Bill
02-06-2009, 12:01 AM
Don't even bother, frightened white guys, this shit happened on your watch, so you can't emotionally cope with the implications, and have to live in denial as you crash the nation into the dirt.
Found this on metafilter...
http://www.dailykos.com/storyonly/2009/2/5/9358/44272/162/693426
John Kenneth Galbraith wrote that embezzlement is "the most interesting of crimes" for an economist. Embezzlement is almost always eventually discovered, but for a time results in "a net increase in psychic wealth," when the embezzler "has his gain" and the victim doesn’t miss it. Galbraith called the undiscovered and therefore unfelt loss "the bezzle."
According to Krugman (http://www.nytimes.com/2009/01/19/opinion/19krugman.html?_r=1&partner=rssnyt&emc=rss&pagewanted=print), the stock in banks that are solvent only by virtue of an "optimistic" valuation of their assets "isn’t totally worthless," but the (bank) stock’s value is "entirely based on the hope that shareholders will be rescued by a government bailout." The "huge gift to banks shareholders at taxpayer expense," Krugman said, was likely to be "disguised as ‘fair value’ purchases of toxic assets."
So maybe insolvent banks are stalling for time, hoping that the economy turns around, that home prices will go back up, or that sick borrowers will get well and unemployed borrowers will find jobs. Maybe they want to enjoy the "psychic wealth" of paper solvency for as long as possible.
And maybe they’re hoping we’ll buy their bezzle.
Check this out - the estimates of the real credit losses so far, that the banks have yet to add to the balence sheets...
Goldman Sachs economists estimated a couple of weeks ago that losses from all debt (http://blogs.wsj.com/economics/2009/01/15/banks-loan-losses-could-reach-2-trillion/)—residential mortgages, credit cards, car loans, commercial real estate, business loans—was now $2.1 trillion, and only $1 trillion of that had been written down by the financial institutions holding the debt. "Loss recognition by US financial institutions still has a long way to go," a Goldman economist said.
Not surprisingly, Nouriel Roubini is less optimistic still. Dr. Doom estimates (http://www.bloomberg.com/apps/news?pid=20601087&sid=a746r_1q9OOY) that losses for U.S. financial institutions could reach $3.6 trillion, about half of that losses to banks and broker dealers. "If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion," Roubini said. "This is a systemic banking crisis."
So who can we believe? Financial institutions’ own valuations of their assets? Standard & Poor’s computers? The price actually paid for an identical asset in a single recent transaction? Goldman Sachs’ economists? Dr. Doom?
Some prominent economists appear to put more faith in Roubini’s analysis than in financial institutions’ valuations. Joseph Stiglitz (http://www.bloomberg.com/apps/news?pid=20601087&sid=a.GJvNfWtCX0&refer=home), a Nobel laureate in economics, calls the rumored plan to buy such assets swapping "cash for trash." Paul Krugman (http://www.nytimes.com/2009/01/19/opinion/19krugman.html?partner=rssnyt&emc=rss), also a Nobel laureate, calls the plan "Wall Street voodoo"- "the belief that by performing elaborate financial rituals we can keep dead banks walking."
Found this on metafilter...
http://www.dailykos.com/storyonly/2009/2/5/9358/44272/162/693426
John Kenneth Galbraith wrote that embezzlement is "the most interesting of crimes" for an economist. Embezzlement is almost always eventually discovered, but for a time results in "a net increase in psychic wealth," when the embezzler "has his gain" and the victim doesn’t miss it. Galbraith called the undiscovered and therefore unfelt loss "the bezzle."
According to Krugman (http://www.nytimes.com/2009/01/19/opinion/19krugman.html?_r=1&partner=rssnyt&emc=rss&pagewanted=print), the stock in banks that are solvent only by virtue of an "optimistic" valuation of their assets "isn’t totally worthless," but the (bank) stock’s value is "entirely based on the hope that shareholders will be rescued by a government bailout." The "huge gift to banks shareholders at taxpayer expense," Krugman said, was likely to be "disguised as ‘fair value’ purchases of toxic assets."
So maybe insolvent banks are stalling for time, hoping that the economy turns around, that home prices will go back up, or that sick borrowers will get well and unemployed borrowers will find jobs. Maybe they want to enjoy the "psychic wealth" of paper solvency for as long as possible.
And maybe they’re hoping we’ll buy their bezzle.
Check this out - the estimates of the real credit losses so far, that the banks have yet to add to the balence sheets...
Goldman Sachs economists estimated a couple of weeks ago that losses from all debt (http://blogs.wsj.com/economics/2009/01/15/banks-loan-losses-could-reach-2-trillion/)—residential mortgages, credit cards, car loans, commercial real estate, business loans—was now $2.1 trillion, and only $1 trillion of that had been written down by the financial institutions holding the debt. "Loss recognition by US financial institutions still has a long way to go," a Goldman economist said.
Not surprisingly, Nouriel Roubini is less optimistic still. Dr. Doom estimates (http://www.bloomberg.com/apps/news?pid=20601087&sid=a746r_1q9OOY) that losses for U.S. financial institutions could reach $3.6 trillion, about half of that losses to banks and broker dealers. "If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion," Roubini said. "This is a systemic banking crisis."
So who can we believe? Financial institutions’ own valuations of their assets? Standard & Poor’s computers? The price actually paid for an identical asset in a single recent transaction? Goldman Sachs’ economists? Dr. Doom?
Some prominent economists appear to put more faith in Roubini’s analysis than in financial institutions’ valuations. Joseph Stiglitz (http://www.bloomberg.com/apps/news?pid=20601087&sid=a.GJvNfWtCX0&refer=home), a Nobel laureate in economics, calls the rumored plan to buy such assets swapping "cash for trash." Paul Krugman (http://www.nytimes.com/2009/01/19/opinion/19krugman.html?partner=rssnyt&emc=rss), also a Nobel laureate, calls the plan "Wall Street voodoo"- "the belief that by performing elaborate financial rituals we can keep dead banks walking."