the visible hand

it is the theory which decides what can be observed – einstein

Archive for January, 2010

Greider: Geithner must go

Posted by ecoshift on January 28, 2010

Geithner Must Go–and the Future of the Fed
http://www.thenation.com

By William Greider
January 23, 2010

The first casualty of the president’s political debacle will likely be Timothy Geithner, the severely over-confident treasury secretary well known as a lapdog of Wall Street. Geithner was effectively repudiated by the president last week when Barack Obama abruptly announced a new, more aggressive approach to financial reform. But the immediate threat to Geithner is the scandal of collusion and possibly illegal behavior gathering around the Federal Reserve Bank of New York for its megabillion-dollar takeover of insurance giant AIG.

Tim Geithner is standing in the middle of the muck because he was still president of the New York Fed in the fall of 2008 when it rescued AIG with tons of public money (now totaling $180 billion). The facts of the deal are catching up with him now and none are good, since they raise doubts about his competence and his public integrity. This scandal has smoldered for several weeks in newspaper business sections, but is about to grab front-page attention.

The House Oversight Committee, chaired by Edolphus Towns, has turned up damning evidence and called Geithner to testify the week of January 27. Committee investigators are poring through some 250,000 e-mails and subpoenaed documents and finding smoking revelations. House Republicans smell blood. House Democrats, given the present climate of popular discontent, are unlikely to rally around tainted goods.

Perhaps the most explosive revelation is that Geithner’s subordinates at the New York Fed instructed AIG executives to evade securities law and conceal from the public the $62 billion the insurance company paid out on contracts with the largest investment houses and banks. AIG was already bankrupt and 80 percent owned by the government, kept afloat solely with the billions being injected by the central bank. Yet the Fed told the company to pay off the bankers at full value–100 percent on the dollar–without negotiating a better deal for the public. The bankers would not have collected a dime if the government hadn’t come to the rescue.

The Fed, in other words, gave the largest, most prestigious banks a very sweet deal–much sweeter than anything the banks or the federal government will offer to homeowners facing mortgage foreclosure. The central bank, in effect, was operating a backdoor bank bailout that nobody could see. The public billions devoted to AIG went in one door at the insurance company and came out another door to the private banks. Goldman Sachs alone collected $13 billion.

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December existing home sales tumble

Posted by ecoshift on January 26, 2010

Home sales tumble surprise 16.7 percent – Real estate- msnbc.com

WASHINGTON – Sales of previously occupied homes took their largest drop in more than 40 years last month yet managed to end 2009 with the first annual gain in four years.

Still, prices plunged by more than 12 percent last year — the sharpest fall since the Great Depression. The price drop for 2009 — to a median of $173,500 — showed the housing market remains too weak to help fuel a sustained economic recovery. Total sales for 2009 were nearly 5.2 million, up about 5 percent from 2008.

Last month’s worse-than-expected showing underscores concerns that the housing market could weaken further after March 31, when the Federal Reserve is set to end its program to buy mortgage securities to keep home loan rates low. Once that program ends, mortgage rates could rise. Adding to the worries, a newly extended homebuyer tax credit is scheduled to run out at the end of April.

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accessible economics…

Posted by ecoshift on January 26, 2010

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Ruling on Spending

Posted by ecoshift on January 21, 2010

Ruling on Spending May Alter Political Terrain
By ADAM LIPTAK
Published: January 21, 2010
nytimes.com

WASHINGTON — Overruling two important precedents about the First Amendment rights of corporations, a bitterly divided Supreme Court on Thursday ruled that the government may not ban political spending by corporations in candidate elections.

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Building Brics

Posted by ecoshift on January 19, 2010

Building Brics: In depth news, commentary and analysis on the Bric economies – Brazil, Russia, India and China – from the Financial Times

“The Bric countries – Brazil, Russia, India and China – have powered ahead economically over the past decade, but will they be able to take up the slack in the world economy from the US consumer?”

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Move Your Money

Posted by ecoshift on January 7, 2010

Move Your Money

People all over the country are choosing to move their money out of bigger banks and into smaller, community-oriented financial institutions that generally avoided the reckless investments and schemes that helped cause the financial crisis.

Fueled by the personal initiatives of thousands, it’s a grassroots effort that has the potential to shift power in the financial system away from Wall Street and to Main Street.

Check out the video, read up on what inspired the idea, connect with others through Facebook and Twitter and then use the tools and links provided to find a community bank or credit union in your area.

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scary sneak preview

Posted by ecoshift on January 5, 2010

California’s scary sneak preview – washingtonpost.com
By Ezra Klein
Washington Post Staff Writer
Sunday, January 3, 2010

We Californians pride ourselves on the crystal-ball quality of our state. Auto emissions regulations, the tech boom and bust, Ronald Reagan, Hispanic immigration, the anti-tax revolt, the mortgage bubble, the struggle for gay rights, most movies, the popularity of Richard Nixon, the unpopularity of Richard Nixon, plastic surgery, and Tiger Woods’s marital problems were all tested in the Golden State before being released to audiences nationwide.

The next likely item on that list is not a happy one, however. California is in a total fiscal crisis. It’s had to slash state services to the bone and will have to cut further. It’s gutted the University of California and lost its credit rating. David Paterson, the governor of New York, casually mentioned that he thinks California might default on its debt. That’s bad enough, as it could drag down the national recovery. But what’s worse is that this picture is probably coming to a theater near, well, all of us.

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