Financial fuckery thread

[Requia ☣]

See Roger for calling the loans (apparently its rare circumstances, and another killer contract clause).

It would be a time biding strategy, except the bit where entire neighborhoods (and in a few extreme cases, entire suburb towns) are going down, as more houses end up abandoned and local economies turn to absolute shit, those house prices are just going to fall even further.

Also, according to my various contacts inside the investment machines, the most likely outcome of all this will be that overall housing prices stay low for a while, since the price won't be allowed by investors to drop as low as the market needs it to be, so it has to wait for inflation to catch up.  Also couple this with the slow flood of houses coming off the foreclosure line.  It's currently estimated the banks are holding enough houses to cover every new home purchase for the next 10 years.  Not much room for prices to go up once they start selling.

[Cain]

No, srsly.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahD2WoDAL9h0

"I just wrote my first reference for a gun permit," said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it's true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn't call me back. The New York Police Department has told me that "as a preliminary matter" it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names.

While we wait, Goldman has wrapped itself in the flag of Warren Buffett, with whom it will jointly donate $500 million, part of an effort to burnish its image -- and gain new Goldman clients. Goldman Sachs Chief Executive Officer Lloyd Blankfein also reversed himself after having previously called Goldman's greed "God's work" and apologized earlier this month for having participated in things that were "clearly wrong."

Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs to provoke the firm into an apology. Talk that Goldman bankers might have armed themselves in self-defense would sound ludicrous, were it not so apt a metaphor for the way that the most successful people on Wall Street have become a target for public rage.

Pistol Ready

Common sense tells you a handgun is probably not even all that useful. Suppose an intruder sneaks past the doorman or jumps the security fence at night. By the time you pull the pistol out of your wife's jewelry safe, find the ammunition, and load your weapon, Fifi the Pomeranian has already been taken hostage and the gun won't do you any good. As for carrying a loaded pistol when you venture outside, dream on. Concealed gun permits are almost impossible for ordinary citizens to obtain in New York or nearby states.

In other words, a little humility and contrition are probably the better route.

Until a couple of weeks ago, that was obvious to everyone but Goldman, a firm famous for both prescience and arrogance. In a display of both, Blankfein began to raise his personal- security threat level early in the financial crisis. He keeps a summer home near the Hamptons, where unrestricted public access would put him at risk if the angry mobs rose up and marched to the East End of Long Island.

To the Barricades

He tried to buy a house elsewhere without attracting attention as the financial crisis unfolded in 2007, a move that was foiled by the New York Post. Then, Blankfein got permission from the local authorities to install a security gate at his house two months before Bear Stearns Cos. collapsed.

This is the kind of foresight that Goldman Sachs is justly famous for. Blankfein somehow anticipated the persecution complex his fellow bankers would soon suffer. Surely, though, this man who can afford to surround himself with a private army of security guards isn't sleeping with the key to a gun safe under his pillow. The thought is just too bizarre to be true.

So maybe other senior people at Goldman Sachs have gone out and bought guns, and they know something. But what?

Henry Paulson, U.S. Treasury secretary during the bailout and a former Goldman Sachs CEO, let it slip during testimony to Congress last summer when he explained why it was so critical to bail out Goldman Sachs, and -- oh yes -- the other banks. People "were unhappy with the big discrepancies in wealth, but they at least believed in the system and in some form of market-driven capitalism. But if we had a complete meltdown, it could lead to people questioning the basis of the system."

Torn Curtain

There you have it. The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm's revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.

This slip-up let the other bailed-out banks happily hand off public blame to Goldman, which is unpopular among its peers because it always seems to win at everyone's expense.

Plenty of Wall Streeters worry about the big discrepancies in wealth, and think the rise of a financial industry-led plutocracy is unjust. That doesn't mean any of them plan to move into a double-wide mobile home as a show of solidarity with the little people, though.

Cool Hand Lloyd

No, talk of Goldman and guns plays right into the way Wall- Streeters like to think of themselves. Even those who were bailed out believe they are tough, macho Clint Eastwoods of the financial frontier, protecting the fistful of dollars in one hand with the Glock in the other. The last thing they want is to be so reasonably paid that the peasants have no interest in lynching them.

And if the proles really do appear brandishing pitchforks at the doors of Park Avenue and the gates of Round Hill Road, you can be sure that the Goldman guys and their families will be holed up in their safe rooms with their firearms. If nothing else, that pistol permit might go part way toward explaining why they won't be standing outside with the rest of the crowd, broke and humiliated, saying, "Damn, I was on the wrong side of a trade with Goldman again."

[Mesozoic Mister Nigel]

Because you have a credit default swap with AIG, so if you call in the loan (or more commonly, raise the interest rate), forcing a foreclosure,  AIG pays out the balance lost on the auction of the house.  So you get all that money today instead of over the next 30 years (plus the added value from the unpayably high interest rate).

Also, they changed the rules so that banks can sit on foreclosed property indefinitely, which means the bank can keep the value on the books of the house the last time it was appraised.

hm. interesting...
so under what clause do they call the loan?  Do you know what the status of AIG is after it's bailout in regards to it's ability to honor all the CDS derivatives?  are they likely to require more bailout?

as far as sitting on foreclosed property just so they can keep the artificially high appraisal on the books, that would just be a biding time strategy, right? since the value of the house is lower, and probably going to continue going south? (esp. after the next wave of rate resets hits next year on the option arms...)  They would presumably only do that if they didn't have a CDS on the mortgage asset that would payout immediately, right?

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

[Elder Iptuous]

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

Right.   I was assuming that when he referred to the last appraisal, it was the last appraisal that the lender did/ordered.  otherwise it would get marked down each year by the property tax appraisal, so there's no advantage...

[Mesozoic Mister Nigel]

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

Right.   I was assuming that when he referred to the last appraisal, it was the last appraisal that the lender did/ordered.  otherwise it would get marked down each year by the property tax appraisal, so there's no advantage...

The property tax assessments are generally adjusted to the last bank appraisal/sale price, and then increase at a percentage annually after that. You can appeal your assessment, but it usually doesn't do a whole lot of good so most people don't.

[Elder Iptuous]

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

Right.   I was assuming that when he referred to the last appraisal, it was the last appraisal that the lender did/ordered.  otherwise it would get marked down each year by the property tax appraisal, so there's no advantage...

oh that's true... they're still increasing tax assessment appraisals... 

The property tax assessments are generally adjusted to the last bank appraisal/sale price, and then increase at a percentage annually after that. You can appeal your assessment, but it usually doesn't do a whole lot of good so most people don't.

[LMNO]

if we had a complete meltdown, it could lead to people questioning the basis of the system.

Dare to dream.

[Triple Zero]

Wow, this is beautiful. If anything, we should amp up these rumours about the bankers and the traders arming up to defend against a prole uprising. For the same reason talk of assassination was shunned during election times, for fear of talking about it making it more likely.
Would that work? Even if it doesn't cause people to go postal on bankers [think security guard that just lost his house?], spreading the rumours would make some bankers shit themselves?
Just make sure they know we know it's not just Goldman Sachs but all of those fuckers.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahD2WoDAL9h0

“I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits. The NYPD also said it will be a while before it can name names.

While we wait, Goldman has wrapped itself in the flag of Warren Buffett, with whom it will jointly donate $500 million, part of an effort to burnish its image -- and gain new Goldman clients. Goldman Sachs Chief Executive Officer Lloyd Blankfein also reversed himself after having previously called Goldman’s greed “God’s work” and apologized earlier this month for having participated in things that were “clearly wrong.”

Has it really come to this? Imagine what emotions must be billowing through the halls of Goldman Sachs to provoke the firm into an apology. Talk that Goldman bankers might have armed themselves in self-defense would sound ludicrous, were it not so apt a metaphor for the way that the most successful people on Wall Street have become a target for public rage.

Pistol Ready

Common sense tells you a handgun is probably not even all that useful. Suppose an intruder sneaks past the doorman or jumps the security fence at night. By the time you pull the pistol out of your wife’s jewelry safe, find the ammunition, and load your weapon, Fifi the Pomeranian has already been taken hostage and the gun won’t do you any good. As for carrying a loaded pistol when you venture outside, dream on. Concealed gun permits are almost impossible for ordinary citizens to obtain in New York or nearby states.

In other words, a little humility and contrition are probably the better route.

Until a couple of weeks ago, that was obvious to everyone but Goldman, a firm famous for both prescience and arrogance. In a display of both, Blankfein began to raise his personal- security threat level early in the financial crisis. He keeps a summer home near the Hamptons, where unrestricted public access would put him at risk if the angry mobs rose up and marched to the East End of Long Island.

To the Barricades

He tried to buy a house elsewhere without attracting attention as the financial crisis unfolded in 2007, a move that was foiled by the New York Post. Then, Blankfein got permission from the local authorities to install a security gate at his house two months before Bear Stearns Cos. collapsed.

This is the kind of foresight that Goldman Sachs is justly famous for. Blankfein somehow anticipated the persecution complex his fellow bankers would soon suffer. Surely, though, this man who can afford to surround himself with a private army of security guards isn’t sleeping with the key to a gun safe under his pillow. The thought is just too bizarre to be true.

So maybe other senior people at Goldman Sachs have gone out and bought guns, and they know something. But what?

Henry Paulson, U.S. Treasury secretary during the bailout and a former Goldman Sachs CEO, let it slip during testimony to Congress last summer when he explained why it was so critical to bail out Goldman Sachs, and -- oh yes -- the other banks. People “were unhappy with the big discrepancies in wealth, but they at least believed in the system and in some form of market-driven capitalism. But if we had a complete meltdown, it could lead to people questioning the basis of the system.”

Torn Curtain

There you have it. The bailout was meant to keep the curtain drawn on the way the rich make money, not from the free market, but from the lack of one. Goldman Sachs blew its cover when the firm’s revenue from trading reached a record $27 billion in the first nine months of this year, and a public that was writhing in financial agony caught on that the profits earned on taxpayer capital were going to pay employee bonuses.

This slip-up let the other bailed-out banks happily hand off public blame to Goldman, which is unpopular among its peers because it always seems to win at everyone’s expense.

Plenty of Wall Streeters worry about the big discrepancies in wealth, and think the rise of a financial industry-led plutocracy is unjust. That doesn’t mean any of them plan to move into a double-wide mobile home as a show of solidarity with the little people, though.

Cool Hand Lloyd

No, talk of Goldman and guns plays right into the way Wall- Streeters like to think of themselves. Even those who were bailed out believe they are tough, macho Clint Eastwoods of the financial frontier, protecting the fistful of dollars in one hand with the Glock in the other. The last thing they want is to be so reasonably paid that the peasants have no interest in lynching them.

And if the proles really do appear brandishing pitchforks at the doors of Park Avenue and the gates of Round Hill Road, you can be sure that the Goldman guys and their families will be holed up in their safe rooms with their firearms. If nothing else, that pistol permit might go part way toward explaining why they won’t be standing outside with the rest of the crowd, broke and humiliated, saying, “Damn, I was on the wrong side of a trade with Goldman again.”

[Elder Iptuous]

Wow, this is beautiful. If anything, we should amp up these rumours about the bankers and the traders arming up to defend against a prole uprising. For the same reason talk of assassination was shunned during election times, for fear of talking about it making it more likely.
Would that work? Even if it doesn't cause people to go postal on bankers [think security guard that just lost his house?], spreading the rumours would make some bankers shit themselves?
Just make sure they know we know it's not just Goldman Sachs but all of those fuckers.

I totally support that.
Do you have any ideas regarding how best to spread these rumors among the 'proles'?
There needs to be more news stories that report this as corroboration...
Various flavors of chain emails that would appeal to the various sectors of the demographic to spread them....
Also, although GS isn't alone, they are heads and shoulders above the others from what I have read.

[Cramulus]

this is a really strong angle for disinformation.

the "just uprising of the people" meme is gaining force, AIG and GS employees are a visible evil, and the rumor feeds these dark emotions people have re: DOING SOMETHING about the system being so broken. Doing something HARSH.

The whole concept is emotionally evocative.

I was reading an article about Crowdsourcing a few weeks ago, and somebody had suggested that there should be a database of AIG and GS employee addresses. And then the crowd would determine what it wants to do with those data. The implication was violent.

will think more about this


it may just be the angle we've been waiting for

[The Good Reverend Roger]

this is a really strong angle for disinformation.

the "just uprising of the people" meme is gaining force, AIG and GS employees are a visible evil, and the rumor feeds these dark emotions people have re: DOING SOMETHING about the system being so broken. Doing something HARSH.

The whole concept is emotionally evocative.

I was reading an article about Crowdsourcing a few weeks ago, and somebody had suggested that there should be a database of AIG and GS employee addresses. And then the crowd would determine what it wants to do with those data. The implication was violent.

will think more about this


it may just be the angle we've been waiting for

I've been mentioning the idea that AIG/GS employees are buying firearms, alongside market indications that the whole mess will drop into the pot in February/March, at every board I go to.

And IRL.

Just for fun.

[Triple Zero]

well for starters, spreading that link. this is the faster-loading, no ads and crap print-page link btw:
http://www.bloomberg.com/apps/news?pid=20670001&sid=ahD2WoDAL9h0

continuing on that line, perhaps an AWS spoof article about people harassing bankers? Just, it need to be only high ranking management bankers, not the clerks behind the counter of course. That would have the opposite effect because the clerks are "one of us" (us being "the little people"). Which might cause sympathy and therefore resistance to the idea of harassing the bankers.

And what Roger said. I will certainly tell my friends.

Oh and I'll just tweet that link right now, too. Anyone got a good line to go with it? "Bankers arming up to defend from people uprising" is the first I can come up with. Needs more catchy.

Lemme check that SEO list of "catchy headline formats"

how about "Why are bankers arming themselves to defend from *** ?" <--- need a good phrase there. but the idea is by asking why, you step past the question whether they are or not.

should send this to @dangerousmeme too, he'd love that stuff, and gets a shitload of readers.

what about

"The number One reason why bankers are arming themselves"

(it doesn't really need to relate directly to the topic of the article, tangentially is also fine, as long as it's provoking.)

maybe

"Public outrage: Should bankers be watching their backs, or worse?"

[The Good Reverend Roger]

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

Right.   I was assuming that when he referred to the last appraisal, it was the last appraisal that the lender did/ordered.  otherwise it would get marked down each year by the property tax appraisal, so there's no advantage...

The property tax assessments are generally adjusted to the last bank appraisal/sale price, and then increase at a percentage annually after that. You can appeal your assessment, but it usually doesn't do a whole lot of good so most people don't.

I DID acknowledge that I was mistaken, right?

Nigel was correct.  Banks cannot call a loan simply because it is upside down.

DAMMIT, JIM, I'M A HOLY MAN™, NOT AN ECONOMIST! (And I should remember that in the future.)

[Mesozoic Mister Nigel]

Just to point out that strategy wouldn't work with houses that were confirmed to be upside-down via an appraisal because it would show as a loss on the books.

Right.   I was assuming that when he referred to the last appraisal, it was the last appraisal that the lender did/ordered.  otherwise it would get marked down each year by the property tax appraisal, so there's no advantage...

The property tax assessments are generally adjusted to the last bank appraisal/sale price, and then increase at a percentage annually after that. You can appeal your assessment, but it usually doesn't do a whole lot of good so most people don't.

I DID acknowledge that I was mistaken, right?

Nigel was correct.  Banks cannot call a loan simply because it is upside down.

DAMMIT, JIM, I'M A HOLY MAN™, NOT AN ECONOMIST! (And I should remember that in the future.)

Yes, you did, and graciously at that.

[Cain]

http://trueslant.com/matttaibbi/2009/11/30/goldman-sachs-arms-itself/

I'm reading this article on Goldman executives applying en masse for gun permits and I'm trying to decide exactly how funny it is on a scale of 1 to 10. Reader assistance here is definitely appreciated.

On the unfunny side: it's never good when anyone buys guns, particularly not rich weenies with persecution complexes. Also, it might possibly be true that people have threatened Goldman bankers physically, which would really not be all that funny and would make me personally feel somewhat uncomfortable, although it would probably never be very high on the list of things I have to lose sleep over.

On the funny side, there are several things to consider. There's the image of Goldman guys walking into Dean and DeLuca's nervously grabbing at their holstered nines as they buy espresso and soy waffles. There's the idea that some of these dorks might actually think that they're going to forestall proletarian rebellion by keeping guns in their Hamptons beach houses. There's even the impossible-to-resist image of a future accidental shooting of some innocent hot dog vendor on Park Avenue, followed by the inevitable p.r. response from Goldman in which the bank claims that the only thing its employees are guilty of is "being really good at shooting people."

Certainly, there are things to ponder on both sides. Right now I'm leaning toward making this a seven on the funny scale, trending toward eight. Advice more than welcome.