Friday, November 6, 2009

Forget about it

Four relatively small banks were seized today costing us only about 133 million bringing the count to 119. The FDIC admits to be tracking another 416 banks, but some of the biggest seizures have not been on the official list. The list will get much longer if the banks are ever required to account for the real value of the toxic assets that they hold on their books.

Unemployment has jumped up over 10% and gold has jumped up over $1100. Really though, unemployment is closer to 20% and gold isn’t up but rather the Dollar is down yet again.

The stock market is up and Goldman Sachs brags that it averages a hundred million a day in profits from its trading operations. They don’t say how they do that, experts don’t like to share their methods unless they are trying to make a plea deal like Bernie Madoff. That didn’t work out so good for him.

Another fourteen executives from the hedge fund Galleon Group were indicted this week for insider trading. You would think naming your company for a kind of ship from an age when slave trading and piracy were noble professions might be a give away. (although it sounds more benign than Cerberus) So far, among those indicted are men who used the nicknames "Octopussy", "the Greek" and "the Rat". Their wire tapped conversations reportedly sounded like Soprano scripts. Octopussy was taped berating his cappos to not be too greedy, "That's a ticket right to the (expletive) Big House." The FBI expects to make more arrests.

In case you’ve been wondering what Cerberus Group has been doing since Chrysler went south, in the past three years they’ve quietly acquired seven US gun and ammunition makers and have consolidated them under the name Freedom Group. These include a company that makes large caliber sniper rifles and another that specializes in silencers. What sort of insider knowledge do you suppose they have. Their upper management is loaded up with made men from the Bush Crime Family. Forget about it.

We thought we were getting off cheap with the bank failures today but the United Commercial Bank in California, that failure will cost us 1.4 billion, just about enough to fund the health insurance reform plan for a week. This doesn’t count all the investors in the bank who lose 100% or anybody whose account was over the 250,000 limit.

Unemployment is the worst since the Reagan reccession but comparing the unemployment rate from the mid-eighties to today’s rate doesn’t work. Reagan seriously screwed up the way the numbers are generated to make it look like he had a rapid recovery from his disaster. Even doubling and redoubling the Federal debt didn’t produce the desired numbers.

Reagan slashing the top tax rate from 71% to 28% for people making the equivalent of 3.5 million produced a brief boost to tax revenue but not because business activity picked up. This tax cut kicked off the big sell out of business and the mergers and acquisitions craze that drove up business debt leading into the S&L collapse and bubble after bubble and concentrated business in the hands of transnational companies so on and so on.