Geithner’s Gamble

By Simon Johnson.  This post comprises the first few paragraphs of a column now running at Project Syndicate: http://www.project-syndicate.org/commentary/johnson17/English

In a recent interview, United States Treasury Secretary Tim Geithner laid out his view of the nature of world economic growth and the role of the US financial sector. It is a deeply disturbing vision, one that amounts to a huge, uninformed gamble with the future of the American economy – and that suggests that Geithner remains the senior public official worldwide who is most in thrall to the self-serving ideology of big banks.

Geithner argues that the world will now experience a major “financial deepening,” owing to growing demand in emerging markets for financial products and services. He is thinking, of course, of “middle-income” countries like India, China, and Brazil. And he is right to emphasize that all have made terrific progress and now offer great opportunities for the rising middle class, which wants to accumulate savings, borrow more easily (for productive investment, home purchases, education, etc), and, more generally, smooth out consumption.

But then Geithner takes a leap. He wants US banks to take the lead in these countries’ financial development….(column continues at Project Syndicate.)

98 thoughts on “Geithner’s Gamble”

  1. Why is it a gamble? This is the successful path taken by Philip Morris: If you run out of marks at home, find friendly governments around the world who lets you rape their own citizens.

  3. Kudos to your greatest banksters. These are wonderful people who make tremendous amount of bonus for themselves in order to save the world from pugatory. Mr. Geithner and Mr. Obama are the greatest world leaders who look after these banksters with the greatest care and of course, sometimes only at a small expense of a few trillion here and a few trillion there of American tax payers money.

    Thanks and many thanks, but no. We have no use for these banksters; you’d better keep them in your own shop. We have no use for big bonus receivers especially they produces only the splendid shining paper and imaginary wealth. In fact, we keep a tight leash of our own want-be banksters. If they behave, that is very good; if not, of course, there is always our barbaric bullet-in-the-head at their service. Come to think about it, you should also export your banksters, and stuff them totally down into such wonderful throats, such as the democracy of India. That shall make their greatest this, or greatest that, and the world’s only super duper power, that much more shining, and incredible, having acquired these new toys like your standard banksters. The shining, of course, will at least last for a few years while the banksters can count the bodies still on the streets, who are still eligible for a new load, and paying themselves some decent bonus. Cheers.

  4. Sir Geithner’s reference to Microsoft is revealing. Some people who are knowledgeable concerning computers (I am not!) consider that the Microsoft monopoly cost the U.S. about a ten year delay in adoption of a reliable Operating System [OS2 would have been better that much sooner].

    Also , the discussion of India is interesting. The Indian finance system (like the Canadian) had adequate regulation to prevent gross participation in our bubble/bust. The last thing India needs is American-style deregulated spread banking … and the last thing the U.S. needs is further affiliation with another dysfunctional ‘democracy’ based on illiterates!

  5. @ Simon, another thoughtful, well-considered post — as opposed to how Kwak might have written the same post: Full of adolescent diatribes about how Geithner is evil and how it makes him “mad.”

    Kwak may have been useful in helping you offload tremendous amounts of work while writing your book, but you must think how embarrassing he is now.

  7. I share many of your thoughts execpt the few childish critizisms. We can thank Paul Volker for a majoity of this situtation, After quickly raising rates in the name of inflation others created ARM”s so the 30 year would not become such a burden. It had to have been one of the dirtyest tricks in the book (and Timmy is not street book smart, his flusies keep him protected) and yes it appears that the ponzi sceme is being attempted in the name of fiscal America to at least be able to pay down our interest debt which is mostly domestically owned.
    There are a number of ways to collapse this bubble quickly, but the forcefield of resistance has always been strong, and their lies run very deep.

  8. I wonder why so many intelligent individuals persist in alleging Mr. Geithner is a public servant thus continue to be amazed at his lack of understanding of the domestic and global financial systems.

    My perception is that Mr. Geithner is simply a mouthpiece for the top tier of global financial institutions. He is not a public servant in any sense. Why continue to be amazed at his comments?

    Perhaps we would be better served by anticipating the future by determining what would most benefit these financial institutions then plan our personal finances and lives from a defensive position.

    From this perception, Mr. Geithner’s comments are to be expected and easily anticipated thus perform as confirming evidence to continuing our personal defensive positions.

    The above blogger comments seem on target to me. We can all recall Margaret Thatcher’s comment (paraphrased) that the problem with socialism is that we run out of other peoples’ money. Well, of course, the financial instititions see they have already decimated massive amounts of wealth in the US with only a modicum remaining to be pillaged. Thus, they are naturally looking to set the foundation for harvesting from global sources which should be “ripe” just about the time the US runs near to dry.

    I appreciate Prof. Johnson’s continued focus as I want confirming evidence that I am on the proper path.

  9. In my experience, ordinary Americans who watch the news or read the papers have Geithner pegged for exactly what he is: the handmaiden of the biggest banks. It doesn’t take a PhD to see this.

    Dr. Johnson, please advise us on how to make our banking system work for the good of the country and regular Americans. What is the answer?

  11. Funny.

    But Thatcher was reflecting on “socialism” as practiced by self-serving liberal types. Real socialists just collect taxes and redistribute them in road systems, security, hospitals and schools etc. — they can’t run out of “other people’s money” if they are judicious and genuine because they are not leeching it away from circulation. Castro, as far as I know, hasn’t got millions stashed in Swiss banks — and his government didn’t need to pay the costs of election/lobbyist politics.

    We live in a culture which historically is based on ruthless exploitation — of nature and humanity. At some point we began to run out of “territory” and started to cannibalize ourselves. Kinda like PeakOil — Peak Territory.

    The old colonialist “us vs. them” (doer/doee) division is now feeding on the small userers, draining their blood. The “us” is becoming more and more of an exclusive club. I can see who you would identify identify yourself with, cedar — but you may be merely prey.

  12. “We live in a culture which historically is based on ruthless exploitation — of nature and humanity. At some point we began to run out of “territory” and started to cannibalize ourselves.”

    Mondo, what a succinct summary of our situation.

  13. The gamble is that an imprudent swimmer who’s insisting on going far away from the shore is trying to pull along the naive, turned unknowingly into life guards, way beyond any safety zone. Just watch the world-wide wave of securitization, especially in those areas where the IMF leads! The self-liberated Arab countries will need some of that too.

    http://imotion.blogspot.com/2011/02/i-wish-all-of-us-luck.html

    We double down at all levels while citizenship is being tested in Wisconsin. If we were to do so to give us time and structurally readjust, it would be one; I’m afraid that cannot be the case…

  14. Carla, I agree. Sometimes the emperor is pretty naked. Like with Cheney — you are lookin’ right at the nature of the beast.

    My uneducated answer to your question, fwiw, is to bank locally, at a credit union which does not feed into the Wall Street/big bank circulation system. I do. I love ’em.

    If things go really T-party democratic, states could issue “local currency” — wonder what the possibilities are in that? If one state, or country, set up an alternative system which was fully and correctly regulated, could we flow into it as an escape from our predatory system? In this age of internet, things can turn on a dime. So to speak.

  15. @ Diogenes

    Hmmm…has Mr. Kwak gotten a little too close to home?

    Dear Simon,
    We’ve got to abolish this albatross around America’s neck called the “Federal Reserve Banking System (FRB)”. It’s totally not functioning properly too its original protocol parameters and without a doubt dysfunctional to the nth degree in administrative direction!
    Our country is reliant on our financial lifeblood (whatever happened to our treasury & banking franchises?) from a arcane (dangerous?) organization that is captured and controlled by known (for God’s sake the secrecy is so thick, the CIA doesn’t even know who the lifetime membership founding shareholders are?) world oligarchy that is packed into the shareholders of the Federal Reserve! They’re communist dictators, iron fisted monarchies, socialistic Maoist, 3rd Reich Nazi’s – and their operating with impunity!
    The “Bank of International Settlements (BIS)”, Basel Accord Committee, and Basel I, II, and III financial templates, in unison with their sub-ordinate baggage thieves – that being the World (useless/pathetic parasitic) Bank (WB) & International Monetary Fund {(IMF)(Lamprey Ell?)} and the ultimate SS/CIA (Russian SP*) universally accredited “Blue Helmet” gangland enforcers with a cadre of ivy league creme de`crop lawyers from the world over! So, so sad?
    This is america’s problem, period. Bringing back a modernized Glass-Steagall Act is a must if this country is to survive into the mid 21st century?

    Geithner is a tax evader that runs the treasury…what does that say about his fiduciary character? He is a Basel member that international law can’t touch (he is an untouchable from all laws in the world?). He, and his crony bosses…the Rockefeller’s, Rothschild’s who run the worldwide stage will loot this country through a fast forward juiced-up steroids attrition program. This so called natural attrition is mutated by a creeping, and crippling pressurized vertigo of flying upside down on the horizon of a volcanic precipice – that is of yet confusingly and placating this perceived reality as but clouded turbulent free – this wondrous one-way express to demise? Paradoxically we will fade as a once great country as does the faded ink absorbs the soiled blotter of ambiguity embroiled in the classical eternal “Mind Fight”?

  16. Simon quotes Geithner as saying: “I don’t have any enthusiasm for…trying to shrink the relative importance of the financial system in our economy as a test of reform, because we have to think about the fact that we operate in the broader world…”

    The global economy was brought to its knees by the interconnected global financial system. To say that reform does not require shrinking the relative importance of the financial sector in relation to the greater economy is dangerous thinking. Our financial sector today is parasitical, and acts in ways that suck capital out of the greater economy.

    Exporting a heavy reliance on debt to emerging economies is not where our attention should be focused. We should instead look to innovating technology, products and services to address the needs of people, not banks.

  20. Carla, you also believe that 9/11 was an inside job? All conspiracy theorists gather here at the baselinescenario.com

  22. Simon boy, you are starting to abuse your tenureship. Everytime you write anything it reminds clear thinking people of the intellectual fraud you are.

    Here is what Warren Buffet wrote in his annual report published today, …”Don’t let that reality spook you. Throughout my lifetime, politicians and pundits have constantly moaned about terrifying problems facing America. Yet our citizens now live an astonishing six times better than when I was born. The prophets of doom have overlooked the all-important factor that is certain: Human potential is far from exhausted, and the American system for unleashing that potential – a system that has worked wonders for over two centuries despite frequent interruptions for recessions and even a Civil War – remains alive and effective.”

    get over yourself johnson. As kwak himself admitted on this blog, you got lucky because your book was published in the weeks before the SEC undertook its extortion of goldman sachs.

    Today 13 bankers is ranked the #13,700 selling book on amazon.com. Haha.

  23. @”desi girl – doing god’s work” I think you may be more like “a piece of work.” But if we all held the same opinions, what a dull world it would be.

  24. But dear, read your history. There HAVE been conspiracies. Big bold ones with many people involved.

  25. . . or they just forgot to fill in the name box. ’twas I. Give people the benefit of a doubt, dude. Be cool.

  26. The socalled MSM can pimp and brute the wave of revolutions sweeping through the Arab world as a contest for democracy and freedom. It’s not. It’s about economics. The predatorclass in the Arab world ruthlessly oppresses it’s people. Like Amerika, all the wealth shoots to the top, and the people are left with the crushing debt, and slavelabor wages, or unemployment. People, (particularly young educated people) will not tolerate this level of thievery, supremist ideologies, and ruthless oppression for long. When you take away jobs, and income, and hope from the masses, – the masses get pissed. Geithner and Obama are the royal protectors of Amerika’s predatorclass and have no eyes and no ears. They have no idea of the suffering of the masses, because they simply do not care. All they care about is advancing, protecting, shielding, and profiting personally from the criminal enterprises, and PONZI schemes of the den of vipers and thieves in the predatorclass. A day of reckoning for Amerika’s predatorclass is fast approaching, and it won’t be peaceful, or bloodless.

  28. Simon, you and I both know that Geithner is the financial plutocrat-in-chief. Of course this is what he is going to say. After all, he is the major water carrier for Blankfein, Dimon, et al. And, to his Mutt, Bernanke is playing compliant Jeff. Between the two of them, there’s absolutely no hope.

  30. Simon Johnson @“Higher leverage increases their payoffs when times are good – as executives and traders are paid based on their “return on equity.”

    I am glad Simon Johnson has finally understood the role of leverage… but having done so the logical answer would be to ask the banks to have at least an adequate capital base when doing operations in those foreign places… as an absolute minimum that would be the same as they are required to have when lending to their local small businesses and entrepreneurs.

  31. By implication, the answer has many steps, and step one is clearly for Geithner to resign and get a new job in Vegas for which he has the right skill set. Of course there are similar flunkies ready to act as Geithner2, but getting Geithner’s resignation might have a sobering effect. For a while Krugman was expecting a “Geithnerdammerung,” but recently leading commentators have stopped explicitly calling for Geithner’s resignation. They ought to write more clearly and unambiguously.

  32. Simon,

    This is a nonsensical post. The part of Citigroup (for instance) that operates internationally as a consumer or transactional bank, does not require a lot of regulatory attention and has been very successful over the years. Of the handful of institutions that dominate transactional banking generally, half are from the US and in some areas (like custodial and clearing services, they dominate outright). A second area where US financial services firms is in invetment banking. Properly regulated (they were largely unregulated until recently) they should be able to deliver and derive value.

    What is this crazy paranoia about an industry that you do not understand at all and where you play to the naive sentiments of people who know even less than you. Do you think that would have any effect on policy?

  33. The real irony with the Basel Committee is that it was set up in order to assure that regulations and capital requirements were harmonized between countries so as to avoid regulatory arbitrage, and then they ended up disharmonizing between creditors based on perceived risks, and producing the mother of all regulatory arbitrage derived crisis.

  34. Yeah, like Geithner preparing to ‘offload’ bank debts to the US Govt. in April 2008. The math might be tough for you ‘desi’, you know, pre ‘innovation’, but that is four months before the so-called ‘crisis’.

  38. Geithner argues that the world will now experience a major “financial deepening,” owing to growing demand in emerging markets for financial products and services…

    …and now offer great opportunities…

    The agenda is here as a policy rationale and directive not a poorly thought out system’s capacity gamble; per se, but a venture capital model of aggressive political economic capture in the global arena of cold war financial supremacy.

    What Geithner is suggesting is that the new target of big- money -political- finance (of which Gig Banking is not an ideology but a weapon or at least a “tool”) will be the assets of “emerging” economies which can be now aligned up for debt dependency and “re-stabilization” under the expanding scope ofbig banking disorder syndrome (AKA: TBTF).

    In effect it is the same thing that “deep finance” has done to our domestic banking system as it looks to assimilate everything possible and consolidate the core power under an oligarchy of political financial controls. We have, of course, taken our eyes off of what continues to happen to our domestic middle class banking system…systemic failings…and takeovers….while we continue to fixate on too big to fail as our focused (distracted) attention. This is all about conquest, capture and power control…not about a global system on any working order.
    It is in thralled to the rhythms of Big banking power,…and it is…”a deeply disturbing vision.”

  39. @mondo,

    My, my aren’t you the simpleton. Just because one dislikes Kwak means that one likes Fox?

    Leave the tautology of the playground, Mondo.

  42. * The Upside of the downside, and the downside of the upside…The wole systemic systme is failing while the top remains TBTF…risks and perversions!
    …while corporate finance grows stronger due to savings from labor expenses and other domestic cost cutting lay-offs and consolidations; let’s see what we might do with that financial float…re-invest in our own domestic economy? No way…! That’s no way to treat concentric financial consolidation and the dependency model of TBTF.

    Global Risk and Reward in 2011 Nouriel Roubini
    http://www.project-syndicate.org/commentary/roubini34/English

    * Also search page
    * Tim Geithner “financial deepening,”
    * http://aolsearcht4.search.aol.com/aol/search?invocationType=webmail-hawaii1-standardaol&query=Tim%20Geithner%20%E2%80%9Cfinancial%20deepening%2C%E2%80%9D

  44. Carla,

    From Cornell U. Law website:

    “Cannibalism is the nonconsensual consumption of another human’s body matter. In the United States, there are no laws against cannibalism per se, but the act of cannibalism would probably violate laws against murder and against desecration of corpses.”

    Of course, they still get an “A” for math even if no one did a risk assessment study on nihilism becoming cannibalism – we don’t want to hurt their feelings and make them feel inadequate as lords of the universe.

  45. The fundamental reasons why it is so hard to advance the otherwise so easy explainable truth of this financial crisis, is because of the deafening noise of the Agendas… From one side, those who want to put all the blame on the capitalistic “banksters”, and, on the other, those who want to blame the socialistic government sponsored enterprises (GSEs) Fanny Mae and Freddy Mac.

    For both sides accepting the fact that it was a regulatory failure of monstrous proportions would be a highly inconvenient truth that would not help them to advance their respective agendas.

    As usual the truth stands little chance against the squeezing by the extremes.

  46. http://www.project-syndicate.org/commentary/stiglitz134/English (excellent opinion article)
    Stiglitz:
    “So this is my hope for the New Year: we stop paying attention to the so-called financial wizards who got us into this mess – and who are now calling for austerity and delayed restructuring – and start using a little common sense. If there is pain to be borne, the brunt of it should be felt by those responsible for the crisis, and those who benefited most from the bubble that preceded it.”

    http://www.treasury.gov/press-center/press-releases/Pages/tg1052.aspx
    Geithner’s address to Brazil: Is this counterintelligence ?
    Statement of Treasury Secretary Tim Geithner 2/7/2011 (excerpt)
    Page Content
    “We recognize that the world looks to the United States to be a source of stability and strength for the global economy. President Obama moved aggressively when he came into office to repair our financial system, to lay the foundation for a more sustainable expansion, and to address the failures in financial oversight that caused so much damage to our economy and to the world economy.

    These policies and those of the Federal Reserve have now produced six quarters of positive economic growth and more than a million private sector jobs. Growth has been led by private investment. Private savings have increased, and our current account deficit has fallen. Productivity growth has been very strong, relative to the experience of other major economies.

    But we have more work to do. We have to continue to invest in innovation, improve education, strengthen public infrastructure, and encourage private investment. And we have to restore fiscal sustainability, with growth-friendly reforms to reduce our long-term deficits. The United States recognizes that we bear a special responsibility for the sound functioning of the international economic and monetary system.”
    http://www.treasury.gov/press-center/press-releases/Pages/tg1052.aspx

    Geithner continues to give lip service to infrastructure investments and austerity economics but his actions are counter to his stance.

    But maybe I am confused. Maybe he means investing in “OTHER” domestic economies with the money?
    http://www.thenational.ae/business/economy/timothy-geithner-in-abu-dhabi-to-meet-crown-prince
    (excerpted from article November 9, 2010):

    “Mr Geithner, a key architect of the US’s bailouts of financial institutions and other responses to the global financial crisis, is set to discuss “broad developments in the global economy and regional issues of mutual concern”, according to a Treasury statement.

    The UAE and other Gulf oil producers are watching closely for signs of how global economic trends – including the US’s emphasis on more stimulus to reinvigorate its economy – might affect the region. The US recently started a new round of so-called quantitative easing, a process in which its central bank is effectively pumping $600 billion of new currency into the domestic economy. Economists say that should work to the benefit of Gulf countries as investors and businesses put the new money into higher-growth markets in Asia, South America and the Middle East.”

    http://www.thenational.ae/business/economy/timothy-geithner-in-abu-dhabi-to-meet-crown-prince

  47. desi girl…doing god’s work…

    I just wanted to know are you on a payroll for this non-sense. And the name…? does that men you are doing all of The Goldman Sachs Group or just LORD Blankfiend?

    Your personal attacks can only mean that 13 Bankers continues to be a success!

  48. Which in my mind proves that we have been divided-and-conquered. Like with the weird red/blue split, which represents two different ways of being self-serving while pretending to be righteous. What entity engineers this? Is it the mother of all conspiracies, or just a really nasty social disease ?

  49. @ mollyrose “Is it the mother of all conspiracies, or just a really nasty social disease?”

    I have no idea… perhaps it is only some natural centrifugal forces responding to information overload… right-wrong… blue-red… Nonetheless below something I wrote in my, the mother of all unread books, Voice and Noise, 2006.

    “In 1872, the British Parliament decreed Speaker’s Corner in Hyde Park of London as a place reserved for free expression, and initially it attracted all those extremists who, although qualifying as nuts, still had the right to vent their opinions. Lately, we have all witnessed how the original Speaker’s Corner speakers moved into Speaker’s Studios and now radicalism, anarchy, or fundamentalism is voiced on prime-time television. All of us others, modest low-key analyzers or rational in-betweens, have to settle gratefully for slots in after-midnight cable television, dubiously sponsored by the most traditional professional services. As rationality could soon be viewed as symptomatic of a modern nut, we might all have to line up at Speaker’s Corner.”

  50. Concerning Geithner: I wonder what Obama found out after the Inauguration, when the Clintons and others took him behind the “black curtain”…things sure changed after that…

  52. “Geithner is a very smart and experienced public servant. His views concerning the future of finance will help shape what happens. And that is why we are headed for trouble.”

    So it’s intellectual capture after all. I guess it’s good that we at least know.

    It seems all the arguments about missed windows of opportunity and strategic mistakes were really irrelevant in the end. Geithner, Summers, Bernanke, and Obama pretty much got exactly what they wanted – a minor patch job on a system they deem otherwise functional and sustainable.

  53. “So it’s intellectual capture after all.”

    StatsGuy, did you see “Inside Job”? If not, the dvd is being released on March 8. Whether it wins an Oscar for best documentary or not, I think everyone should see that movie.

  56. When the intellect is captured, you abandon it. That is why the red side and the T Party people are so bone-headed. They may save us yet.

  58. Per, “For both sides accepting the fact that it was a regulatory failure of monstrous proportions would be a highly inconvenient truth that would not help them to advance their respective agendas.”

    “Regulatory failure”?

    The one “issue” that banksters and GSEs were in complete agreement about was that there were “too many” regulations…so both sides LAUGHED at, or fired, all the “regulators” in their midst…and then loaded up regulatory departments with “timmy” political appointments who could cover up the “data” until the laws were changed.

    What makes you still think that all this horror isn’t exactly what was planned by Nihilists?

  59. Rien Huizer / Sir:
    As a risk assessor might note…Funny you should mention “Citygroup”:

    http://www.harpers.org/archive/2009/03/hbc-90004536 (“…facilitate “looting” natural resource wealth from poor countries.”)

    http://en.wikipedia.org/wiki/Parmalat_bankruptcy_timeline
    2004: February 24 – For the first time Bank of America, along with Citigroup, Morgan Stanley, Deutsche Bank, UBS AG, and several Italian banks, becomes a formal target of the Italian investigation surrounding the Parmalat bankruptcy.
    http://www.corpwatch.org/article.php?id=689 (award: most destructive & corrupt)

    http://www.wsws.org/articles/2003/aug2003/enrn-a05.shtml (collusion with Enron)

    and the creme de la creme:
    http://www.noslaves.com/content/citigroup-jpmorgan-chase-offshore-outsource-5-billion-more-india

    *
    Citigroup, JPMorgan Chase Offshore Outsource $5 billion more …

    Feb 14, 2011 … With a United States jobs crisis, TARP bail out recipients Citigroup and JP Morgan Chase are offshore outsourcing $5 billion in I.T. and …

    http://www.noslaves.com/content/citigroup-jpmorgan-chase-off... – Similar

  60. @Annie Do you really mean that if regulators regulate badly that is not a regulatory problem but a market problem because the market bought off the regulators?

  61. America – and the rest of the world – experienced rapid wealth creation as we went through the industrial revolutions and learned how to convert coal and oil into energy and food. The dividends from cheap energy helped form the middle class.

    Now, the high quality coal is disappearing and we’re burning the junk we used to toss away. And we rejoice when we find oil trapped in rocks with an extraction cost of $80/bbl.

    It sounds like the middle-class subsidy is vanishing. (Perhaps those who take the opposite view know where some cheap oil can be had?)

    I’m all for human ingenuity. But let’s face it, we’re not as smart as we think. The 200 years Buffet refers to were aided by a massive tailwind.

    http://www.planbeconomics.com/2011/01/31/peak-oil-and-the-new-boom-bust-cycle/

  62. The more likely reason for Geithner’s support of the “deepening” of western-style finance probably came from Jamie and Lloyd needing an assist on their image problems in these so-called middle-income economies. See, e.g.,

    http://www.telegraph.co.uk/finance/china-business/7975486/Goldman-Sachs-invests-to-get-its-image-right-in-China.html

    The anti-GS books are huge sellers in China. The Telegraph link above, for example, notes that the opening chapter of one bestseller in China, “alleges the bank’s (i.e., GS’s) “ultimate goal is hunting and killing China”. It claims that: “Like a fox chewing a bone, Goldman Sachs knows the rules of the game and when to go for your neck.”

    Vampire squid would be a step up for the GS guys in China.

    Jamie, Lloyd, etc., rightly realize they’re about to be frozen out of the high-growth markets, and won’t be able to sell the new generation on the latest in “financial innovation,” Paul Volcker’s remarks re ATMs notwithstanding.

    Joe Ackermann’s probably lobbed a help-me in to Timmy too, given DB was busted in S. Korea this past week:

    http://www.reuters.com/article/2011/02/23/korea-deutsche-idUSTOE71L03520110223

    The S. Korea government’s opening a new investigation in to DB as well. Oh, well.

    What’s really interesting here is Timmy’s doing the bidding of these banks yet again. He refuses to see them as a clear and present danger to the developed and developing world. Their TBTF/TBTS status is now working against them in undeveloped financial markets — where traditionally the margins to be realized from the unknowing “customers” in these countries are huge. That’s something that’ll keep all of them up at night.

  64. ummm … been reading up on the Maoris, they might have been cannibals, to confuse matters, transubstantiation in the eucharist means that bread and wine become the body and blood of Christ

  65. @ Diogenes

    Cute ;>()

    I had to google up to find your strength?

    “as experience scars and sculpts your sanctimonious cloistered, and seemingly bifurcated character

    your proselyte has many fractures of ambivalence addicted to a idealistic yet funky hubris like nemesis

    within that quandary even a symbiotic atrophy state of osmosis would not unshackle the amorphous turmoil

    your gibberish speak faith in monetary demagoguery hinges on fate that seemingly hollows out a void of despair inside this dual personified mask worn as flesh of a bedlam Bedouin

    indeed there are a plethora of blind spots illuminating ambiguity tethered to ones existence of rational

    your pique tone deaf dear sir…is that of a severed sows ear of mediocrities”

    Yours truly – the word addict!

  66. Interesting comments and links markets.aurelius. It seems that the Irish are also setting an example for political pay back and are pretty much fed up with the financial debt traps. Unlike America, however, they seem to be putting their attention where it counts:

    http://news.yahoo.com/s/nm/20110227/wl_nm/us_ireland_vote

    and general search:
    http://search.aol.com/aol/search?enabled_terms=&s_it=comsearch50&q=Irish+opposition+nears+victory+%28associated+
    press%29

  67. monkey brains + imagination = belief in your own made up crap

    like “transubstantiation”.

    Looks like it’s true, you can’t legislate “morality”.

    Although if a tribe actually does make it a taboo to eat each other, well, so be it – “democracy” has at least as long of a “history” as does tyranny…

    One of those stuck-in-traffic, FREE radio comedy morning shows in NYC area spent about an hour picking apart the news story about how at one point the guys trapped in the mine in Chile started to consider who was going to most likely be “sacrificed” to the rest of them for “survival”….people above ground working for their release heard that conversation and decided to first find a way to get food supplies down to them, and from that success, got the idea that ultimately worked :-)

    All de-regulation LAWS (how’s that for ironic?)

    are psycho ops making the sell that cannibalism is not against the “law”,

    per se…

    It’s gonna get real ugly – putting down cannibals…at least prison expenses could be cut – an interesting take on the TV hit – “Survivor” – we can watch them vote on who to eat for dinner – and do the math – down to two prisoners left…and then only one to “house”…cheap

    creative financial instrumentation…endless new possibilities when one throws in cannibalism…

  70. @ RH

    Rein, in case you haven’t read the newspapers in the last 15 years…Citigroup (C) has been bailed out “Three Times”. Sandy Weill should be in prison,…

  72. Hi Per, You ask, “@Annie Do you really mean that if regulators regulate badly that is not a regulatory problem but a market problem because the market bought off the regulators?

    It’s a people problem :-)

    People are regulators. People can write dumb regulations, even when their intentions are honorable.

    So if there were dumb regulations, address the dumb-ness and make it better.

    But what happened with “financial” regulations was – both – dumb regulations and dishonorable intentions.

    And now digging in the heels to maintain both….dumb and dishonorable.

    So getting back to the REAL marketplace, it’s back to the future – have to understand that paper money was issued so that you didn’t have to take the whole herd of cattle into the banker’s office…but, of course, there were “regulators”, so to speak, who counted the cattle and confirmed there were 742…

    “Just the facts, Ma’am”.

    The risk they tried to defend themselves against was the risk that wealth would be distributed in a more just way – ie. you got to keep the house you built and the food you grew and the animals you husbanded with your bare hands, determination and intelligence out of raw materials of the material world…

    the “physics” of the marketplace, it seems, does not support such concentrated currency in just a few HANDS – an explosion is inevitable….

  75. Tippy, since you are trippin’ on cannibals here, you might be interested in this thought: In the evolution of human consciousness two rules extend back into the mists of prehistory, one is against incest, and the other against cannibalism. Probably the cannibalism taboo came first, and it must have been very hard to overcome the dark passions that cannibalism represents, to imprint the taboo so deeply into our minds that it is reflex. So when Yeshua established the Lord’s Supper he initiated a rite which had the power to call forth into the light the darkest, most atavistic elements deep within us. Just as undergoing public death put Yeshua in solidarity with our mortality, in a way Buddha the enlightened teacher is not. A root thing, making channels so love is accessible to all parts of us. We seldom look at cannibalism, and much is to be learned there. Shakespeare’s last play before he retired from public life was The Tempest, and it is a study of these things. Caliban is a word play on cannibal, and is set in the “primitive” new world.

  76. SDR are more debt based currency. The problem is too much debt. All this will do is concentrate wealth even more than it already is, and cause governments to lose their monetary sovereignty.
    HORRIBLE concept for the well being of 99.9% of the global population.

  79. thank you mollyrose for your thoughtful comment

    I could not “wrap my brain” around how events like the Holocaust or the Nanjing Massacre could occur. Then someone explained to be that human beings are capable of extreme evil and the highest good. This is within our collective power.

  80. Rene Girard is profound on this subject. He writes of the atavistic scapegoat mechanism, in which the group purges itself of negative energies by accusing and then killing someone. Girard says Yeshua caused us to identify with the victim, something unknown in classical and primitive culture, and thereby changed our world, ushering in compassion — and eventually human rights.

  81. Anadopadooda, “Rene Girard is profound on this subject. He writes of the atavistic scapegoat mechanism, in which the group purges itself of negative energies by accusing and then killing someone. Girard says Yeshua caused us to identify with the victim, something unknown in classical and primitive culture, and thereby changed our world, ushering in compassion — and eventually human rights.”

    Romans went on record as washing their hands of the Pharisee conspiracy – so centuries of rationalizations have not littered the interpretation of Roman “law”,

    nor has history been mutilated by scapegoating.

    You are worse than cannibals if you IMAGINE that justice can be “tempered” with rationalizations on behalf of iniquity.

    I’m sure compassion has been around at least as long as cannibalism….

  82. Sorry to all opf you, but you did not read my comment! I was discussing the transactional banking and consumer banking arms of Citigroup. The ones Sandy Weil and his Salomon guys basically killed. No sympathy with those from me. But these two businesses still exist and are the best in the business (the place where everyone tries to recruit from). Real product, real revenue streams, real customers. That was not the part that had to be bailed out! Apparently some people who visit this blog do not read..Or are all these people here really ignorant about the financial services industry? Think it is some kind of perverse fantasyland?

  83. You have to separate those in the blog who want financial sector reform that serves the economy from those who are out after banksters. Unfortunately, even among the first group there are many without sufficient knowledge of what is happening sometimes because, as PhD economist, they feel it is beneath them to get their hands dirty with regulatory carpentry.

  84. Yeah, and going after banksters is bad in what way?….

    Rien, am assuming you were either not alive in 1998, or feigning ignornace, ’cause there was no ‘consumer/’transactional’ combo banking before then. At least not in the US. That’s what Glass-Steagall was, you know the SEPERATION of said, and in fact the reason it was put in place in the 1930’s, to stop these banksters, or fraudsters-a more appropriate term. CITI’s merger/acquisition phase during the late 90’s was the beginning of our problems, then they re-wrote the laws after the fact to make it all ‘legal’ like.(With Clinton enthusiastically signing). The Commodities Fut. Mod. Act followed to allow these new entities to escape states’ anti-gambling laws via ‘deriviatives’ and take it to the multiple-trillionth degree. Then, all of a sudden, we have a ‘crisis’.

    Sometimes A + B = C

  85. @1 Kings “Yeah, and going after banksters is bad in what way?….”

    Yes if by rounding up every able body in town for a posy to go after banksters you allow the real culprit to get away… then it is very bad!

    Leave the Glass-Steagall Act for another day, since this crisis was caused by the regulators and who acting as risk-managers, authorized the banks to leverage their capital an unbelievable 60 times to 1, or in some cases even more… just because a stupid little meaning triple-A rating was involved.

  87. http://www.amazon.com/dp/0199730563/ref=pe_85510_18760550_pe_epc_d1 (read all the customer reader reviews)

    The Economist’s Oath: On the Need for and Content of Professional Economic Ethics
    by George DeMartino

    The Economist’s Oath: On the Need for and Content of Professional Economic Ethics [Hardcover]
    George F. DeMartino (Author)

    Amazon lists: Philosophy & History of JUSTICE:

    http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3
    Dstripbooks&field-keywords=philosophy+of+justice&x=16&y=20

    AND; BON APPETITE: (Cannibalism) symbols & substance
    http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dstripbooks&field-keywords=philosophy+of+justice&x=16&y=20#/ref=nb_sb_ss_i_6_11?url=search-alias%3Dstripbooks&field-keywords=cannibalism&sprefix=cannibalism&rh=n%3A283155%2Ck%3Acannibalism

  88. Here is a current distribution from the IMF on Global prospects.
    * IMF Survey: More Action Needed for “Right Kind of Recovery” Speaking at the G-20 meeting in Paris, IMF Managing Director Dominique Strauss-Kahn says stronger policy action is needed to ensure that world sees “the right kind of recovery” that addresses unemployment and inequality. Some emerging markets face the risk of overheating.
    http://www.imf.org/external/pubs/ft/survey/so/2011/new021911a.htm

    It is interesting in contrast to all that has been said here and with respect to Geithner’s economically “double blinded” Janus policies (see: http://en.wikipedia.org/wiki/Janus)

    http://blog-imfdirect.imf.org/2010/04/25/fair-and-substantial%E2%80%94taxing-the-financial-sector/
    Fair and Substantial—Taxing the Financial Sector
    Posted on April 25, 2010 by iMFdirect

    By Carlo Cottarelli

    http://www.imf.org/external/pubs/ft/survey/so/2011/new021911a.htm

    G-20 Ministerial Meeting
    More Action Needed for “Right Kind of Recovery” IMF Survey online

    February 19, 2011

    * Economic recovery uneven across and within countries, Strauss-Kahn says
    * Unemployment, inflation, food and energy prices, pose risks
    * G-20 agreement on indicators on imbalances and reform of international monetary system.

    “Beyond unemployment in the advanced economies, major issues to be addressed included the risk of overheating in the emerging markets and the problems of increased food and fuel prices, which he noted were now as high as they were in 2008, and a threat particularly for low-income countries and for vulnerable people everywhere. [listen to podcast about food price hikes].

    Major issues requiring action

    Strong policy action was needed both nationally and internationally. More needed to be done to reform and repair the financial sector. He said that while important reforms have been undertaken, there was a risk that the financial system would return to “business as usual.” In particular, he said that while steps had been taken to improve regulation, much more needed to be done on supervision and cross-border resolution of financial institutions. He also noted that, to discourage excessive risk taking by the financial sector, the IMF had proposed the idea of both a financial sector contribution and a financial activities tax, but sadly these had not been taken forward.”
    http://www.imf.org/external/pubs/ft/survey/so/2011/new021911a.htm

    subtext links from IMF:
    Join the discussion at the IMF’s new policy Blog on the global economy: http://blog-imfdirect.imf.org/

    Check out our new Publication the Fiscal Monitor at: http://www.imf.org/external/ns/cs.aspx?id=262

    TAKE A LOOK: For tracking globalization and its impact on individual economies, please see the new IMF Survey magazine online at http://www.imf.org/external/pubs/ft/survey/so/home.aspx News, views, and analysis from the IMF.

  89. Enough with the cannibalism – it’s all gossip unless you do it yourself or see it for yourself – where’s the scientific proof? Wusthof knife cuts on the bones?

    Talk about ADD and the internet compounding it…

    Justice, my friend.

    No country can claim a status as a nation when it has passed “United Citizens” legislature…

    And they were cackling about how smart they are on Hardball tonight…

    Yup, time to ask The Honorable Supreme Court Justice Antoni Scalia why he thinks the sign on that bridge in his hometown of Trenton NJ no longer boasts “Trenton Makes, The World Takes”, but now says, “Call Jose for the Very Best Dope from Mehiko”…but of course, The Judge is too distracted with protecting Viagra business models and taking pot shots at women

    to care about the old, in need of repairs, bridge in Trenton…well, until “budget cuts” come up…

    That’s the thing about NJ – we all know how they got to where they are – lots of our relative’s faces under the bottom of those hand made shoes…

  90. Annie: Justice, my friend…No country can claim status: …

    http://www.oyez.org/cases/2000-2009/2008/2008_08_22
    The Federalist Society was formed in 1982 to promote conservative legal ideas and conservative lawyers, while inside Reagan’s Justice Department, a cadre of young ideologues worked to bend the system as far to the right as possible. Two of those young lawyers, John Roberts and Samuel Alito, now sit on the Supreme Court, where they have delivered an unending line of business-friendly decisions and overturned one law after another that impedes the privileges of power.

    http://tpmmuckraker.talkingpointsmemo.com/2010/03/clarence_thomass_wife_teams_with_federalist
    _societ.php

    As the Los Angeles Times reported …, Virginia Thomas recently created Liberty Central, a new lobbying group that seeks to tap into the grassroots energy unleashed by the Tea Party movement.

    But Thomas will have help from some Republican players with a rather more inside-the-Beltway profile. Leonard Leo, a top official with the Federalist Society, is a director of the new group, according to business records kept by the state of Virginia, and reviewed by TPMmuckraker.

    In a 1995 speech to the Federalist Society, Clarence Thomas, a member of the society, described Leo as “my good friend.” A prominent conservative legal scholar and activist, Leo played a key role in successfully shepherding the Supreme Court nominations of John Roberts and Samuel Alito through the Senate confirmation process.

    http://www.accuracy.org/release/2218-supreme-court-pick-kagan-loves-the-federalist-society/
    …Kagan explicitly endorsed the Bush administration’s bogus category of ‘enemy combatant,’ whose implementation has been a war crime in its own right.
    Obama administration is as bad or worse than the Bush administration when it comes to issues like state secrets and wiretapping.

    “Kagan has said ‘I love the Federalist Society.’ This is a right-wing group; almost all of the Bush administration lawyers responsible for its war and torture memos are members of the Federalist Society.

    “Five currently on the U.S. Supreme Court were or are members of the Federalist Society: Harvard Law graduate Roberts; Harvard Law graduate Scalia; Harvard Law graduate Kennedy; Yale Law graduate Thomas; and Yale Law graduate Alito. A narrow elite is imposing itself through the legal system, and ordinary Americans need to start asserting themselves.”

    Now, selected by Obama, Elena Kagan Associate Justice of the Supreme Court of the United States, serving since
    August 7, 2010

  91. There’s no judicial genius in Kagan, imo, so there had to be another reason such mediocrity rose to the “top”.

    The really odd thing about “justice” that is fair to LABOR? Even very low IQs know it when they see it…you’d think “religion” would at least have the same capacity?

    I believe 196 countries have a LOWER unemployment rate than USA….the ex-slave owners never had a PLAN – how long did they think slavery was going to last?

    The Roman Empire brought back ONLY the best stock from “conquered” lands as “slaves” – but, get this, they PAID their slaves enough money for that hard physical labor no one wants to do forever to BUY their way to citizenship – and ones who did not cut it, well, let’s just say everyone has had a eugenics plan in their pocket…

    The PLUTOrats in USA? They never had a PLAN, still don’t, other than to turn everyone into a criminal…and the LAWS are now making sure GOOD people finally are “law” breakers…

    In one way or another, everyone who posts here is a spinner FOR the new “law and order” delusion.

    Again, even the RETARDED are capable of knowing JUSTICE….

  93. Re: @ Bruce E. Woych

    Thankyou Mr. Woych for all your research.

    It is refreshing to have such pertinently factual, and timely references/links on this blog.
    Your fabulously grand dissertation regarding the flow of reason should have overwhelmingly garnered much enthusiastic acceptance for your doctorate…with many well earned accolades coming from your peers.
    Your contemporaries must have great respect for you sir…as do I.

    Thanks again for sharing your conscious :-))

  94. tippygolden, there is to be a one-hour documentary on Girard tonight, broadcast on CBC radio, and it will be available on podcast also — free I believe.

  95. Very kind of you earle.florida and the feelings and respect, I assure you, are mutual. I look for your entries and your thoughtful contributions. I think we have several regulars here that are exceptional in the care they take to contribute sincere and thoughtful material during these very tough and confusing times. And it all done without market rewards! That MUST MEAN something !!!

    Your kind words made my day a lot brighter! Thanks !
    Bruce

  96. Hey Desi girl, if you truly were doing god’s work, you’d be here in the man cave, bouncing on the micro-fiber!

  98. A deeper analysis on the situation is needed. His view on the world economy is not far from reality, but there are still other strategies to uplift the economy.

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