August 2009 archive

1. Bloomberg News reports the Wall Street stealth lobby defends the $35 billion haul in derivatives. Five U.S. commercial banks (JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, and Citigroup) “are on track to earn more than $35 billion this year trading unregulated derivatives contracts.”

   The $592 trillion over-the-counter derivative market is one of Wall Street’s “richest fiefdoms”.

   The Washington fight, conducted mostly behind closed doors, has been overshadowed by the noisy debate over health care. That’s fine with investment bankers, who for years quietly wielded their financial and lobbying clout on Capitol Hill to kill efforts to regulate derivatives…

   In recent months, Wall Street firms have embarked on a lobbying campaign to influence the media and legislators.

   Goldman Sachs held an off-the-record seminar for reporters in April to explain how credit-default swaps work…

   JPMorgan has mobilized some corporate clients, advising them that the proposed changes could hurt their ability to hedge against losses, according to a person familiar with the matter…

   Health-care reform may make it unlikely any derivatives legislation will be enacted in the near future… For Wall Street, the longer it takes to get legislation passed the better. As stock market values and the economy improve, anger at banks is likely to subside.

   Outside of Wall Street, The Hill reports the AFL-CIO and some Democrats push for new tax on Wall Street transactions. They propose assessing “a small tax – about a tenth of a percent – on every stock transaction. Small and medium-sized investors would hardly notice such a tax, but major trading firms, such as Goldman, which reported $3.44 billion in profits during the second quarter of 2009, may see this as a significant threat to their profits.”

   “It would have two benefits, raise a lot of revenue and discourage speculative financial activity,” said Thea Lee, policy director at the AFL-CIO.

   A tenth of a percent transaction tax “could raise between $50 billion and $100 billion per year”.

Four at Four continues with an update from Afghanistan, Blackwater hired foreigners for CIA death squad contract, and India says ignore population during climate talks.

According to an article and accompanying photo essay, “The Lost Boys of Afghanistan“, in The New York Times, thousands of Afghan minors have come to European Union countries seeking asylum.

“The boys pose a challenge for European countries many of which have sent troops to fight in Afghanistan but whose publics question the rationale for the war.”

Thousands of lone Afghan boys are making their way across Europe, a trend that has accelerated in the past two years as conditions for Afghan refugees become more difficult in countries like Iran and Pakistan. Although some are as young as 12, most are teenagers seeking an education and a future that is not possible in their own country, which is still struggling with poverty and violence eight years after the end of Taliban rule.

Estimates by the Separated Children in Europe Program have about 100,000 unaccompanied children from non-EU countries living in the EU. Many of the minors are not asking for “protection in any form.”

The topic below was originally posted yesterday, on my blog, the Intrepid Liberal Journal.

Like millions of my fellow citizens, I am reflecting after the death of Ted Kennedy. Death is an egocentric experience for the survivors. Indeed, rituals such as funerals, wakes or in the Jewish religion “sitting Shiva,” is really about nurturing the souls of those left behind. That is also true when it is a public figure or celebrity that has died. We may never have met them or knew them yet they touched us nonetheless. The Kennedy family understands this better than anyone and is well practiced in rituals that not only honor the dead but comfort the living.

It is a strange characteristic of modern journalism that it is so consensus driven that huge stories are completely missed. Such is the case with the surreal resurrection of AIG corporation. Not content with caretaker management intending to quietly sell off the remnants of AIG, the cancer men behind the Obama administration have chosen a pompous retired CEO, Bob Benmosche, to “revive” this zombie corporation.

Recall that the US taxpayers have pumped about $180 billion dollars into AIG, and that the current (highly inflated) market capitalization of the company is only $6 billion. There is not the ghost of a chance that the taxpayers will ever get their money back, because most of it was paid out to back crazy casino bet derivatives. But none of this matters, because the Obama administration does not believe in running corporations financed by the taxpayers. No, this would suggest that the Government could actually manage an organization better than the people who wrecked it.

Thus, we now enjoy the surreal spectacle of a bankrupt organization supported by taxpayer funds hiring a CEO who tells the government to back off and let him run the company according to his whims. We, the US taxpayers, are paying the salary of an arrogant blowhard who insists that he has the right to do with our funds as he pleases because he is a member of the CEO caste.

How many more companies will turn into Federally funded zombies run by loose-cannon CEO’s? How can one even predict the actions of managers who are completely untethered to any financial reality? It is as though the US economy is slowly turning into a comic-book caricature of itself, a Bizarro world of incongruity and excess, with the only constants being corruption and unaccountability.

Rise & Fall Of The US Dollar: 1800 – 2008

Sean W. Malone, Saturday, August 29, 2009 at Logicology

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