September 11,2009/1

President Obama is going to Wall Street this coming Monday to make a speech. The date chosen is the first anniversary of the failure of Lehman Brothers. The speech will presumably be self-congratulatory, about how the world has been made safe for capitalism. This stinks; it smells like dancing on the grave - but presumably the President, for whom I am losing increments of trust and respect every waking day, will stick the Bush administration with the Lehman Brothers decision, which unarguably can be said to have made matters much worse than they need have been, but which did open the door for Goldman, JP Morgan Chase and others to mulct the taxpayer for upwards of a trillion dollars. In the passing twelvemonth whose anniversary the President will be marking, millions more have lost jobs, homes, self-respect, medical security. Is all this compensated for by Goldman's record profits? Is this proper cause for celebration? Not in my book.

September 10, 2009/2

Briefly, on the President's health-care speech:
The first part of the speech was necessarily complicated but was to some extent rescued by the exhortatory peroration and conclusion. The situation still looks functionally intractable to me - too many members of Congress in the pocket of insurers etc. - but I have no doubt some illusory plan will emerge. The behavior of the Republicans - Boehner, in particular, who for some reason didn't show up in full SS regalia although he was clearly dreaming of Polish villages to liquidate - was despicable.

September 10, 2009/1

" The property portfolio doomed Lehman when a rescue still seemed possible. On Saturday, Sept. 13, 2008, Timothy Geithner, then president of the Federal Reserve Bank of New York and now U.S. Treasury secretary, asked a team of the world’s top bankers to evaluate Lehman’s real estate holdings as part of an effort to facilitate a sale of the investment bank to London-based Barclays Plc.

The team, including representatives from Goldman Sachs and Credit Suisse Group AG, determined that Lehman had overvalued its real estate investments by $20 billion to $30 billion, according to people who attended meetings at the New York Fed last September."

This, from Bloomberg this morning, validates what I, virtually alone since October, have been saying with regard to Washington's decision to le Lehman go. It wasn't Fuld's arrogance, or Barclay's being held up by UK regulators (a straw man of an excuse, if ever I heard one) that doomed Lehman, it was the firm's commercial real estate book - which set it apart from other supplicants, mainly Merrill. Here's what I wrote on Forbes.com on October 7,2008, three weeks after Lehman failed:

"Think about this. Every report on Lehman that I have recently read is saying that the real toxicity on the Lehman balance sheet is in its commercial real estate holdings and investments. Of no other troubled firm does this seem to be true, only Lehman, which may also explain the Paulson team's no-bailout call."

No wonder I can't find work. There's no one the mediocrities who run American media hate worse than someone who knows what he's talking/writing about.

September 2, 2009/1

I'm trying to balance a whole bunch of things, so won't be blogging much until Labor Day. I am fascinated by the way the media is cheerleading this "recovery." Take "productivity." The late unlamented Greenspan based much of his folly on a notion called "anhedonic pricing," which basically meant that thanks to Moore's Law each month saw an increase in productivity as computer capabilities increased faster than computer prices, ie. more bang for the buck, or more "productive." It never bothered Greenspan that the more work computers take on, the less there is for humans to do. This may be more "productive" statistically, but it promises sheer hell for any political economy pretending to be a functioning free-market democracy. Another few years of this, the United States is going to be little more than a giant El Salvador.