It’s a lovely day in the neighborhood, sort of a sin to be sitting here in my dungeon typing away with so many projects begging for my attention outside.
But I think we’ve already made peace with the idea that this is how I’m ‘twisted’.
Good thing Mother Nature has a ‘to-do list’ five times longer than any one of your arms or I’d probably hari-kari come TEOTWAKI, the day when the Internets go dark. Which is not to say that more than a few people won’t make the transition to life without their daily dose of pixels successfully.
Sort of a bizarre admission, most of us will be so busy trying to survive that we won’t even miss our technological ‘crutches’. You may find yourself going to bed with the sun, which will be okay because your backside will be dragging (from hauling buckets of water to your thirsty garden plants all day) and you will have run out of candles by then anyway!
None of this is to even hint at the heresy that we would not all endure long nights of wailing laments when our electronic babysitters are no longer there to comfort us and keep the all encompassing dark from swallowing us. Maybe some of us are grown up enough to face the dark…but if you listen carefully, you should have no problem hearing the sobs of the frightened ‘children’…and we are all SOMEBODY’S child.
We have a little ‘potpourri’ in store tonight, one main offering, which we will come to last in the que, and two brief ‘snippets’.
Our first snippet is something Ilargi borrowed off of Barry Ritholtz’s web site ‘The Big Picture’. It is a rather gruesome (albeit justified) expression of outrage over the Kabuki Dance that has become the ‘Great Recession’.
Barry Ritholtz evokes this image: "Like the last scene in Spartacus, I want to see a row of heads on pikes, and crucifixions stretching from Washington DC to Wall Street. I am beyond disgusted."
Ilargi thinks ‘heads on pikes’ is ‘over the top’ where I’d say, “The hell with pikes, just impale ‘em! That way the ones you only crucify will consider themselves ‘lucky’.”
It’s hard to pinpoint what provokes the sudden surging to the fore of this type of repressed outrage, but I saw the topic raised elsewhere in travels.
Notably, Alternet carried a wonderful Joe Bageant piece titled “When will we see justice?” (or something like that…you have to watch how many links you embed into a post or the ‘oh-oh’ squad will come and shut you down at my blog’s mirror site over on Blogger.)
That said we can speculate that this latest surge in public anger is due to the, er, ‘irregularities’ that have been exposed by the investigation of the collapse of Lehman Bros.
For the first time (although these facts have been known for quite a while here in the blogosphere) we have ‘proof’ that shareowners were ‘defrauded’ by the lavishly paid executives of Wall Street investment firms…
It is now two years after the collapse of Lehman Bros and has anyone seen a single prosecution anywhere? (Besides Bernie Madoff the Texan who pulled off that ‘Ponzi scheme’ in Antigua…)
Short answer, no.
Well good citizen, that brings us to snippet number two and the next exciting installment of the ‘Friday Night Bank Busters’.
FDIC Friday: Seven More Banks Fail
March 20th, 2010
Via: AP:
Regulators on Friday shut down seven banks in five states, bringing to 37 the number of bank failures in the U.S. so far this year.
The closings follow the 140 that succumbed in 2009 to mounting loan defaults and the recession. [Makes you real thankful ‘The Great Recession’ is over…oops!]
The Federal Deposit Insurance Corp. took over First Lowndes Bank, in Fort Deposit, Ala.; Appalachian Community Bank in Ellijay, Ga.; Bank of Hiawassee, in Hiawassee, Ga.; and Century Security Bank in Duluth, Ga.
The agency also closed down State Bank of Aurora, in Aurora, Minn.; Advanta Bank Corp., based in Draper, Utah; and American National Bank of Parma, Ohio.
The FDIC was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits. The regulatory agency approved the payout of the bank’s insured deposits and it said checks to depositors for their insured funds will be mailed on Monday. [How many ‘de-flationista’s’ are discounting the ‘inflationary’ effect this will have on the ‘real’ economy? Worse is the fact that the current method used to measure inflation actually doesn’t measure inflation! The formula is ‘inflation less inflation’.
The failure of Advanta Bank is expected to cost the federal deposit insurance fund $635.6 million.
For the other banks:
– First Citizens Bank of Luverne, Ala., agreed to assume the deposits and assets of First Lowndes Bank. First Lowndes had $137.2 million in assets and $131.1 million in deposits. The FDIC expects that the cost to its insurance fund will be $38.3 million.
– Community & Southern Bank of Carrollton, Ga., agreed to assume the deposits and assets of Appalachian Community Bank. The bank had $1 billion in assets and about $917.6 million in deposits. The cost to the insurance fund is expected to be $419.3 million.
– Citizens South Bank of Gastonia, N.C., will assume the deposits and assets of Bank of Hiawassee. Bank of Hiawassee had about $377.8 million in assets and $339.6 million in deposits. The failure is expected to cost the insurance fund $137.7 million.
– Bank of Upson, based in Thomaston, Ga., agreed to assume the assets and deposits of Century Security Bank, which had $96.5 million in assets and $94 million in deposits. It is expected to cost the insurance fund $29.9 million.
– Northern State Bank in Ashland, Wisc., agreed to assume the deposits and assets of State Bank of Aurora. The bank had about $28.2 million in assets and $27.8 million in deposits. The FDIC expects the move will cost the insurance fund $4.2 million.
– National Bank and Trust Co., based in Wilmington, Ohio, agreed to assume the assets and deposits of American National Bank, which had $70.3 million in assets and $66.8 million in deposits. The cost to the insurance fund is expected to total $17.1 million.
The pace of bank seizures this year is likely to accelerate in coming months, regulators have said, as losses mount on loans made for commercial property and development.
Seven banks in one throw…I dunno what the future holds but that’s a lot of banks! Will we start hearing jokes like, “What do you call fifty bankers at the bottom of the ocean?”
I read a good one yesterday…“Bankers…because here are some things even a lawyer would refuse to do.”
But, as I mentioned earlier, I digress.
The, er, ‘continued failure’ of what passes for our justice system is being felt elsewhere in economy , as tonight’s main offering attests.
A Ruinous Meltdown
By BOB HERBERT
Published: March 19, 2010
A story that is not getting nearly enough attention is the ruinous fiscal meltdown occurring in state after state, all across the country.
Taxes are being raised. Draconian cuts in services are being made. Public employees are being fired. The tissue-thin national economic recovery is being undermined. And in many cases, the most vulnerable populations — the sick, the elderly, the young and the poor — are getting badly hurt.
Arizona, struggling with a projected $2.6 billion budget shortfall, took the drastic step of scrapping its Children’s Health Insurance Program. That left nearly 47,000 low-income children with no coverage at all. Gov. Jan Brewer is also calling for an increase in the sales tax. She said, “Arizona is navigating its way through the largest state budget deficit in its long history.”
In New Jersey, the newly elected governor, Chris Christie, has proposed a series of budget cuts that, among other things, would result in public schools receiving $820 million less in state aid than they had received in the prior school year. Some well-off districts would have their direct school aid cut off altogether. Poorer districts that rely almost entirely on state aid would absorb the biggest losses in terms of dollars. They’re bracing for a terrible hit.
For all the happy talk about “no child left behind,” the truth is that in Arizona and New Jersey and dozens of other states trying to cope with the fiscal disaster brought on by the Great Recession, millions of children are being left far behind, and many millions of adults as well.
“We’ve talked in the past about revenue declines in a recession,” said Jon Shure of the Center on Budget and Policy Priorities, “but I think you have to call this one a revenue collapse. In proportional terms, there has never been a drop in state revenues like we’re seeing now since people started to keep track of state revenues. We’re in unchartered territory when it comes to the magnitude of the impact.” [What does this tell us good citizen? Understand, businesses pay most of the taxes, so why (all of a sudden) are businesses not contributing? Is the ‘smoking gun’ here off-shoring?]
Massachusetts, which has made a series of painful cuts over the past two years, is gearing up for more. Michael Widmer, president of the Massachusetts Taxpayers Foundation, told The Boston Globe: “There’s no end to the bad news here. The state fiscal situation is already so dire that any additional bad news is magnified.” [I’ll tell you from personal experience, seeing that Massachusetts is my ‘home state’, why tax revenues have ‘fallen off a cliff’. Our economy ‘used to be’ heavily ‘defense oriented’…now, even though we (as a nation) have never spent more on defense, we don’t do it here no more. So yes, it’s definitely an ‘off-shoring’ problem.]
California has cut billions of dollars from its education system, including its renowned network of public colleges and universities. Many thousands of teachers have been let go. Budget officials travel the state with a glazed look in their eyes, having tried everything they can think of to balance the state budget. And still the deficits persist. [Can you say ‘off-shoring’? If the business isn’t here then it doesn’t pay taxes here! It really is that simple.]
In the first two months of this year, state and local governments across the U.S. cut 45,000 jobs. Additional layoffs are expected as states move ahead with their budgets for fiscal 2011. Increasingly these budgets, instead of helping people, are hurting them, undermining the quality of their lives, depriving them of educational opportunities, preventing them from accessing desperately needed medical care, and so on. [Er, ‘so on’ is a topic that deserves considerably more attention as desperate States start using their police departments as ‘revenue enhancers’.]
The federal government has tried to help, but much more assistance is needed. [Screeching stop! Yeah, times are tough and you expect cutbacks to be made but hell, contrary to popular belief, the taxpayers don’t have ‘bottomless pockets’. Which is to say the solution to these ‘budget shortfalls’ don’t lie in ‘more taxes’ on people who are already ‘underpaid’. ‘The System’ created the problem and it’s going to take altering the system to repair the damage that’s been done.]
These are especially tough times for young people. “What we’re seeing now in Arizona and potentially in New Jersey and other states spells long-term trouble for the nation’s children,” said Dr. Irwin Redlener, a pediatrician who is president of the Children’s Health Fund in New York and a professor at Columbia University’s Mailman School of Public Health.
“We’re looking at all these cuts in human services — in health care, in education, in after-school programs, in juvenile justice. This all points to a very grim future for these children who seem to be taking the brunt of this financial crisis.” [We can only wonder if the good doctor is pointing to the same thing the rest of us fear, being a member of a society that has no use for you.]
Dr. Redlener issued a warning nearly a year ago about the “frightening” toll the recession was taking on children. He told me last April, “We are seeing the emergence of what amounts to a ‘recession generation.’ ”
The impact of the recession on everyone, of whatever age, is only made worse when states trying to balance their budgets focus too intently on cutting services as opposed to a mix of service cuts and revenue-raising measures. [Isn’t it ironic that ‘Red States’ are dead set against raising taxes? Um, flipping that rock over, employers have also been ‘allergic’ to handing out raises to their domestic workforce, compounding the problem/shortfall.]
As Mr. Shure of the Center on Budget noted, “The cruel irony is that in a recession like this, the people’s needs go up at the same time that the states’ ability to meet those needs goes down.”
Budget cuts also tend to weaken rather than strengthen a state’s economy, especially when they entail furloughs or layoffs. Government spending stimulates an economy in recession. And wise spending is an investment in everyone’s quality of life. [The ‘wisdom’ behind both the bailouts and the stimulus are both highly questionable.]
All states have been rocked by the Great Recession. And most have tried to cope with a reasonable mix of budget cuts and tax increases, or other revenue-raising measures. Those that rely too heavily on cuts are making guaranteed investments in human misery.
Here we see yet another ‘tool’ conservatives use to ‘starve the beast’ and insidiously, it has been working like a charm. For the past four decades the focus has been on ‘tax relief’ while commerce has concentrated on off-shoring rather than domestic investment.
This touches on another topic I’ve been hot to bring to the fore, that of too much money chasing too little return. Investors, having increased their returns enormously via the whipsaw of lower wages and benefit costs, have been increasingly hard pressed to find investment vehicles in which to place their newly pilfered plunder.
Um, understand even at the time Yahoo was not worth $500 a share…and yet we recently saw Google match that high water mark…maybe with a modicum better of justification but still, what are we seeing?
We could ask the same question of CDS…and arrive at pretty much the same answer. Investors are buying these pieces of garbage because there’s no place else to put the money.
Think about that and the sheer magnitude of the problem it presents.
Too much money with nowhere to go…and no legitimate way to make it grow! Understand that investors know if they don’t keep their money ‘working’, inflation will erode it until there’s nothing left. When you are dealing with large sums, ‘inflation erosion’ can be significant.
So imagine investor’s panic at being unable to keep their funds outperforming inflation. Sadly, what do you suppose happens in cases like this? These people are ready to believe anything anyone might propose as a solution.
And BANG, you have the Dot Com boom!
Which busted…only to be followed almost immediately by the Real Estate Boom…but hey, what did you expect? The pool of ‘qualified buyers’ was absolutely miniscule so there had to be some ‘razzle-dazzle’ when it came to the financial vehicles…add in the ‘voodoo’ of price appreciation and WHAM, you’ve got your sucker right where you want him…and you’ve also got something else. You’re ‘hip’ to the game, you know where the chips are going to fall.
So you bet against the same chumps you set up with variable rate mortgages and watch the dough roll in!
Are you beginning to grasp just how dangerous this ‘off-shoot’ of globalization really is?
Too much money in the hands of too few people have put civilization itself into a ‘death spiral’.
We can pull out but unfortunately the rest of the world may not go along with it…and that would be a tragedy.
Thanks for letting me inside your head,
Gegner
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