama appointed Geithner as Treasury Secretary. This isn't petty politics.

Mr. McDonald: The fundamental problem that drove the meltdown was too much debt and its cousin, not enough savings/capital to buffer losses. "The Big Short" is a great book and an interesting read, but it doesn't begin to assess the macro causes for the meltdown. Consider Lewis' treatment of the much harder landings in Greece, Ireland and Iceland in "Boomerang." The tools of delusion and destruction were different in each.

The commonality across countries, besides too much debt and not enough capital, were government support of economically unsustainable investment, inadequate disclosure and excessive insider trading. The transactions which exposed these weaknesses involved derivatives in the US -- different components of financial markets froze up in other countries.

The necessary regulatory answers are to reduce concentration in the banking sector, require disclosure, structually separate components of the finacial system (ala Glass Steagall, thank you for being idiots Bob Rubin, Larry Summers, Bill Clinton, Phil Gramm and Alan Greenspan), and get government out of the stacking the economic deck game.

"Pfft - no evidence of this whatsoever. Here's another talk radio point that has absolutely no substance."

Let me put it into terms you may find easier to understand.

When City Hall misappropriates funds from the Water Bureau to spend on one of Randy's misadventures (Loos, Rose Festival, bike paths), AND NOTHING HAPPENS, is he more likely or less likely to do it again?

When a 5th grade bully steals your kids lunch money, with impunity, is he likely to continue doing so?

When a foreign air force attacks an American aircraft, and there is no retaliation, is it more likely/less likely to occur in the future?

Too much debt is obviously a problem. Just the wording says that. But what happened was that derivatives turned a bad bet into a catastrophic bet. The trigger was the housing implosion but then all the security swaps - the insurance that relied on the housing bubble to continue and grow - were triggered.
These security swaps - derivatives - were fraudulently rated triple AAA when the Street knew, in many cases, they were junk. The Street often bet against them while selling them - that's the reason they fight so hard not to be responsible for advice they give out. They want to advise you to buy something, bet against it themselves, and then have no responsibility for advising you in the first place.
It all adds up to fraud - especially the triple AAA rating.

What I didn't realize until recently was that I was viewing the federal government as some unwilling agent of the People that had just been bought and compromised.

I should have known that politicians are selling the idea they are good stewards so they are just as invested in not telling the People what Wall Street did, as Wall Street is.

This is not to say they weren't also bought.

Oh, and there is that ugly little fact that if the People really knew in their hearts, minds and guts just how far into trouble this has gone, then that alone would destroy the economy.

That's also a rule of politics: Don't talk down the economy. Everything's slowly getting better, right?

Oh, well. At least we won't get three more cavemen on the Supreme Court.

Let's hope that's not all we get out of this--maybe we will be pleasantly surprised this time?? Hope/Maybe isn't much, but Supreme Court nominations are.

"Cranky old b******": Spot on as usual, Jack. However, nothing would please me more than the furture proving me wrong. I hope Obama has a wildly sucessful second term. I hope 20 years from now folks are still talking about how he fixed the economy, brought bipartisanship back, eliminated the national debt, and managed to untie the nuclear Gordian Knot that is the middle east. I hope all of this, and more, for him (and our country.) But, the prospect of this seems very, very remote. As I said, I hope I am wrong.

Since the dawn of the atomic age, we've sought to reduce the risk of war by maintaining a strong deterrent and by seeking genuine arms control.

Deterrence means simply this: making sure any adversary who thinks about attacking the United States, or our allies, or our vital interests, concludes that the risks to him outweigh any potential gains. Once he understands that, he won't attack. We maintain the peace through our strength; weakness only invites aggression.

-President Regan, 1983 ("Strategic Defense Initiative" televised speech).

Banks? Thieving banksters? Don't forget Jon Corzine. Customers are still missing their $1.6 billion, and he's free as a bird. He supported Romney, right?

James Johnson, the man who radicalized Fannie Mae (and lobbied Congress to break the mortgage system), was also heavy into O's 2008 campaign. Rich and retired.


Sorry Denizen,

Jon Corzine (the disgraced former Governor and Senator from New Jersey) is still an Obama fundraiser and supporter. He was also the rumored Treasury Secretary nominee (to replace Geithner) until MF Global went bankrupt.

He's may need a pardon soon. And he usually bets on winners.

Thank you Mister Tee, that was rather my point. =-) Sorry if my juxtaposition wasn't more cleverly written.

He was Obama's top bundler, and he is the poster boy for criminal Banksters -- he made $1.6 billion in client money (not just house money) disappear, and he didn't get so much as a parking ticket.

James Johnson was a mover and shaker in the 2008 Obama campaign (and briefly the head of the VP search committee), and he single-handedly turned the secondary mortgage market into his personal playground during the Clinton administration.

Point being that there are as many richy rich types on the left, as on the right. Eight out of the ten wealthiest counties in the U.S. voted Obama this time around. Party of the regular working people, eh...

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