Housing bubbles are missed, the Eurozone faces contagion, and nothing at all is being done about unemployment.
Not that this is anything new, but what’s frustrating is that no one is being held accountable for anything.
The superior officers of urinating marines, Fed governors, Wall Street financiers: you name ‘em and they’re getting a free pass.
Gorilla says: “When there’s no punishment for being craven, craven becomes the new normal!”
Yet again, a wealthy hedge fund manager engages in criminal behavior and is allowed to walk after a payment of $10 million.
This time, it’s the Administration’s former “car czar”.
The revolving door of corruption between Washington and Wall Street continues.
There’s zero accountability and the pervasive sense that the rule of law doesn’t apply to rich people who can afford to hire lawyers to drag out trials for years.
Unless criminals like Rattner have a clear understanding that they will lose their freedom and their wealth, there’s very little hope of improving the way business is done on Wall Street.
Oh, and by the way, it would be nice to close the tax loophole that sees crooks like these pay lower tax rates than almost anyone else in America.
Fat chance of that happening so long as the Know Nothing Party is back in power.
Gorilla says: “Guess he wouldn’t really rather have a Buick!”
The financial reform bill is stalled, thanks entirely to the Know Nothing Party…
So, a compromise will be reached, and a nothing bill will be passed.
The point of financial reform is to be seen to be tough on Wall Street, without actually correcting any of the practices that led to the mess we’re in.
There’s nothing here of substance about bank size, derivative transparency, or genuine consumer protection, but at least Americans are now aware that only one political party is serious about protecting Wall Street’s interests.
Gorilla says: “The shitty never sleep!”
Simon Johnson has made the case for some time that breaking up the big banks is the best way for America to get control over Wall Street.
And who can disagree?
Well, pretty much everyone who matters in our political leadership. There’s no stomach whatever for really taking on the big banks, either through forced downsizing or, as Paul Krugman would have it, tougher regulation aimed at making financial services more like the boring, profitable, plain vanilla sector it was from 1945-1980.
What we’ll get is a bit more regulation, a bit more “resolution authority” to wind up big domestic banks that get in trouble, and, as Johnson points out, absolutely nothing on the far more important issue of reining in cross-border banking. The banks will continue along their merry way until the next big bubble bursts.
Nobody in Congress likes what Wall Street has done, but everyone in Congress likes Wall Street money. So what matters in an election year is to be seen to be doing something, but not too much.
That’s why the Know Nothings, having realized a bit too late that there’s no political advantage to be had from defending the banksters, will go along with some sort of bill, and the President, thrilled at last to have some bipartisanship, will make sure the bill is watered down sufficiently as to be meaningless.
Gorilla says: “Wall Street is selling CDOs on the spoons we still haven’t hidden!”
It was run by crooks who gambled and lost.
Gorilla says: “Life’s not all that complicated on Wall Street!”
The financial reform bill is dead in the water, and it’s just as well.
The problem isn’t that the system lacks regulation, the problem is that the regulators didn’t do their jobs properly.
There’s no evidence they’ll do any better next time, and no willingness on the part of Wall Street’s captive legislators to take the banks on.
So, we can all start waiting around for the next bubble to burst: dollar carry trade, Chinese real estate, currency default swaps, or whatever it is our valiant regulators continue to ignore.
Gorilla says: “The rich man has already passed through the eye of the needle into deregulated heaven!”
The tidetime folklorist wonders whether not begrudging will have a bigger impact on unemployment than say not apologizing.
The Platter: Sorry/I Ran All The Way Home by the Impalas (do they still make those in Detroit?)
The Bait: The Heddon Meadow Mouse (currently cavorting unapologetically in the White House garden)
The Fed leaves cheap money in place, while the Administration backtracks yet again from serious regulatory reform.
Message: This time it’s ok, next time it’s ok! Oh, we’re angry about the pay schemes and the massive taxpayer bailout, but we don’t intend to bite the hand that feeds us!!!
Gorilla suggests: “Cancel my order for plain vanilla, I’d like tutti frutti carry trade with extra hedging please!”
The GAO says AIG’s condition has “stabilized”, whatever that means, but long-term survival depends, surprise!, on “the long-term health of the company, market conditions, and continued government support.”
We’re in for $185 billion so far, we’ve softened the bailout conditions 3 times, and yet another AIG-sponsored Congressman thinks we should ease the debt burdens further.
Bottom line? Taxpayers are unlikely ever to be paid back.
AIG, like Citibank, Merrill, GM, Lehman Brothers, Bear Stearns, Fannie, Freddie and BoA, should have been nationalized, its assets sold off, its shareholders and debt holders wiped out, and its directors and management fired. This would have enabled the country to regain some control over Wall Street and to restore the principle of moral hazard.
Instead, Washington continues to play kick the can down the road, so the salaries and bubbles continue, because there’s always hope for the future in Movingforwardville!!!
Gorilla concludes: “Remember the next time someone mentions Goingbackwardville: There’s no again without AIG!”
These were the things that mattered in Gorilla’s world this week:
*The Administration scrapped missile defense in Eastern Europe, to be replaced by a less expensive dinosaur. It appears that making deals is what comes first in Obama’s foreign policy, the better to have time to make deals in domestic policy. Gorilla thinks we’ll have an arms control agreement and an understanding on Iran with the Russians before the end of the year.
*Health care continues to spin its wheels forward. Senator Max Baucus crafted a very bad plan, and it is unclear whether health care reform can ever pass in the Senate. Gorilla still thinks we’ll have a deal by the end of the year, and it will be sufficiently meaningless for both parties to declare victory.
*The Israeli-Palestinian dance continues. Gorilla thinks there will be nothing to talk about for at least another year.
*The anniversary of the Lehman Brothers failure brought much tut-tutting and the unacknowledged reality that nothing much will be done to rein in Wall Street. Not a single bank CEO showed up for the President’s speech, even though his actions saved their asses. A lower pay packet and a higher capital requirement distracts from the truth: Wall Street is too big and politicians are too small. Gorilla assumes the next bubble is already underway, this time in the dollar carry trade.
*Mary Travers, Keith Floyd, and the pizza box Imac died. They all contributed richly to Gorilla’s life.
