Summers - hedge fund sycaphant

[WordKeeper]

I'm mad as hell and glad to have a place to express it!

Todays article is just more food about the problem with Summers having a function in Obama's administration. I am a big Obama supporter but my enthusiams is sliding sharply after a weekend of fascinating news about Summers and Geitner. Much acquired from Bill Moyers Journal on PBS friday and NPR today on a Boston article about a Harvard Fdnt PHD who warned about hedge fund investments and was consequently fired.

I don't believe that McCain (whom I admire) would have been a better vote but my hope concerning Obama righting this sinking economic ship is slipping. So much for real "Change".

http://www.nytimes.com/2009/04/06/bu...Summers&st=cse

(That would be sycOphant.)

[WordKeeper]

This from the NYTs article - old news but connects to new news that I will try to link.

"Mr. Summers joined the hedge fund world after his tempestuous, five-year term as the president of Harvard came to an unhappy end in February 2006, after a statement he made that women might lack an intrinsic aptitude for math and science."

[Brutha]

Geitner really has an impressive bio:
Council on Foreign Relations
IMF
Group of Thirty (a thinkthank founded by the Rockefeller Foundation)
President of the Federal Reserve Bank of New York - Vice President of the FOMC
(banks actually have at least 6/9 of the relevant votes to elect the president of the New York Fed)

Change?

[Dan.Linehan]

Yeah, Geitner is pretty terrible. I'm not sure what Obama is doing here.

Maybe he wants Geitner to personally fix what he broke?

[WordKeeper]

Read this excerpt from Bill Moyers' Journal aired on PBS last Friday night.
Bill Moyers Journal: William K. Black on The Prompt Corrective Action Law

WILLIAM K. BLACK: Geithner is charging, is covering up. Just like Paulson did before him. Geithner is publicly saying that it's going to take $2 trillion — a trillion is a thousand billion — $2 trillion taxpayer dollars to deal with this problem. But they're allowing all the banks to report that they're not only solvent, but fully capitalized. Both statements can't be true. It can't be that they need $2 trillion, because they have masses losses, and that they're fine.
These are all people who have failed. Paulson failed, Geithner failed. They were all promoted because they failed, not because...
BILL MOYERS: What do you mean?
WILLIAM K. BLACK: Well, Geithner has, was one of our nation's top regulators, during the entire subprime scandal, that I just described. He took absolutely no effective action. He gave no warning. He did nothing in response to the FBI warning that there was an epidemic of fraud. All this pig in the poke stuff happened under him. So, in his phrase about legacy assets. Well he's a failed legacy regulator.
BILL MOYERS: But he denies that he was a regulator. Let me show you some of his testimony before Congress. Take a look at this.
TIMOTHY GEITHNER:I've never been a regulator, for better or worse. And I think you're right to say that we have to be very skeptical that regulation can solve all of these problems. We have parts of our system that are overwhelmed by regulation.
Overwhelmed by regulation! It wasn't the absence of regulation that was the problem, it was despite the presence of regulation you've got huge risks that build up.
WILLIAM K. BLACK: Well, he may be right that he never regulated, but his job was to regulate. That was his mission statement.
BILL MOYERS: As?
WILLIAM K. BLACK: As president of the Federal Reserve Bank of New York, which is responsible for regulating most of the largest bank holding companies in America. And he's completely wrong that we had too much regulation in some of these areas. I mean, he gives no details, obviously. But that's just plain wrong.
BILL MOYERS: How is this happening? I mean why is it happening?
WILLIAM K. BLACK: Until you get the facts, it's harder to blow all this up. And, of course, the entire strategy is to keep people from getting the facts.
BILL MOYERS: What facts?
WILLIAM K. BLACK: The facts about how bad the condition of the banks is. So, as long as I keep the old CEO who caused the problems, is he going to go vigorously around finding the problems? Finding the frauds?
The context then is Geithner saying that it would cost the taxpayers $2 trillion to bail out the insolvent banks, yet virtually all the banks are reporting they are solvent and “well capitalized.” I noted that both statements could not be true. Geithner has every incentive to understate, not overstate, the cost of bailing out the banks and his $2 trillion estimate is materially lower than most analysts, so there is every reason to believe that the banks are not recognizing at least $2 trillion in losses. We know that the big banks hold a greatly disproportionate share of the worst assets. That means that many, probably most, of the big banks are massively insolvent (because $2 trillion far exceeds what they claim to hold as capital). We know that many large bank stocks (before the announcement of the huge TARP II subsidy for banks) were trading at prices that indicated market expectations that they had suffered massive capital losses and were essentially high risk options capitalizing the value of moral hazard. (Remember, the worst thing we can do is to maximize moral hazard. We are maximizing moral hazard by leaving open insolvent banks under the control of managers that caused the failure, often through fraud.)
If Geithner is right about the scale of the banks’ insolvency many of the large banks have to be hopelessly insolvent, but engaging in accounting fraud to hide that insolvency. That was the context for our PCA discussion. These large banks have not been able to recapitalize. They have been deeply insolvent since, at the latest, March 2007 when the secondary market in nonprime assets collapsed. (If we are fortunate it will never be restored because it was inherently dangerous. If it is it will cause future crises

[WordKeeper]

Trying to lose weight?
Read this, if you don't throw up, you'll at least be unable to eat.

Larry Summers, Tim Geithner and Wall Street's ownership of government - Glenn Greenwald - Salon.com

former Reagan-era S&L regulator and current University of Missouri Professor Bill Black was on Bill Moyers' Journal and detailed the magnitude of what he called the on-going massive fraud, the role Tim Geithner played in it before being promoted to Treasury Secretary (where he continues to abet it), and -- most amazingly of all -- the crusade led by Alan Greenspan, former Goldman CEO Robert Rubin (Geithner's mentor) and Larry Summers in the late 1990s to block the efforts of top regulators (especially Brooksley Born, head of the Commodities Futures Trading Commission) to regulate the exact financial derivatives market that became the principal cause of the global financial crisis. To get a sense for how deep and massive is the on-going fraud and the key role played in it by key Obama officials, I highly recommend watching that Black interview.

(The interview is linked in Greenwald's blog.)

[escapee]

These "people" at the top of the money chain have created a trap that the only way to keep the system alive or on life-support is socialism for the uber rich and capitalism for the poor (AKA Corporate fascism).

YouTube - Gerald Celente expect World Riots Ghost Malls

[WordKeeper]

Where Congress said, "We will not give you a single penny more unless we know who received the money." And, you know, when he was Treasury Secretary, Paulson created a recommendation group to tell Treasury what they ought to do with AIG. And he put Goldman Sachs on it.

Moyers: Even though Goldman Sachs had a big vested stake.

Black: Massive stake. And even though he had just been CEO of Goldman Sachs before becoming Treasury Secretary. Now, in most stages in American history, that would be a scandal of such proportions that he wouldn't be allowed in civilized society.

[escapee]

AIG will be a financial black hole for years to come. Whenever you have a company goes bust and can't repay back the extreme fractional reserve generated loan to the bank. The CDS bomb would be triggered and AIG would be required to compensate all the insured amount of debt TO THE BANKS/Bondholders. Since AIG is so broke, the only way to do that is through money printing and bailout fund from taxpayers.

GM: Bankrupt, UNLESS.... - The Market Ticker

The government has provided a history now that says that if you are a holder of CDS written by AIG, you will get 100 cents on the dollar, even if the notes don't default. In addition that 100 cents is above what you would normally get even if there IS a default, because normally you have to tender the defaulted bond or the payout is limited by the recovery, and recovery on a defaulted bond is almost never zero.

So in this case the winning play, if you're a big bondholder, is to tell GM to suck eggs; you'll get paid 100 cents on your CDS even though AIG has no money, because the taxpayer will make you whole on those CDS, even if the bonds have a recovery in bankruptcy.

In other words you could conceivably get more than 100 cents if you hold those bonds - so long as you also hold a CDS as a hedge.

It must be nice to be able to screw the taxpayer for more than a 100% payout, right?

I have a wacky idea, let us all common folks buy CDS on our mortgage/loan with AIG, when we (purposely) lose our job or our business go down AIG(or taxpayers) gets to pay for all our debt and we still own the properties. Damn....

[WordKeeper]

This is what I was looking for earlier. It was aired on NPR's "Here & Now" today.

I tells of a brilliant Harvard PhD employee at the Harvard Fnd who went to Summers and expressed her concern about investments in hedge funds that appeared disastrous. Not long after her confidence in Summers she found herself fired.

Ex-employee says she warned Harvard of risky investments - The Boston Globe

President Obama’s chief economic adviser, Lawrence Summers, was warned about the dangers of investing in complex financial instruments when he was president of Harvard. An employee came to him, concerned that Harvard’s endowment was taking too many risks. The employee was fired shortly thereafter. We talk to Beth Healy, investigative business reporter for the Boston Globe.

[WordKeeper]

I knew that Obama could not live up to the expectations and hope I had placed on him. No human really could.

But I did not know that my disappointment would be so severe and so quick. I had more expected an inability to deliver - that is reasonable. I had not foreseen his turning a blind eye to the corruption that I watched build between Wall Street and the White House beginning with George HW Bush.

Am I angry with myself for being so naive? Perhaps.