Financial fuckery thread

[Cain]

There are so many potential ways the global economy can explode this year (hedge funds, banks, Chinese/British property price collapses, the straits of Hormuz, another earthquake somewhere important, a tsunami or hurricane etc) that I'll be surprised if we make it to the end of the year in anything like as "good" a condition as we are now.

[Scribbly]

Monday, Lagarde said that the Eurozone firewall needs to be made much bigger for Spain and Italy to avoid default. Approximately $500bn, with an expectation that there will need to be $1tn provided over the next two years for bailout funds worldwide.

Germany seems to be the target again. Given how belligerent they were last time I just don't see it going through.

Really will be interesting to see what's still standing at the end of 2014.

[Cain]

South America and China have already made it clear they're not going to pay into an IMF fund for European stability.  I bet Angela Merkel is feeling mighty isolated nowadays...

[Cain]

I'm going to agree with the Institute of Directors

http://www.bbc.co.uk/news/uk-politics-16827424

Fred Goodwin knighthood 'hysteria' criticised

Figures from the business world have hit out at a decision to strip former Royal Bank of Scotland boss Fred Goodwin of his knighthood.

He had been criticised over the bank's near-collapse in 2008, which prompted a taxpayer bailout. Political pressure to remove the honour had mounted recently.

This, along with the focus on bank bonuses, are two of the biggest sources of political-economic stupidity in the UK today.

Firstly, who gives a fuck if Goodwin has a knighthood or not?  Oh, thats right, people who think Knighthoods count as anything more than political favours for people impressed by archaic titles.  In other words, idiots.  It's not surprising that the head of one of the biggest banks in a country with an outsized financial sector and where that sector has significant political influence would be honoured by that system.

A smart person would say "lets use this to hang it around the neck of both current and past governments, highlight their essential continuity and underline the political influence of the banks".  An idiot goes "OMG Fred Goodwin is disgracing the noble institution of the Knighthood, and devaluing the hard work of honest people like Bono, this is an outrage, fix it and fix it now."

Secondly, bonuses.  Yes, giving people bonuses for fucking up is bad.  Yes, giving them bonuses for performing their job marginally competently is also not great.  Did bonuses cause the financial crisis?  Fuck no, so shut up about them, you little tits.  Whining about bonuses when the Eurozone is starting to fall apart and the Chinese property bubble has collapsed and American banks have been engaged in highly criminal acts and are getting away with it....all that suggests you a) know nothing about finance and b) deserve to have your right to vote taken away for being irredeemably stupid.

I realise this also applies to most members of Parliament who took part in the idiotic "debate" on the issue last week.  I am, if anything, more convinced of the above two points.

On the other hand, watching the IoS whine about the "political act" of stripping a knighthood, as if giving a knighthood were also not a political act, was the height of hilarity.

[Scribbly]

I'm going to agree with the Institute of Directors

http://www.bbc.co.uk/news/uk-politics-16827424

Fred Goodwin knighthood 'hysteria' criticised

Figures from the business world have hit out at a decision to strip former Royal Bank of Scotland boss Fred Goodwin of his knighthood.

He had been criticised over the bank's near-collapse in 2008, which prompted a taxpayer bailout. Political pressure to remove the honour had mounted recently.

This, along with the focus on bank bonuses, are two of the biggest sources of political-economic stupidity in the UK today.

Firstly, who gives a fuck if Goodwin has a knighthood or not?  Oh, thats right, people who think Knighthoods count as anything more than political favours for people impressed by archaic titles.  In other words, idiots.  It's not surprising that the head of one of the biggest banks in a country with an outsized financial sector and where that sector has significant political influence would be honoured by that system.

A smart person would say "lets use this to hang it around the neck of both current and past governments, highlight their essential continuity and underline the political influence of the banks".  An idiot goes "OMG Fred Goodwin is disgracing the noble institution of the Knighthood, and devaluing the hard work of honest people like Bono, this is an outrage, fix it and fix it now."

Secondly, bonuses.  Yes, giving people bonuses for fucking up is bad.  Yes, giving them bonuses for performing their job marginally competently is also not great.  Did bonuses cause the financial crisis?  Fuck no, so shut up about them, you little tits.  Whining about bonuses when the Eurozone is starting to fall apart and the Chinese property bubble has collapsed and American banks have been engaged in highly criminal acts and are getting away with it....all that suggests you a) know nothing about finance and b) deserve to have your right to vote taken away for being irredeemably stupid.

I realise this also applies to most members of Parliament who took part in the idiotic "debate" on the issue last week.  I am, if anything, more convinced of the above two points.

On the other hand, watching the IoS whine about the "political act" of stripping a knighthood, as if giving a knighthood were also not a political act, was the height of hilarity.

I think both issues are largely down to the low standards of reporting (which are themselves down to the fact people eat that shit up I guess).

It is a lot easier to report 'YOU have to call a Bad Man Sir, isn't that terrible?' or 'Banker Earns More In One Year Than You Ever Will' than it is to try and explain the Eurozone crisis. This way, the reporters can tick the 'financial news' box and be guaranteed of finding some suitably outraged people to huff indignantly about it for prime time. If they ask the man on the street whether they think the Eurozone has any future, they'll have to ask six times as many people before they find one who says something intelligible.

[Cain]

Yeah, totally.

Still, it's as annoying as hell.  Self-righteous indignation does not remove the terrors of economics!

[Cain]

Greece has voted yet again for austerity measures...though this time they had to kick out 40+ MPs for voting against them.

Also, about 80,000 people protested in Athens alone.  30 buildings were set on fire.  And Greece is still no closer to paying off its debt.

The absolute worst part?  That in 2008, Greece's debt stood at 260 billion Euros, and as of today, the EU has spent 340 billion Euros on bailouts, once you throw in PSI etc into the mix.  And Greece is still no closer to paying off its debt.

We should have just paid the thing off entirely in 2008 and told them to never do it again.  Instead, we've worked a painful level of debt up into a systemic global financial risk.  Go us!

[Elder Iptuous]

The absolute worst part?  That in 2008, Greece's debt stood at 260 billion Euros, and as of today, the EU has spent 340 billion Euros on bailouts, once you throw in PSI etc into the mix.  And Greece is still no closer to paying off its debt.

absolutely incredible!

of course, if that had happened, it would have set a bad precedent for debt forgiveness.
and we don't want all those people around the world that are hopelessly indebted to empires to think they could demand dignity, now, do we?

[The Good Reverend Roger]

The absolute worst part?  That in 2008, Greece's debt stood at 260 billion Euros, and as of today, the EU has spent 340 billion Euros on bailouts, once you throw in PSI etc into the mix.  And Greece is still no closer to paying off its debt.

I got the impression a while ago that the EU - or parts of it, anyway - wasn't actually interested in fixing Greece, but instead picking over its bones.

[Elder Iptuous]

in the past it was only the smudgy countries that were preyed upon by the empires using IMF bailout type devices, right?
i would think action like this would put a chill down the spines of all players in the EU that aren't at the top of the pack.  that your 'union' might just eat you at some point seems like it would hurt the morale and cohesion of the venture as a whole.

[Scribbly]

in the past it was only the smudgy countries that were preyed upon by the empires using IMF bailout type devices, right?
i would think action like this would put a chill down the spines of all players in the EU that aren't at the top of the pack.  that your 'union' might just eat you at some point seems like it would hurt the morale and cohesion of the venture as a whole.

We aren't all in this together.

That's the basic mentality of the EU. It isn't a matter of trying to help each other through this; nobody cares about anyone but themselves. I don't even mean that they want what to do what is best for their countries, I mean that the naked self-interest runs higher than that. All the countries in the EU want to do everything they can to perpetuate the power structures which are already in place, and if that means throwing the undesirables like Greece under the bus, well, at least it is politically palatable back home.

I'm not going to say that Greece had (and has) no problems with its population; it clearly does. Tax evasion is rife, for a start. But the governments and media have done a fantastic job of selling the idea that failing to cut deficits is a matter of 'laziness', and that therefore anyone who is in trouble has brought it on themselves. Why should WE help THEM out? We're in tough times too, after all, and WE didn't bring it on OURSELVES, right?!

It is a self destructive and naive political ideology which is devouring our countries from within. We all seem to have this lunatic idea that if we position ourselves properly we can ride the wave of debt to come out at a higher position relative to our competitors, completely ignoring that all we really succeed in doing is dragging the entirety of Europe down and possibly lowering global living standards as a result.

Because this is preferable, presumably, to eating the bankers.

[Scribbly]

I'm going to agree with the Institute of Directors

http://www.bbc.co.uk/news/uk-politics-16827424

Fred Goodwin knighthood 'hysteria' criticised

Figures from the business world have hit out at a decision to strip former Royal Bank of Scotland boss Fred Goodwin of his knighthood.

He had been criticised over the bank's near-collapse in 2008, which prompted a taxpayer bailout. Political pressure to remove the honour had mounted recently.

This, along with the focus on bank bonuses, are two of the biggest sources of political-economic stupidity in the UK today.

Firstly, who gives a fuck if Goodwin has a knighthood or not?  Oh, thats right, people who think Knighthoods count as anything more than political favours for people impressed by archaic titles.  In other words, idiots.  It's not surprising that the head of one of the biggest banks in a country with an outsized financial sector and where that sector has significant political influence would be honoured by that system.

A smart person would say "lets use this to hang it around the neck of both current and past governments, highlight their essential continuity and underline the political influence of the banks".  An idiot goes "OMG Fred Goodwin is disgracing the noble institution of the Knighthood, and devaluing the hard work of honest people like Bono, this is an outrage, fix it and fix it now."

Secondly, bonuses.  Yes, giving people bonuses for fucking up is bad.  Yes, giving them bonuses for performing their job marginally competently is also not great.  Did bonuses cause the financial crisis?  Fuck no, so shut up about them, you little tits.  Whining about bonuses when the Eurozone is starting to fall apart and the Chinese property bubble has collapsed and American banks have been engaged in highly criminal acts and are getting away with it....all that suggests you a) know nothing about finance and b) deserve to have your right to vote taken away for being irredeemably stupid.

I realise this also applies to most members of Parliament who took part in the idiotic "debate" on the issue last week.  I am, if anything, more convinced of the above two points.

On the other hand, watching the IoS whine about the "political act" of stripping a knighthood, as if giving a knighthood were also not a political act, was the height of hilarity.

I want to make a comment on bonuses, even though it is a very marginal issue in the entire financial mess, because I think it highlights the gestures being made to placate people.

All through the BBC news yesterday I heard people saying how great it was Lloyds bankers were losing £2 million out of their (combined) bonuses in order to be punished for fraudulent PPI sales. These are the individuals responsible for the criminal act which has dragged on for years.

In total, the PPI fiasco cost Lloyds £3.2 billion.

The bankers are still getting bonuses - at least six figures and in some cases still seven. However, by giving them this slap on the wrist, Lloyds have now responded to public opinion. Barclays and Royal Bank of Scotland are being criticized this morning for not doing so, which will likely spiral into yet more coverage of ZOMG banker's bonuses.

But in total, the actual payback for what the bankers did amounts to 1/100th of the .2 of the losses their actions have incurred. The huge losses are still covered, essentially, by government bailouts.

-

In more pertinent financial news, the greek 'voluntary writeoff' of 53% of their debt is being considered over the next few days. If it goes ahead, people are hoping that they can have Greece back on a stable footing by 2020. Everyone else seems to be basically treating this as a default, because they can call it what they want but it means they aren't capable of paying, and although the Euro is up in the short term... it seems unlikely that any sensible private investors are going to be buying European government bonds any time in the future.

If we also have an Iranian crisis in the next three months as is being predicted in some quarters, Europe is going to go into shock and another very deep recession. I suspect we're going to see that anyway over the next year; the eurozone crisis isn't going away, nobody is addressing the real issues, everyone in the financial world seems to be either in huge denial or panicking at an increasing rate.

[Cain]

Disturbing news from Greece:

http://www.nakedcapitalism.com/2012/02/paul-mason-of-bbc-on-how-austerity-is-reducing-greece-to-developing-country-status.html

The BBC's Paul Mason, fresh back from Greece, gives a report on Democracy Now of how living conditions have deteriorated as a result of the imposition of austerity measures. One of the stunners, mentioned in Atlantic Wire (hat tip Lambert), is that not only will some Greeks have to work without pay, some will have to pay for their jobs (yes, that is not a typo). The euphemism is a "negative salary."

Mason also discusses how this program is radicalizing the public. Communists, Trotskyists and other extreme-left groups are polling at 43%. That's a strikingly high number. This plus the level of dissent on the street suggests Greece is on its way out of the eurozone.

Not so much the high polling of the extreme left - to be honest, if the Greeks weren't doing that, I'd be worried, given their history.  The paying to have a job bit...that's worrying.

Things have gotten so bad the major centre-left Greek parties are now finally questioning the austerity measures being put in place.  I honestly won't be surprised if this ends in violence.

[LMNO]

I'm sure I'm only seeing one side here, but I read Krugman's blog quite often, and he has continually shown through historical (and current) analysis that austerity during a recession only increases the recession.

Other than blind ideology, why the fuck are all politicians (and some economists) so gung-ho about austerity in a recession?

[Cain]

Bruce Bueno de Mesquita actually kindof answers this in his "The Dictator's Handbook: Why Bad Behaviour Is Almost Always Good Politics."

Politicians desire three things, 1) to acquire power, 2) to hold onto power and 3) to control the cash flow.

Recessions are not bad because there is less money per se, but because there is less money for politicians to buy off opposition and pay supporters.  Recessions are a political issue, not an economic one.

Politicians therefore have to prioritise who needs to be payed off.  What austerity tells us is that in so-called democracies, the general public is not a powerful or influential or unified enough actor that it needs to be bought off, beyond certain basic concessions.  Banks, on the other hand, are.