State Banking, Globally

 By Simon Johnson

A standard refrain from U.S. banking industry lobbyists is “you cannot put us at a disadvantage relative to our overseas competitors.”  The Obama administration has largely bought into this line and cites it in public and private as one reason for opposing size caps on our largest banks and preventing Congress from raising capital requirements.

The US Treasury puts its faith instead in the Basel Committee on Banking Supervision process, a somewhat murky convocation of bank regulators from various countries that has a weak track record in terms of setting sufficient prudential standards (also the assessment of Dan Tarullo, now an influential Federal Reserve governor; disclosure, I have a part-time position at the Peterson Institute, which published his book).  But, the official US reasoning goes, the crisis of 2007-08 was so traumatic, our European counterparts will now want to be more careful.

The problem with this approach is that there is a fundamental and widening gap between how banks are seen in the United States compared with other leading countries.  To some extent this is about tradition – from the early 19th century the US has a long history of suspicion regarding the political and economic power of banks, whereas Germany has tended to have a more cooperative relationship between the state and big banks.  It is also about what we think government should do – our “pro-banking” group in government draws a lot of support when it insists that the federal authorities should not run banks, but in France there is much less reluctance to mix politics and financial business.

All of this matters because if a government stands behinds its banks, those banks need much less capital in order to be viable.  Capital is a buffer against losses – it represents the shareholders’ wealth and as such “absorbs” the damage caused by bad loans or disastrous purchases of securities.  If a bank’s capital falls to zero (or below), it is out of business – unless it can raise new capital, which would typically be hard to do from private markets for a failed bank.

But if the state stands behinds its banks, it will be more willing to “inject” capital as needed.  Government officials may not want to do this as a matter of routine – primarily because that would worsen the moral hazard problems of the banks’ management, i.e., they would have no incentive to be careful.  It could also be politically unpopular to provide too much support in this fashion.

Still, there is no question that while we wait for the public results of the European bank stress tests, the relevant governments are making it quite plain that their big banks will not be allowed to fail.  We shall see if this commitment comes with more effective corporate governance and personnel changes than was the case in the United States – when the top 13 Bankers (and almost everyone else in leading financial institutions) were bailed out unconditionally.

In any case, the global competitive landscape is changing unambiguously.  Despite all the obvious incentive problems in the eurozone writ large (including irresponsible lending at many levels), the state is not retreating from banking in Europe – on the contrary, it is becoming more deeply committed.  Under these circumstances, the Basel process is even less likely to lead to a meaningful increase in capital requirements.  Even if the headline numbers look reasonable, there will be so many exemptions and exceptions – at European insistence – that the ultimate outcome will not put stronger buffers against loss into big global banks.

And onto the global scene now burst the Chinese banks, loved by the markets and backed by the state  (as seen in this week’s IPO by the Agricultural Bank of China).  To be sure, there is a governance structure around these banks that has worked after a fashion within China.  But whenever banks go global, they tend to slip outside the domestic constraints that have worked well – remember what happened when Japanese banks went on a global buying spree in the 1980s; this is also a potential issue as Canadian banks expand internationally.

What does this mean for US-based global banks in the aftermath of the Dodd-Frank financial reform bill?  Their leading foreign competitors are backed by creditworthy governments, e.g., Germany (and arguably some other eurozone countries) and China.  Without question, this provides a form of nontransparent, unfair, and dangerous subsidy to those financial sectors.  How do we compete on this basis?

To some degree, of course, we have followed suit – although our government guarantees for Too Big To Fail banks are arguably more hidden and more dangerous than what we see in Europe.

But is this really where we want to be?  When hidden subsidies are provided to various nonfinancial sectors in our trading partners, we take that up with the World Trade Organization.  Banking has not, until now, been seen in the same terms – the idea was that we could get sufficient convergence through other means, including the Basel Committee. 

With the European and Chinese states on course to back their global banks for the indefinite future, this traditional approach increasingly seems unappealing.  Either we will play in the same state-backed banking space (and face the dangerous consequences) or we will need to think about the international basis for trade in financial services from a new perspective.

An edited version of this post appeared this morning on the NYT’s Economix; it is use here with permission.  If you would like to reproduce the entire piece, please contact the New York Times.

41 thoughts on “State Banking, Globally

  1. The notion that America needs to keep drinking enough poison that it’s “competitive” with foreign poison-drinkers is clinically insane.

    What should be needless to say, this finance sector which produces nothing, which only riots, loots, and vandalizes everything in sight, is nothing but poison which needs an absolute purgative.

    If the rest of the world still wanted to tread the path of suicide, let them. We’d be free.

    (At the moment that great goal seems further away than ever. But the next, far bigger crash and far greater skinning alive of the people will come soon enough. Is it possible next time people will actually learn a lesson?)

  2. The so-called ‘currency wars’ are in full force. Team Obama is Team Wall Street. The financial terrorists are America’s allies in the war to stay the dollar as the prevailing reserve currency and are the driving force behind the nation’s foreign policy agenda. The financial terrorists rule the United States. The government is a mere proxy. The Federal Reserve is now fighting to subvert other currencies to preserve the dollar. This war doesn’t have a Geneva Convention.

  3. What I find very very bothersome is Ben Bernanke’s U.S. taxpayer subsidization of the Corrupt European bankers, through his “QE” payments to the European Central Bank (ECB) and the Swiss National Bank (SNB). (Or “Loans”, whatever you want to call the “QE” he is handing over).

    And what is very scary about it is his ability to do that nearly totally off the radar screen, without the knowledge or even a glance up from the general public. This is extremely extremely dangerous. Another thing that is interesting to note, is that only after he handed over Billions to the corrupt European banking system, did Bernanke and Geithner think to ask for an “audit” of the European banks and an extremely half-assed audit at that.

  4. Relax. Banking products are just becoming the same race to the bottom that every other product in the world does as a result of globalization. Pretty soon you’ll have currency that’s just as useless as the Chinese-made crap you’re trying to buy with it!

  5. Of course, they are not really “our” banks and “we” has no meaning. These are trans-national entities selling trans-national capital. It is time to recognize that “we” have no meaningful stake in them, and they are beyond “our” regulation. This generalization continues to obscure the problems faced by individuals constituting the majority who have no ownership in the wealth of “our” society.

  6. “All of this matters because if a government stands behinds its banks, those banks need much less capital in order to be viable.”

    Can you spell TBTF, boys and girls?

  7. Last week Mark Thoma put up a post in relation to Fin-Reg, expressing his faith in regulators..Good luck !

    The ongoing farce of the European bank stress tests, imho, just illustrates the repeat of ‘regulatory capture’ or W.Black’s ‘control fraud’, while some bank studies published by the FT show that some major European banks, among them Credit Agricole, do not meet the Basel III Standards..
    So what happens ? The banking lobby manages to have the can kicked, and banks will have until 2012 to adjust.
    One even got to hear Olli Rehn, one of the European commissioners,the Monetary Commissioner, declaring publicly that the European SPV could be used to
    help the banks…

  8. Haha, funny. I’m not quite that anti-globalization, but I have to say your words ring very true to my ears (if I can use that phrase on a blog thread).

    You know when I was in university as a business major, they pounded that stuff into my head about NAFTA and free trade and they actually had me believing it for a short period of time. Comparative advantage and that highly intelligent Hebrew Mr. David Ricardo. You know, the Germans making the beer, and Americans making the cholesterol packed hamburger, the Chinese making nice cheap silk suits. And when you lose those jobs you get it back with the cheap consumer goods. It all seems to make perfect sense….

    Until one day you wake up and realize 90% of your country’s jobs are minimum wage service jobs (McDonald’s and Wal-Mart) with no benefits, or you can go get your head shot off in the Mid-east. How are you going to buy products when you can’t pay your utilities, much less the doctor and the dentist with no medical coverage. Well working at McDonald’s is wonderful, you can still by that Chinese toy with lead poisoning for your 4 year old.

    But no need to worry you have Nobel prize winners (you know like Scholes and Merton who drove LTCM hedge fund into the toilet) telling you NAFTA is wonderful, and Dick Cheney (the guy with FIVE military deferments) telling young men to go get their arm and family jewels blown to hell so they can be heroes for their country.

  9. I don’t think anything I said above in my filtered comment crossed the line. I hope it will be cleared inside 24 hours.

  10. Hard to improve on this assessment, Russ.

    Yes, all attention is focused on the needs and demands of the banker and rentier class, that and the perceived needs of Israel. To our rulers, the people serve two functions primarily: (1) to provide the wherewithall to socialize the losses attendant to banker risk taking and (2) to serve as the cannon fodder to cover the expansionist ambitions of Leibermanite Israel. And it was once said that Leninism was unique in conducing a war against the populations it governed.

  11. From PBS News Hour last night – CHRISTINE LAGARDE: The economic policy that we are adopting with that rilance, with a bit of cutting deficit on the one hand, a bit of stimulating growth on the other hand, is a constant fine-tuning exercise, because we want as our first priority economies to develop value and to create jobs. And this is my constant obsession: How are we going to create jobs in Europe?

  12. Time to DE-Globalize.

    Time to DE-Centralize.

    Time to create an alternative to the debt=money paradigm.


    The answers are simple.

    The implementation is difficult – basically David (main street) vs Goliath (bigCorp, banksters, bigGovt).

  13. Reading your comment led me to think about Atlas Shrugged. While I’m not a raving fan of Ayn Rand, she (like other philosophers and “worldly philosophers”) made some good points.

    Isn’t the only real solution to create an “alternate reality” similar to Galt’s – withdrawing as much as possible from the fixed-n-faux system and creating alternative intentional communities based on different values and with different monetary systems. I may be dreaming, but barring complete destruction of the world, I see this as the final outcome, sooner or later.

  14. Just last week Deutsche Bank released a stunning critique of the United States “FIN-REG” – in stark contrast, the ECB’s (pretty much speaks for the European Communities) outlines a somewhat sanitized watered-down controversial analysis that clearly defines Neo-Central Banks divergence globally:____#1) Decrease in Bank Lending; a)contrains recovery of securitization markets: b)global regulatory arbitrage opportunities; c)New York based Wall street business less competitively globally.___#2) Drag on United States Economic Recovery; a)less liquidity in key financial markets including,__(1a)dirivatives (2a)foreign exchange (3a)commodities___#3)Encourages flow of “Risk and Capital” to less regulated jurisdictions…either “Outside the United States” or in the “Shadow Banking System”.___*I would be very concerned personally about #3 as it seems the US Regulators (all umteen hundreds or so?) are actually forcing their (US Banks) hands to move home-grown growth offshore increasing the already risky globalization trade. Thanks Simon, and James and “Never stop the Good Digging for America’s Sake”

  15. Annie wrote:

    “And this is my constant obsession: How are we going to create jobs in Europe?

    One might ask the same of other countries.

    California To Government Workers: It’s Minimum Wage For You, $7.25 an Hour

    July 8, 2010: 12:53 PM ET – excerpt

    NEW YORK ( — “A year ago, California dealt with its budget crisis by handing out hundreds of thousands of IOUs to contractors and taxpayers. This year, it’s threatening to cut state workers’ wages to the bone.

    Most of California’s 240,000 state employees could see their salaries temporarily cut to the federal minimum wage ($7.25 an hour) because government officials can’t reach agreement on a new fiscal-year budget for the financially troubled state.”

  16. Not to worry. Benny has a plan. I suspect that this is a ‘trial balloon’ story that the Fed sends out as a means of informing its constituents about the likely paths of it policy, to solicit feedback and prepare the way. From the Washington Post.

    Federal Reserve weighs steps to offset slowdown in economic recovery
    By Neil Irwin
    Thursday, July 8, 2010

    What is most disappointing is that they are considering the obvious, and more of the same.

    The cutting of the interest paid on reserves to zero is something which I have been predicting for some time, despite serious wonkish scoffing from some economic circles that I will not shame to mention. No, it is not a useless or meaningless thing to do.

    That will be a real move to ZIRP. But it also removes a welfare payment to a few of the Too Big To Fail Banks which are still remarkably insolvent and running on unsustainable business models, so the Fed will proceed slowly. That is the real ‘technical issue.’ The Fed never paid such interest before, so to say now that it is a systemic requirement is a bit disingenuous. It is a requirement if your system is broken, and not in the process of being fixed.

    As for tweaking their wording, OMG. Benny is losing confidence fast. In the last few statements the Fed was largely talking to themselves. In the second part they make a great deal of playing to foreign creditors. That makes more sense, but we are clearly in that endgame.

    China does not buy Treasuries because they enjoy the returns on their bonds. They buy them because it is part of the policy of currency manipulation to subsidize their domestic economy. When they decide to stop they will stop. And that goes for the oil states as well, with slightly different motives.

    More monetization, the buying of existing debt, gets down to the heart of the program, their game plan, but note please that this is just a way to subsidize the creditors, keeping people in houses that they cannot afford almost at any interest rate. The principal still reflects bubble pricing, and must be reduced. The associated debts will have to be written off, not refinanced.

    The Fed is still acting primarily in the interest of the Wall Street banks, and Timmy and Larry are they yes-men in the government.

    Based on what I am seeing, when push comes to shove, Benny is going to print, and devalue the dollar, because he sees no other options, lacking the will and imagination to create other choices in addition to merely debasing the currency and stealing the rest of the savings of a generation.

    The monied elite do not favor this, and will attempt to promote ridiculous austerity programs, to direct the pain more heavily towards the middle and lower class, and so the class and currency wars begins to gain momentum.

  17. Far-fetched: if The Silence was absent, then all bewares For More Downturns. If you are an Investor Looking for Profits, the signal has been sent in This Narrow Window in History…

    While looking at Buffett’s statements and all the empirical data of all the sectors within the world markets, it has become crystal clear that when the banks and other major events of world laws put a shield around them recently, to continue almost a business as usual. The roar of the stampede of Bulls and Bear Meat is the near term message for all within these markets.

    These are all driven from intrinsic forces that support the Coase Human Oppression Theorem metrics of profound measurements. Warren Buffet and others are the Canary of truth, not a truth that the world can ultimately profit from a moral, ethical, and a sense of virtues and Morales. No, it is a perfect storm of how large profits are put on the worlds table for markets to transition wealth.

    These next months are going to see markets actually topping over previous highs. The signal of fiscal realignments of the G-20 and their GDP, CPI and allowing an extension of debts with a return on Human Unit consumption under the environment of sovereign austerities makes these insights for markets to take off again.

    The most powerful of all signals came through the banking reforms and the lack of controlling the ability of the continued ruin of man through their abilities to conduct a business as almost usual as they enjoyed before the crisis was lit.

    By taking away the emerging concern of banking, sent the signal of profits based on now having safety nets to continue this One Economic World Order and of their ability to conduct business by the directions of an Oligarchy that has been enforce for a very long periods of time.

    The response sent by China and the Asian rim with the adjustments of currencies and supports of the G-20 brought this second Bull wave in these most recent months are also sending this as a clear signal.

    The tech sectors of Emerging Market Income, Equity, along with U.S. Small-Cap Fixed Income, U.S. Mid-Cap and plays with Inverse-Market areas and with the Financials, should become along with; Corporations like BAC, JPM, GS, WFC, SST, AAPL, BP, CRUS, DWRI, SNDK, MSFT, CSCO, SHOO, NKE, MCD, and ISSI, and the list could be long; are subject for sparkling profit potentials.

    Oil should see the low 50s and other commodities would find a downturn in the coming future as disparity would play its card in time.

    Read the sign of the times. The answer too many questions have been given as the story is told that God seems as He has been still left from the equation of economic policies. It does not mean that you and or your families are unable to incorporate strong use of living within your means and accepting your own ability to invite the Creator back to your own personal success of surviving these many times of changes.

    Do not forget the message of Teleios, and your connection in what it offers in the relationship with the Creator. The ability to be in harmony and taking the hedge bet of any prudent investor knows to diversify your portfolio as you must within your lives to hedge your bet for eternal treasures greater than those upon this earthly bank do.

    May your families and you weather the storms of these changes being brought upon the human conditions of life!

    Peace, as I am out of here for now…

    James Gornick

  18. Will Americans accept hardships to pay for the socialized debt that amounts to welfare for the rich? The financal terrorists’ puppets are targeting social security. Will the puppet regime refund American taxpayers the money they’ve looted for social security, bailouts, and ‘stimulus’? Austerity measures affecting the lower and middle class don’t have any political legitimacy.

  19. “U.S. banking industry lobbyists is “you cannot put us at a disadvantage relative to our overseas competitors.” The Obama administration has largely bought into this line”

    The Obama administration is staffed with U.S. banking industry lobbyists, it doesn’t have to buy into this line; its top staffers (Summers, Geithner, et al) are its chief promoters.

  20. Since the entire world has been living within the “Nuclear Age Family” for approx. seven (70yrs.+/-) decades now, it seems reasonable we won’t be having any “World War III” to clear the air (those of you who find this albeit over-the-top?), or better said, burst the financial bubbles! Just yesterday I reviewed data from the great depression of the late 20’s into the mid 30’s regarding US Treasuries being priced below fare-market-value just so…as too get a good nights sleep that your money was at least worth something? Imagine people paying/buying for a negative return just to sleep well, unfortunately this is where were headed (I really hope I’m wrong on this one?) – ironically this is a classic, “Truth is Stranger than Fiction Tale”?

  21. earle,florida wrote:

    “Since the entire world has been living within the “Nuclear Age Family” for approx. seven (70yrs.+/-) decades now, it seems reasonable we won’t be having any “World War III” to clear the air…”

    My understanding is quite the contrary. I bet my farm and my son’s future farm, predicated on the assumption that the financial war continues, and I should keep my powder dry (predicated on Nomenclature).

    “Naming ‘things’ is a part of our general communication using words and language: it is an aspect of everyday taxonomy as we distinguish the objects of our experience, together with their similarities and differences, which we identify, name and classify. The use of names, as the many different kinds of nouns embedded in different languages, connects nomenclature to theoretical linguistics, while the way we mentally structure the world in relation to word meanings and experience relates to the philosophy of language.”

  22. – ironically this is a classic, “Truth is Stranger than Fiction Tale”?

    Agreed. :-) :-) :-O

  23. Lagarde is no better than Geithner. Book smart intelligence with apparently no connection to reality. A European bureaucrat in every negative sense of the words “European bureaucrat”. Lagarde’s answer to the problem is to wave her index finger “naughty naughty” style at U.S. regulators, while begging for “QE” loans from Bernanke, and hoping the masses of financial illiterates don’t notice French bankers loaned a s.h.i.t.load of money to Greece and have a high % of “non-performing” loans.

    Walking around telling lies with a smile and phony gold halo over her head. If Lagarde was not female and telling the lies she was telling now, the few people we have left doing financial journalism would have her metaphorically hanging upside down on a French flagpole by now.

  24. Simon Johnson writes: “The US Treasury puts its faith instead in the Basel Committee on Banking Supervision process, a somewhat murky convocation of bank regulators from various countries that has a weak track record in terms of setting sufficient prudential standards”

    Well not only the US Treasury, but also the IMF, but also Simon Johnson, and of whom until know we have not read anything questioning for real the Basel Committee.

    But again Simon Johnson when mentioning “a weak track record in terms of setting sufficient prudential standards” proves he has no idea of what really happened.

    It was NOT that Basel Committee failed by setting sufficient prudential standards, they set too prudential standards and therefore gave excessive incentives to the banks to build up excessive exposures to AAA rated clients or securities.

    The gullible regulators completely forgot that bank crisis do not grow in high-risk lands… they always bloom in perceived risk-free lands.

    As an Executive Director of the World Bank spoke out formally against the regulatory paradigms used by Basel, over and over again, but no one wanted to listen…. and they still don´t get it.

    In 1999 I published an article in which I said:

    “The possible Big Bang that scares me the most is the one that could happen the day those genius bank regulators in Basel, playing Gods, manage to introduce a systemic error in the financial system, which will cause the collapse of the OWB (the only bank in the world) or the financial dinosaur that survives at that moment. Currently market forces favors the larger the entity is, be it banks, law firms, auditing firms, brokers, etc. Perhaps one of the things that the authorities could do, in order to diversify risks, is to create a tax on size.”

    And we now had our first big bang…. are we just going to wait for the next?

  25. Per Kurowski wrote 2010:

    “And we now had our first big bang…. are we just going to wait for the next?”

    US Set For “Big Bang” Financial Clean Up

    January 31, 2009 – Financial Times – excerpt

    “The Obama administration is gearing up for a “big bang” announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.”

  26. Guess we have more geography available for libraries to fill up…

    CHRISTINE LAGARDE: “Well, I did say at the time that we had dealt, addressed, argued about each and every issue that there is to be argued upon, and that that has filled our libraries, and that we have done enough thinking so far. It’s about time to roll up our sleeves and get on with the work.

    And I still very strongly believe that we have to produce more value. Our economic system has to be more productive, has to be more competitive. And I don’t see and I don’t know any other alternative but work. Yes, I haven’t changed.”

    How can anyone still be so delusional as to think that there is an egg-laying chicken left? Unbelievable.

    They’re leaving Afghanistan with the CASH – not “paying” anything at all to Afghan contractors who did the work…looks like mercenaries know how “high” finance works.

  27. I guess we haven’t filled the prairies yet here in big USA…

    CHRISTINE LAGARDE: “Well, I did say at the time that we had dealt, addressed, argued about each and every issue that there is to be argued upon, and that that has filled our libraries, and that we have done enough thinking so far. It’s about time to roll up our sleeves and get on with the work.

    And I still very strongly believe that we have to produce more value. Our economic system has to be more productive, has to be more competitive. And I don’t see and I don’t know any other alternative but work. Yes, I haven’t changed.”

    Mercenaries aren’t counting on institutional technocrats figuring out that there is no egg laying chicken left to STEAL from the “middle class” to pay them with – they’re leaving with that cash on the runways – not giving even a buck to any Afghani who did the work or provided the material…seems they know all about “high” finance better than the college kids…

  28. Biggest Defaulters on Mortgages Are the Rich

    July 8, 2010

    LOS ALTOS, Calif. — “No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars. A home in foreclosure in Los Altos, Calif., a city where the median home price is $1.5 million.

    The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

    Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

    More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

    “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop.

    Not many had a plan B.

    The defaulting owners, he said, often remain as long as they can. “They’re in denial,” he said.”

  29. From my perspective, this substantive difference in the relationship between foreign states and their banks, and our governments relationship with our “banks” (not really banks, but seemingly multifaceted casinos posing as bank holding companies), is like music to the ears of all of the true global financial behemoths. It gives them even greater opportunities for massive arbitrage in nearly endless ways. After all, since all are quite cozy (albeit expressed in different ways) with their local national governments, they have immense latitude to act, especially off shore, where the local rules don’t apply, and in the back yards of competitors. Meanwhile, I suspect that the smaller “real” banks, both overseas and here, are being squeezed to such an extent that their markets are severely limited. As we all know, massive numbers of our real banks continue to fail at a disasterous rate. The obvious problem is that small banks, like small businesses, are the real growth engines. This is why the global economy, and most specifically ours, Europe’s, and others, continue to have difficulty pulling free of this severe coefficient of fiscal drag, and provide real recovery impetus.

  30. Right… small banks and small businesses is the closest we can get to the real economy this side of formality and legality… but no one is much concerned about them, busy as they are defending or bashing the too big to fail banks whose business was promoted by the Basel Committee.

  31. I’ve gotten on the protectionism bandwagon lately. Frankly, I don’t see a downside to it for us.

  32. You almost seem like you have something interesting to say, but your writing style is of gibberish. I’m sorry, but I don’t have time to sort out your meaning through the horrible writing.

  33. Barbara wrote, in part, “The monied elite do not favor this, and will attempt to promote ridiculous austerity programs, to direct the pain more heavily towards the middle and lower class, and so the class and currency wars begins to gain momentum.”

    You are so GOOD at “prophecy” – You get “fanned” :-)

    After a week of quantum meditation, mobilizing the prayer groups, and can we please get back to discussing the pros and cons of torture?…

    They’ve settled on trolling the housing data this weekend for some more rent property for themselves.

    You know they’re not going to mess with the CASH mercenaries.

    Colbert gets it – the person who will populate the HIT LIST for them will be fired as soon as they deliver the list.

    All the open name calling! Most entertaining was Mika calling Lindsey a “skank”…yup, that’s the potential most people who watched Lindsey’s first movie said about her – “She’s going to be a skank when she grows up…”

  34. Re: @ Anonymous____This doesn’t bode well for Q4, or perhaps the Oct/2010 mini-crash in High-End Real Estate where WF,BA,JPMC,and C who hold the bulk of this debt. Can’t blame FREddy/FANnie for these laggards. PS. New laws regarding “Off-Budget” balance sheets are no longer excluded from EBITA – ie.) the banks can’t hide (or are they working on changing that as I write) anything?

  35. James:

    You have to love summer vacation. Just going through Baseline scenario(s) article posts and happened to read your prior comments and this one as you posted July 8, 2010. I am glad you answered the questions that where posed to me some time ago from a fellow blogger.

    You were able to answer a most difficult question on the Physics law of Economics and the Human Unit equation within the origins of life.

    We read this within the college circuit of ingénues and provocative Thoughts & Theorems come to life. Your explanation and use of “Teleios” and the relationship to the Physics Law of Life is incredible; and I thank you for pushing this forward in a world reeling with the need for so many answers.

    Many may find your writing prose confusing and admittedly, sometimes it is, but the most impressive part of your writing and cutting edge theorems or theory’s and views are playing out upon the world’s stage; for your market analysis and predictions to the consumers and financial empires as I write this post are happening as true.

    I as many look forward to your next posts, wherever they may be. You are quite followed as I have stated prior. Followed by many as to your notions and ideas are with great depth of wisdoms that have yet to be conceived.

    You’re brilliance of calling out to all to learn and take heed seems the most simple of explanations of all you have written that many seem from all I have read to now find merit with your ideas and thoughts.

    John B.

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