When Bear Stearns blew up in 2008, the New York Fed handed it to JP Morgan Chase – the beginning of a vast bailout corruption fest. Turns out, five years later, the execs who caused it to blow up have jobs on Wall Street that are more lucrative than ever. To honor these sordid details, Nick Stuart wrote a hilarious, cynical parody about the last days of Bear.
Federal Reserve
Wall Street Engineers Newest Frankenstein’s Monster For Housing
by Wolf Richter • • Comments Off on Wall Street Engineers Newest Frankenstein’s Monster For Housing
Wall Street engineering is back in the housing market. Its newest product is one heck of a contraption, a synthetic structured security of the type that helped blow up the financial system back in 2008. It’s like those triple-A rated mortgage-backed securities that became toxic waste in your “money-market-equivalent” bond fund – only worse.
The Jobs Curse At Amazon (And Obama Stepped Into It)
by Wolf Richter • • Comments Off on The Jobs Curse At Amazon (And Obama Stepped Into It)
Amazon’s promotion machine shifted into high gear to tout President Obama’s visit to one of its warehouses where he unveiled his “better bargain” for “middle class jobs.” The visit was artfully synced with Amazon’s announcement that it would create 7,000 jobs. Out of nothing. One of the ongoing lies in America’s jobs crisis – and Obama stepped right into it.
David Stockman: Hedge Funds And The Rule Of Rips And Wrecks
by David Stockman • • Comments Off on David Stockman: Hedge Funds And The Rule Of Rips And Wrecks
“At junctures of extreme financial stress, the high level of carry trade funding” that hedge funds use during bubbles “results in violent market reversals,” David Stockman writes. “Wholesale funding evaporates and involuntary asset sales cascade into a bidless abyss.” Hence the collapse of 2000–2003 (45%) and 2008–2009 (55%). Now they’re doing it again.
The Exquisite Art Of Marketing To Pauperized Consumers
by Wolf Richter • • Comments Off on The Exquisite Art Of Marketing To Pauperized Consumers
People in the upper income categories, those who don’t have to worry about the price of toilet paper, have seen their incomes rise over the years. The rest are in a downward spiral: median household income, adjusted for inflation, has dropped 7.8% since 2000. The lower end got hit the hardest. For these folks, tissue makers have a special strategy: desheeting.
David Stockman: Hedge Funds And The Regime Of Insider Trading
by David Stockman • • Comments Off on David Stockman: Hedge Funds And The Regime Of Insider Trading
“As the Fed transformed Wall Street into a casino,” wrote David Stockman, “arrangements for insider speculation took on massive size,” with “hedge fund footings” soaring from $150 billion in 1990 to $3 trillion by the 2007–2008 peak. Trading books of Wall Street banks grew even more explosively. Together, they formed “the fast money complex.”
Verdict Is In: “The Banking Lobby Is Simply Too Strong To Allow It To Happen”
by Wolf Richter • • Comments Off on Verdict Is In: “The Banking Lobby Is Simply Too Strong To Allow It To Happen”
“A culture of dangerous greed and excessive risk-taking has taken root in the banking world,” said Senator McCain last week. Senator Warren told Wall Street, where failure has been rewarded with bailouts and record bonuses, that “Banking should be boring.” They were pitching the “21st Century Glass-Steagall Act.” Wall Street must have gotten the willies.
What Gloomy CEOs See That Giddy Retail Investors Don’t
by Wolf Richter • • Comments Off on What Gloomy CEOs See That Giddy Retail Investors Don’t
CEOs have, in these crazy days of ours, one primary job, it seems: manipulating up the stock of their company. Few master this delicate art like Tesla Motors CEO Elon Musk, who took his highflyer into the stratosphere on a wing and a prayer. But why are executives worldwide wallowing behind the scenes in 2009-like gloom about the economy’s future?
David Stockman: Financial Engineering As The ATM Of The Prosperous Classes
by David Stockman • • Comments Off on David Stockman: Financial Engineering As The ATM Of The Prosperous Classes
Unlike mortgage equity withdrawal by households, where the cash windfall was distributed across the middle class, corporate equity withdrawal through buybacks, buyouts, and takeovers resulted in cash distributions to the very top of the economic ladder. Financial engineering: the ATM of the prosperous classes!
Mother Of All Bubbles Pops, Mess Ensues
by Wolf Richter • • Comments Off on Mother Of All Bubbles Pops, Mess Ensues
The asset bubbles the Fed’s money-printing and bond-buying binge has created are spectacular, the risk-taking on Wall Street with other people’s money a sight to behold. Big winners were mortgage Real Estate Investment Trusts – and those who got fat on extracting fees. But now the pendulum is swinging back, and the bloodletting has started.