Bailout expertise by mattsteinglass
September 23, 2008, 12:00 am
Filed under: President

It’s been four days already since the 700 billion bailout was proposed, and somehow nobody has yet remarked that while Barack Obama has no relevant experience in this situation, John McCain probably knows as much about bailouts as anybody else in America.

Memorial to John McCains bailout over Truc Bach Lake, Hanoi

Memorial to John McCain's bailout over Truc Bach Lake, Hanoi


A fearsome prospect by mattsteinglass
September 22, 2008, 8:59 pm
Filed under: Economics

Peter Cohan points out one much-overlooked consequence of the demise of the investment banking industry:

And this raises big questions about what will happen to all the MBAs who formerly streamed to Wall Street after graduation. If the global financial markets can survive this crisis, it would not surprise me to see investment banking revive in its current form through start-ups capitalized by institutional investors. Some of these MBAs could go into hedge funds or private equity — but a regulatory crack down on those market players could also be in the offing. This could mean that MBAs actually have to manage businesses instead of shuffling financial papers.

It’s entirely possible that the rise of investment banking is a consequence of a Marxian crisis of overproduction. That is, once global industry gets productive enough, there simply isn’t anything for a lot of macho, quantitatively oriented graduates of institutions of higher learning to do. The evolution of investment banking and hedge funds has provided a way to send these people off into little corners for 16 hours a day, where they play with their keyboards and pretend to be doing something very important. This has always suited me fine, because it keeps them out of my way.

The problem now is that they’re all going to have to start running companies that actually do something, which means they’re going to have come up with some kind of idiotic products and try to sell them to me. And I really don’t need the hassle.

Underpants Gnome Step 2 — revealed! by mattsteinglass
September 22, 2008, 1:44 pm
Filed under: Economics

Based on what’s been going on in the US over the past 4 or 5 days, I think we can now reverse-engineer the actual heretofore mysterious Underpants Gnome Business Plan Step 2. The plan, you will recall, as revealed on South Park, went like this:

1. Collect underpants.

2. ?

3. Profit!

We can now fill in the question mark.

1. Collect underpants.

2. Sign so many insanely complicated contracts for underpants, underpants-backed securities, collateralized underpants obligations, structured underpants investment vehicles, and underpants credit default swaps with every major and minor financial institution on planet Earth that nobody has any idea what the hell is going on anymore and the US Treasury must funnel you 700 billion dollars immediately to prevent the world from imploding.

3. Profit!

John McCain’s Swiss banker… by mattsteinglass
September 22, 2008, 9:01 am
Filed under: President

…is his top secret financial adviser, Phil Gramm, who is also vice chairman of the investment banking arm of gargantuan Swiss bank UBS.

UBS is among the European banks with the greatest exposure to the collapse in American mortgage-backed securities. Over the weekend, UBS successfully lobbied to have its cratering US mortgage-backed securities included in the US treasury’s buyout plan. That is, US taxpayers are going to pony up $700 billion to, among other things, buy bad debt from a Swiss bank. And one of McCain’s top two financial advisers is the vice chairman of that bank.

If the Democrats made TV ads the way Republicans do…think about how that would run. The GOP wants to take 700 billion dollars of taxpayer money. No questions asked. And give it to the banks. And not just American banks. Swiss banks, too. Like this one. UBS. Where John McCain’s friend Phil Gramm, the guy he wants to make Treasury Secretary, just happens to be vice chairman.

I’ve always thought the phrase “old boy network” was a hollow stereotype out of 1930s movies, but if there were an instantiation of what that means in the modern world, this is it.

Some call us fiscally prudent, Henry Paulson calls us suckers by mattsteinglass
September 21, 2008, 6:16 pm
Filed under: Economics

You know, I used to think I would never be able to afford to live in New York. How could my wife and I afford to buy a $1,000,000 Brooklyn house on our modest incomes? What I failed to understand was that if my loans ever went bad, the Federal Government would buy me out at an inflated price in order to keep real estate values across the country artificially propped up so all those rich people’s banks wouldn’t go under! Silly me, why didn’t I take out a no-income no-asset ARM last year and buy that Park Slope brownstone?

Here comes your FDR by mattsteinglass
September 19, 2008, 3:17 pm
Filed under: President, United States

We wondered what it would take to get a new Democratic president coming into power with a large legislative majority at a moment of crisis that would legitimate sweeping legislative actions that could change the face of American government.

Presto change-o! And now we wait and see what he does with it.

Wall Street is run by Communists by mattsteinglass
September 19, 2008, 3:04 pm
Filed under: Economics

We are through the looking glass, people.

Traders erupted into cheers on the floor of the New York Stock Exchange as the Dow Jones Industrial Average jumped 617 points from its low of the day after Senator Charles Schumer proposed a new agency to pump capital into financial companies. The Standard & Poor’s 500 Index climbed 4.3 percent as 68 companies in the gauge rose more than 10 percent.