Michael Lewis "The Big Short"

[Winstonm]

I think you have it backwards. Increased spending comes from increased demand.

 

And I think your take on entrepreneurs is bonkers.

 

A lot depends on how words are used and understood. Concerning expansion in an established economy, the is no incentive to expand production without more people wanting more of your stuff - there is incentive only to reduce costs to elevate profits. When that part of the population that spends nearly 100% of their income is provided a raise (either minimum wage increases or tax breaks), they do not horde that money but spend it - adding additional demand.

 

It is this additional demand that spurs business owners to expand production to meet new demand. This creates jobs.

 

Bottom line: money creates jobs.

 

My take on entrepreneurs is not bonkers but bankers :P . There is no risk-taking when there is no failure allowed - and the bailout of the TBTF banks provided a social safety net for these wealthy bankers.

[PassedOut]

Rolling Stone has an interesting piece about an honest young lawyer who finds herself working in a den of thieves: The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare

 

One of the ongoing myths about the financial crisis is that the government is outmatched by the legal talent representing the banks. But Fleischmann was impressed by the lead attorney in her case, a litigator named Richard Elias. "He sounded like he had been a securities lawyer for 10 years," she says. "This actually looked like his idea of fun – like he couldn't wait to run with this case."

 

She gave Elias and his team detailed information about everything she'd seen: the edict against e-mails, the sabotaging of the diligence process, the bullying, the written warnings that were ignored, all of it. She assumed that it wouldn't be long before the bank was hauled into court.

 

Instead, the government decided to help Chase bury the evidence. It began when Holder's office scheduled a press conference for the morning of September 24th, 2013, to announce sweeping civil-fraud charges against the bank, all laid out in a detailed complaint drafted by the U.S. attorney's Sacramento office. But that morning the presser was suddenly canceled, and no complaint was filed. According to later news reports, Dimon had personally called Associate Attorney General Tony West, the third-ranking official in the Justice Department, and asked to reopen negotiations to settle the case out of court.

 

It goes without saying that the ordinary citizen who is the target of a government investigation cannot simply pick up the phone, call up the prosecutor in charge of his case and have a legal proceeding canceled. But Dimon did just that. "And he didn't just call the prosecutor, he called the prosecutor's boss," Fleischmann says. According to The New York Times, after Dimon had already offered $3 billion to settle the case and was turned down, he went to Holder's office and upped the offer, but apparently not by enough.

 

A few days later, Fleischmann, who had by then moved back to Vancouver and was looking for work, was at a mall when she saw a Wall Street Journal headline on her iPhone: JPMorgan Insider Helps U.S. in Probe. The story said that the government had a key witness, a female employee willing to provide damaging testimony about Chase's mortgage operations. Fleischmann was stunned. Until that moment, she had no idea that she was a major part of the government's case against Chase. And worse, nobody had bothered to warn her that she was about to be effectively outed in the newspapers. "The stress started to build after I saw that news," she says. "Especially as I waited to see if my name would come out and I watched my job possibilities evaporate."

 

Fleischmann later realized that the government wasn't interested in having her testify against Chase in court or any other public forum. Instead, the Justice Department's political wing, led by Holder, appeared to be using her, and her evidence, as a bargaining chip to extract more hush money from Dimon. It worked. Within weeks, Dimon had upped his offer to roughly $9 billion.

 

In late November, the two sides agreed on a settlement deal that covered a variety of misbehaviors, including the fraud that Fleischmann witnessed as well as similar episodes at Washington Mutual and Bear Stearns, two companies that Chase had acquired during the crisis (with federal bailout aid). The newspapers and the Justice Department described the deal as a "$13 billion settlement," hailing it as the biggest white-collar regulatory settlement in American history. The deal released Chase from civil liability. And, in what was described by The New York Times as a "major victory for the government," it left open the possibility that the Justice Department could pursue a further criminal investigation against the bank.

 

But the idea that Holder had cracked down on Chase was a carefully contrived fiction, one that has survived to this day. For starters, $4 billion of the settlement was largely an accounting falsehood, a chunk of bogus "consumer relief" added to make the payoff look bigger. What the public never grasped about these consumer--relief deals is that the "relief" is often not paid by the bank, which mostly just services the loans, but by the bank's other victims, i.e., the investors in their bad mortgage securities.

When the bankers own the government and the police, corruption results. Fortunately we still have some folks with the courage to speak up and we still have some ways for them to tell the world what they know.

[kenberg]

Rolling Stone has an interesting piece about an honest young lawyer who finds herself working in a den of thieves: The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare

 

 

When the bankers own the government and the police, corruption results. Fortunately we still have some folks with the courage to speak up and we still have some ways for them to tell the world what they know.

 

That is a very optimistic way of looking at it. These guys are worse than the Mafia. With the Mafia, you can pretty much stay out of their way and everything goes ok.

[mike777]

Note sure why anyone would think that bankers own the government or the police. If anything it seems the opposite. See all the regulations and fines in just the past few years. As a result lawyers have been in place at the top not bankers.

 

If you read the article you see even the large banks and bankers spend most of their time with the lawyers and the government, not business.

 

 

Of course it has long been conceded that the bond markets if not own then often exert control over governments. :)

[kenberg]

Of course they have lawyers. A lot of lawyers. The Mafia used to hire gunmen. Very crude and inefficient. Hire lawyers. You can get away with much much more that way.

[blackshoe]

Shakespeare was right.

[mike777]

Get away with what?

 

the govt got billions and billions in fines

the govt has Dimon dancing on a pin, he is dancing to their tune.

 

Please note this article is all about fines, regulators and govt lawyers and police. The bank is not doing any banking, it is run by lawyers, regulators and the govt..

 

Let me put it this way if you think banks rule the world then buy bank stock....but I bet you will not,

[PassedOut]

Please note this article is all about fines, regulators and govt lawyers and police. The bank is not doing any banking, it is run by lawyers, regulators and the govt..

Not really. It is about massive, intentional fraud by the bank, concealed by the bankers' friends in government in exchange for a token payoff by the bank.

[mike777]

Not really. It is about massive, intentional fraud by the bank, concealed by the bankers' friends in government in exchange for a token payoff by the bank.

 

 

As this last post shows, this article is all about the government and how it controls.

It shows how the banks are controlled by those few, very few in power in the gov.

 

 

Clearly this shows that the owners of the banks are not in control.

 

If you want to shove the owners in jail ok then do it but those in power in the govt prefer other.

[kenberg]

I would be happy to stipulate that government lawyers can be overbearing. In the case at hand, they have a lot to be overbearing about. We have a bank that at the highest level was planning on selling crap and evading rules to disclose the nature of the crap. They forbade putting things in e-mail. Ok, I agree e-mail can be taken out of context, and, just because someone says something stupid in an e-mail, it should not be claimed that it is policy. Still, complete avoidance of e-mail is a pretty clear indication that a paper trail could cause trouble. They wanted approval of documents that no honest professional would approve, so they kept the people late, running them through the process again and again until they finally got the message that if they wanted to have any sort of life outside the office then they had better say they approve.

 

Basically there was, and I doubt that it has changed all that much, a group of people at the top of what was once believed to be a respectable industry doing their very best to get filthy rich by scamming people. There have always been scam artists, that's hardly news, but they now are in positions of great power and capable of causing national and worldwide damage.

 

So yes, the gov can be overbearing. But the problem is real and needs to be addressed vigorously.

[barmar]

Get away with what?

 

the govt got billions and billions in fines

Were the fines more than what the banks made along the way? I'll bet they still netted many billions. I wouldn't be surprised if they have line items in their budgets for paying fines, although probably the fines after the Great Recession were undoubtedly more than they budgeted. But when they know they're doing something shady, they probably take the possibility of getting caught and being fined into account. "Don't do the crime if you can't do the time."

 

And when they make new regulations, the bankers find new loopholes.

[mike777]

If the banks are engaged in massive fraud then end them.

 

close the banks and put the owners all of the owners and there are thousands and thousands in jail.

 

If Holder the AG is complicit then throw him in jail

 

If you don't think there is massive fraud and a cover up then

otherwise this is spouting.

[kenberg]

So we should put thusands and thousands in lail or else we should just shut up and put no one ion jail? This would not be my approach.

 

I don't hate the rich, I don't hate the super-rich. I do think that people who have or control amounts of money that I cannot really even imagine often are able to pervert justice. I am opposed to letting that happen. Of course it always has happened and always will happen, but there are degrees. I favor vigorously challenging corrupt practices with the goal of reducing it.

 

Mike, I think you are backing a losing horse here. I am not out in the streets shouting about the one percent, I'm a pretty relaxed guy. But corruption exists. and it has to be dealt with. You are going to have a tough time convincing me that this is somehow unfair to bankers.

[y66]

From The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare by Matt Taibbi

 

She tried to stay quiet, she really did. But after eight years of keeping a heavy secret, the day came when Alayne Fleischmann couldn't take it anymore.

 

"It was like watching an old lady get mugged on the street," she says. "I thought, 'I can't sit by any longer.'"

 

Fleischmann is a tall, thin, quick-witted securities lawyer in her late thirties, with long blond hair, pale-blue eyes and an infectious sense of humor that has survived some very tough times. She's had to struggle to find work despite some striking skills and qualifications, a common symptom of a not-so-common condition called being a whistle-blower.

 

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

 

Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as "massive criminal securities fraud" in the bank's mortgage operations.

 

Thanks to a confidentiality agreement, she's kept her mouth shut since then. "My closest family and friends don't know what I've been living with," she says. "Even my brother will only find out for the first time when he sees this interview."

 

Six years after the crisis that cratered the global economy, it's not exactly news that the country's biggest banks stole on a grand scale. That's why the more important part of Fleischmann's story is in the pains Chase and the Justice Department took to silence her.

 

She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. "Every time I had a chance to talk, something always got in the way," Fleischmann says.

 

This past year she watched as Holder's Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. The banks paid big fines, without trials or even judges – only secret negotiations that typically ended with the public shown nothing but vague, quasi-official papers called "statements of facts," which were conveniently devoid of anything like actual facts.

 

And now, with Holder about to leave office and his Justice Department reportedly wrapping up its final settlements, the state is effectively putting the finishing touches on what will amount to a sweeping, industrywide effort to bury the facts of a whole generation of Wall Street corruption. "I could be sued into bankruptcy," she says. "I could lose my license to practice law. I could lose everything. But if we don't start speaking up, then this really is all we're going to get: the biggest financial cover-up in history."

More

[mike777]

Guys Keep in mind the title "big short"

When you short you want to make money big money on destruction!

Capitalists are trying to make money big money on destruction and the govt is stepping in and saying no no no. A few a very few in govt are saying we will decide not millions. We will decide because we are better than you.

 

 

Yes, it is the government and Holder as top cop who are keeping these banks alive. If these banks are doing massive fraud year after year after year, end them. IT is only the govt that is keeping them alive.

 

Now to be fair the FDIC could kill these banks in a day but it wont. Simply end FDIC for these criminal banks.

 

 

As I have stated often capitalism destroys. It destroys jobs, it destroys companies.

The issue is many hate this and want govt to step in and stop this.

Just look at wash dc, it has become a very rich city because the govt steps in and stops destruction of jobs and companies.

 

See 60 minutes tv show and govt jobs.

See how many step in and say no no no....we cannot allow this destruction.

[mike777]

This post is a side note concerning economic and banking crises.

 

 

Perhaps economic and banking crises are one of the same.

Perhaps massive cross border investment flows into a country create credit bubbles which when the cash flows are withdrawn create massive credit and economic disaster?

 

Possible solutions to discuss are modified Bretton Woods controls or exchange controls?

 

 

See Robert Aliber.