The Housing Bubble

Nice to see Big V posting again.

Look who is holding a pitch fork now…

The Wall Street Journal
U.S. Charges Goldman With Subprime Fraud

Goldman Sachs was charged with deceiving clients by selling them mortgage securities secretly designed by a hedge fund run by John Paulson. Goldman denied the SEC’s civil charges, setting up a major clash between Wall Street and regulators.
…
The SEC lawsuit likely strengthens the position of President Barack Obama as he tries to push financial-overhaul legislation through Congress. He vowed Friday to veto any version of the bill that doesn’t bring the derivatives market “under control.”

Regulators say Goldman allowed Mr. Paulson’s firm, Paulson & Co., to help design a financial investment known as a CDO, or collateralized debt obligation, built out of a specific set of risky mortgage assets—essentially setting up the CDO for failure. Paulson then bet against it, while investors in the CDO weren’t told of Paulson’s role or intentions.

“The product was new and complex, but the deception and conflicts are old and simple,” said Robert Khuzami, the SEC’s enforcement chief.

Mr. Paulson and his firm aren’t named as defendants. The hedge-fund firm said in a statement that it wasn’t involved in marketing the bonds to third parties. “Goldman made the representations, Paulson did not,” Mr. Khuzami said.

Mr. Paulson took home $4 billion in 2007 for correctly betting on a housing collapse.

The SEC said Mr. Tourre was “principally responsible” for piecing together the bonds and touting them to investors. According to the SEC, Mr. Tourre wrote in an email shortly before the bonds were sold that “the whole building is about to collapse anytime now.” He described himself in the email as the “Only potential survivor, the fabulous Fab … standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”

But he was hardly alone, the SEC alleges: The deals were signed off by senior Goldman executives, though the SEC didn’t specify how high up it believes the knowledge extended.

In the past year, Goldman—the most profitable firm on Wall Street—has emerged as a symbol of excess. The taxpayer-funded rescue of the markets helped catapult Goldman to a huge profit rebound last year and stirred resentment of the firm’s bonuses. Goldman paid out about $16 billion in compensation to employees in 2009.

And late last year in a profile in London’s Sunday Times, Goldman’s chief executive, Lloyd Blankfein, described himself as “doing God’s work,” a remark that Goldman later explained was made in jest. Still, the quip inflamed Goldman critics who said it showed the firm was tone deaf about concerns over its business practices and rich pay.
…

Thanks to bailouts, Megabank of America is well positioned to profit going forward while Main Street America continues to enjoy the bottom of the bus.

Still, there is something patently unfair about a bank that would have gone bankrupt if not for the $45 bn in aid from Uncle Sam turning around and evicting hapless American households which were supposed to get HAMP forebearance but didn’t. I personally would rather have seen Megabank of America go under than have my friends kicked out of their family home. Hopefully yesterday’s 5.5 percent loss is a sign that a larger Wall Street fraud investigation is brewing that will catch Megabank of America in its dragnet.

* THE WALL STREET JOURNAL
* BUSINESS
* APRIL 17, 2010

BofA Says the Worst Has Passed
Merrill, Once a Headache, Is Now Driving Profits; Less Upbeat Than Dimon

By DAN FITZPATRICK

Strong investment-banking results powered Bank of America Corp. to a $3.2 billion profit in the first quarter as the giant financial institution reemerged from the most tumultuous year in its history, providing further evidence that U.S. banks are on the mend.

“The worst of the crisis is clearly behind us,” Chief Executive Officer Brian Moynihan said.

But the new CEO struck a less enthusiastic tone about the immediate future than rival J.P. Morgan Chase & Co. CEO James Dimon, who announced a $3.3 billion profit Wednesday and said “this could be the makings of a good recovery.” Mr. Moynihan instead warned that loan demand is weak, the mortgage division continues to struggle, and high unemployment is still “very sticky.” He pledged to protect the bank from any unexpected bumps.

“We are trying to be conservative here,” he said.

The nation’s largest bank by assets lumbered through 2008 and 2009, taking $45 billion in aid from the U.S. government and reeling from the fallout from its decision to buy troubled securities firm Merrill Lynch & Co.

The Merrill Lynch acquisition contributed to the surprise retirement of CEO Kenneth Lewis. His successor, the 50-year-old Mr. Moynihan, is trying to improve the bank’s relationship with customers, change the way it manages risk, and soften the tone it takes in Washington, D.C. Mr. Moynihan also is pushing a new, handpicked management team to better integrate the old Bank of America with its most-recent acquisition, Merrill Lynch.
…
The performance, though, wasn’t enough to send shares higher Friday, as concerns about the Securities and Exchange Commission’s allegations of fraud at Goldman Sachs Group Inc. weighed down bank stocks.

Bank of America closed at $18.41, down 5.5%.

The bank’s performance in the first quarter shows how the taxpayer infusions that propped up U.S. banks in 2008 and 2009 positioned some of the nation’s largest institutions for a profit rebound this year.

But there is still plenty of uncertainty hanging over the industry. More than 100 banks are expected to fail this year due to bad lending practices and other mistakes in the run-up to the crisis.

Bank of America, for its part, lost $2.1 billion in its still struggling mortgage division. The bank still has $36 billion in nonperforming loans it mightn’t be able to collect. Loan losses were 4.44% of all loans in the first quarter, as compared to 2.85% a year earlier. The bank said its charge-offs would have dropped if the bank hadn’t brought back onto its books loans previously held in off-balance sheet vehicles.

BofA CEO Brian Moynihan said “we are trying to be conservative.”

Revenues dropped 11% to $32.2 billion from $36.1 billion during the year-ago quarter. Fee income was down roughly 22% as the bank grappled with new regulatory restrictions.

“We got work to do,” Mr. Moynihan said.

There also is the danger that the bank’s robust trading income could disappear if interest rates increase, although such a development would likely boost the results of its consumer operations.

Looking ahead, Bank of America is hoping a push overseas in Asia and Europe will generate more revenue, and it is trying to squeeze more referrals between Merrill’s army of financial advisors and Bank of America’s corporate bankers.

Mr. Moynihan also acknowledged the bank is working on changes in the bank’s consumer pricing model, with the possibility of a “maintenance fee” for certain accounts. Such changes are not likely to occur until 2011, but the bank does need to find a way to make up for the billions it will lose as it eliminates debit card overdrafts and other traditional fees.

Even with new regulatory restrictions, Bank of America is still well positioned to churn out big profits in the years ahead. Banking analyst John McDonald said the bank could earn $8.5 billion in 2010, $22.2 billion in 2011 and $27.2 billion in 2012.
…

* THE WALL STREET JOURNAL
* LAW
* APRIL 16, 2010, 11:20 P.M. ET

Judge Bashes Bank in Foreclosure Case

By AMIR EFRATI

A Florida state-court judge, in a rare ruling, said a major national bank perpetrated a “fraud” in a foreclosure lawsuit, raising questions about how banks are attempting to claim homes from borrowers in default.

The ruling, made last month in Pasco County, Fla., comes amid increased scrutiny of foreclosures by the prosecutors and judges in regions hurt by the recession. Judges have said in hearings they are increasingly concerned that banks are attempting to seize properties they don’t own.

The Florida case began in December 2007 when U.S. Bank N.A. sued a homeowner, Ernest E. Harpster, after he defaulted on a $190,000 loan he received in January of that year.

The Law Offices of David J. Stern, which represented the bank, prepared a document called an “assignment of mortgage” showing that the bank received ownership of the mortgage in December 2007. The document was dated December 2007.

But after investigating the matter, Circuit Court Judge Lynn Tepper ruled that the document couldn’t have been prepared until 2008. Thus, she ruled, the bank couldn’t prove it owned the mortgage at the time the suit was filed.

The document filed by the plaintiff, Judge Tepper wrote last month, “did not exist at the time of the filing of this action…was subsequently created and…fraudulently backdated, in a purposeful, intentional effort to mislead.” She dismissed the case.

Forrest McSurdy, a lawyer at the David Stern firm that handled the U.S. Bank case, said the mistake was due to “carelessness.” The mortgage document was initially prepared and signed in 2007 but wasn’t notarized until months later, he said. After discovering similar problems in other foreclosure cases, he said, the firm voluntarily withdrew the suits and later re-filed them using appropriate documents.

“Judges get in a whirl about technicalities because the courts are overwhelmed,” he said. “The merits of the cases are the same: people aren’t paying their mortgages.”
…
Cases handled by the Law Offices of David Stern

* Dismissal of GMAC Mortgage LLC v. Debbie Visicaro
* Hearing in U.S. Bank N.A. v. Ernest Harpster

Related Articles

U.S. Probes Foreclosure-Data Provider
4/3/2010

Two Different Plaintiffs Claim to Own Same Mortgage
11/14/2008

Some Judges Stiffen Foreclosure Standards
7/26/2008

The Court House: How One Family Fought Foreclosure
11/28/2007

Judges Tackle “Foreclosure Mills”
11/30/2007

Wells Fargo Is Sanctioned For Role in Mortgage Woes
4/30/2008

* THE WALL STREET JOURNAL
* LAW
* APRIL 16, 2010, 11:46 P.M. ET

Fraud Allegations Further Inflame Fight Over Financial Regulation
BY DAMIAN PALETTA AND VICTORIA MCGRANE

The government’s civil-fraud charges against Goldman Sachs Group Inc. subsumed Washington’s debate over new financial-market rules Friday, handing Democrats a powerful tool to press their case for stricter curbs on Wall Street’s big banks.

Goldman has been a political punching bag since the financial crisis erupted, and lawmakers from both parties promptly sought to draw the SEC charges into the increasingly bitter clash on Capitol Hill over revamping financial markets’ regulatory framework.

“This is also why we need to pass strong Wall Street reform this year,” said Senate Majority Leader Harry Reid (D., Nev.).
…

EMPLOYMENT
California’s jobless rate hits high of 12.6% in March

The state adds 4,200 jobs, but more people were seeking work than in February. L.A. County’s rate holds at 12.4%; Orange County’s rises to 10.1%. Meanwhile, unemployment benefits are running out.
…

BFF (Bank Failure Friday, or as PB calls it, FDIC Friday) saw a whopping EIGHT banks shut down, bringing the total for the year to 50. We’re still on pace to break the total from last year of 140 by a good margin.

Perhaps the best sign is that a bank in Massachusetts (”home of the second season of Jersey Shore”) failed for the first time since 1994, leading to much gnashing of teeth from the Boston Globe.
=================
In other news, it looks like I’m getting transferred for work - away from Massachusetts, back to my home state (I’ve been in contact with the office there for years, so they clued me in the requisition was being posted). Much much much lower home prices. Rent on a bigger apartment in a really nice area of town is half of what we pay for the apartment here in MA on a busy road, and I keep the same salary. So Mrs. Chile will be able to stay home with Mini-Chile instead of sending him to Kiddie Kennel.

Interesting story I read today on facebook.

My wife has an annual get together with her college friends who are spread out all over the country. About 8-10 of them give go back to the college town for a 3 or 4 day weekend every July. Most of the husbands/boyfriends go as well. I’ve gone 3 times, good times.

One of the participants and her husband - they’ve been married about 6 months - sent out the great news over FB. They had their offer on a house accepted. Woo hoo! It has a pool too!

Only downside, they are now a strict house budget, and have no money to go to the reunion trip in the summer. Just married and due to the r/e propaganda machine, already too broke to go on a trip that will cost them at most $2000. But they’re home owners, and living the American Dream, so that’s a good trade off I suppose.

I was tempted to write back “Congrats. BTW I rent a nicer, bigger house than that, with a bigger pool, for 1/2 what your mortgage will be, and I can go on 10 trips this summer if I want”. But the guest bed is really uncomfortable so I’ll keep my mouth shut.

It seems the states that had the biggest real estate bubbles now have (among) the highest unemployment rates. I wonder if there might be a pattern here?

The Associated Press April 16, 2010, 2:23PM ET
Florida’s jobless rate reaches record 12.3 percent

This news will get the housing market going again…

Blogs | Scam Diego
Local Unemployment Rate Back to 11%
By Don Bauder | Posted April 16, 2010, 10:43 a.m.

The unemployment rate in San Diego County rose to 11% in March from 10.7% in February, although employment increased by 5,000 in the month. The comparable rate for California was 13% and the nation 10.2%. Local government jobs went up 1,400 from February to March. Retail trade jobs inched up 0.3% and amusement, gambling and recreation jobs rose 1.3%. Jobs in full service restaurants rose 1.4% in the month. These are possible signs of a lambent consumer recovery. Tourism (accommodation) jobs were flat — an improvement over some previous months. Year over year, the county lost 35,100 jobs.

County, state unemployment rates up
Figures rise even amid increases in hiring

By Dean Calbreath, UNION-TRIBUNE STAFF WRITER

Friday, April 16, 2010 at 8:40 p.m.

Despite three straight months of hiring increases, the unemployment rate in both California and San Diego County rose to new heights in March because the creation of new jobs has not kept pace with the influx of workers entering the job market.
…

Matt Taibbi should get some kind of an award. His investigative journalism on GS has been superb.

Looks like emerging market stocks will go down by 3-4% Monday on Goldman news and other charges that are awaited.

As the Goldman Sachs news hit the wires yesterday I made a comment about the value of those toxic MBS tracked by Markit. It was one of the only places you could see the actual prices of some those AAA through B tranches. They were priced when issued at near 100 cents on the dollar. At the bottom some had lost 95% of their value. Of course as the FED stepped in and bought hundreds of billions of this stuff at near full value you could see these MBS shoot up in value over the last year. So when the SHTF yesterday I was interested to see if there was any effect on these indexes. Well the answer is yes, sort of.

http://www.markit.com/en/products/data/indices/structured-finance-indices/abx/abx-prices.page?

If you check out a few of these you will see the AAA rated stuff did indeed take a hit yesterday but the effect was pretty minor. If the GS fraud can be linked to the rating agencies we should expect lots of fireworks in these indexes.

The Fire Next Time NYT

Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding. But before I get to that, let’s talk about why he’s wrong on substance.

Well, Mr. McConnell is trying. His talking points come straight out of a memo Frank Luntz, the Republican political consultant, circulated in January on how to oppose financial reform. “Frankly,” wrote Mr. Luntz, “the single best way to kill any legislation is to link it to the Big Bank Bailout.” And Mr. McConnell is following those stage directions.

It’s a truly shameless performance: Mr. McConnell is pretending to stand up for taxpayers against Wall Street while in fact doing just the opposite. In recent weeks, he and other Republican leaders have held meetings with Wall Street executives and lobbyists, in which the G.O.P. and the financial industry have sought to coordinate their political strategy.

And let me assure you, Wall Street isn’t lobbying to prevent future bank bailouts. If anything, it’s trying to ensure that there will be more bailouts. By depriving regulators of the tools they need to seize failing financial firms, financial lobbyists increase the chances that when the next crisis strikes, taxpayers will end up paying a ransom to stockholders and executives as the price of avoiding collapse.

Even more important, however, the financial industry wants to avoid serious regulation; it wants to be left free to engage in the same behavior that created this crisis. It’s worth remembering that between the 1930s and the 1980s, there weren’t any really big financial bailouts, because strong regulation kept most banks out of trouble. It was only with Reagan-era deregulation that big bank disasters re-emerged. In fact, relative to the size of the economy, the taxpayer costs of the savings and loan disaster, which unfolded in the Reagan years, were much higher than anything likely to happen under President Obama.

The Obama administration wants tighter regulation of derivatives, while Republicans are opposed. And that tells you everything you need to know.

So don’t be fooled. When Mitch McConnell denounces big bank bailouts, what he’s really trying to do is give the bankers everything they want.

http://www.nytimes.com/2010/04/16/opinion/16krugman.html?src=me&ref=general

Wouldn’t more panic be useful if it led to substantive Wall Street reform? I don’t know about you guys, but I don’t want my kids to suffer from a never-ending period of American economic decline while Wall Street banksters continue collecting their pirate loot.

More Than Goldman Sachs In SEC Gun Sight
Robert Lenzner, 04.16.10, 06:49 PM EDT
Other people should be worried, too, and they know who they are.

The chickens may have come home to roost for Goldman Sachs and perhaps for a host of other purveyors of rotten mortgage-backed securities that were fobbed off on unsuspecting investors.

The Securities and Exchange Commission’s enforcement chief revealed Friday that his investigators were looking at “other products and practices” on Wall Street that might also lead to eventual fraud charges for others. In the meantime, be aware that the government is seeking the disgorgement of illegal profits Goldman Sachs ( GS - news - people ) obtained as a “result of fraudulent misconduct.”

Last but not least, the U.S. Attorney in New York, had “no comment’ when asked if the Justice Department had in the works a criminal investigation of this civil fraud action by the SEC. In the present climate of anger toward Wall Street you can probably count on a criminal investigation. Justice recently divulged it was looking into accusations that Lehman Bros. hid massive debts from investors just before it went bankrupt.

Truthfully, any indictment is unlikely as it would threaten Goldman’s charter as a dealer of Treasury securities and throw the financial community back into panic.
…

100,000 Califonians to lose unemployment bennies this weekend…

ouch.

www dot kcba dot com/Global/story.asp?S=12327329

http://thehill.com/blogs/on-the-money/banking-financial-institutions/92775-hedge-fund-manager-at-center-of-goldman-allegations-is-a-major-democratic-donor-

The hedge fund manager at the center of the Goldman Sachs allegations is a major Democratic donor. I am shocked, shocked! I tell you.

Lots of bank failures this weekend. I noticed FDIC was cutting more 50/50 deals on asset losses making the acquiring banks cover the difference.

Direct evidence here?

“Lure of easy real-estate money sinks couple”

http://www.ajc.com/business/lure-of-easy-real-467220.html

“These days, a single two-bedroom cabin in Ellijay is all that remains of a real estate empire the Ballards once thought would be worth about $30 million. Now bankrupt, her husband, Doug, has returned to work in Florida. “

What ever happened to James Bond and women melting type of type of traditional thinking?

The newest development is the judgment heaped on men for bad behavior. Women’s judgment of adultery and promiscuity in men has become far harsher, according to recent studies. The shift in attitude could be interpreted as a feminist advance. Women now hold men to the same stringent sexual standards that they themselves have long been held to. Even men are beginning to judge other men for promiscuity. What this points to is the end of a great American tradition: the double standard.

http://www.slate.com/id/2250706/

Obama and the dems - raising OUR taxes through the roof but giving tax breaks to foreigners????

—————

U.S. government mulls luring foreign property owners(tax break 4 foreign CRE buyers)
Reuters | 04/16/10 | Ilaina Jonas

NEW YORK (Reuters) - Tax breaks may not be enough of a sweetener to bring foreign buyers back into the flailing U.S. commercial real estate market, where falling rents, rising vacancies, a scarcity of debt financing and lack of property for sale have acted as deterrents.

Congress is considering a move to lower or eliminate U.S. taxes currently imposed on foreign investors of U.S. commercial real estate, where the number of sales has fallen off a cliff over the past two years.

The Real Estate Revitalization Act of 2010 is designed to stir demand by foreigners and in turn lift prices and encourage even more buying by alleviating the U.S. tax burden imposed upon foreign sellers. The number of commercial property deals fell by 55 percent in 2009 after diving 62 percent the previous year.

Yet many current owners are hanging on to their property despite values that are often less than the mortgages because lenders are extending the loans rather than take the loss from a foreclosure.

But if lawmakers hope that rejigging the tax laws for foreign sellers will suffice to kick-start the U.S. commercial property market, they may be in for a letdown.

Both foreign and U.S. investors are keeping a massive amount of money parked on the sidelines. They are spooked not by taxes but by falling rents, rising vacancies and a lack of debt financing. There is also a dearth of well-leased, financially stable office, retail, hotel apartment or warehouse buildings for sale.

Recession, Recovery… Remodeling

It’s hard to tell whether the LIRA signals a broader economic recovery. It may be that people who can’t sell their homes are deciding that, if they have to stay put, they might as well renovate. If that’s the case, now may be the time to start that renovation project you’ve been putting off — well before the good contractors start getting booked.

http://www.theatlantic.com/business/archive/2010/04/recession-recovery-remodeling/39029/

Interesting development in our short sale (that is pending). A smaller house, not upgraded, is now pending too. It was listed at $255k but is not a short sale. Our realtor thinks we’re screwed if this closes quickly and is anywhere near asking. The bank still hasn’t ordered a BPO, which will obviously be different with this new comp. BofA would then try to jack us, at which point we’d bail.

My street-level observation is that the dead cat bounce / mini me bubble is at about 2006 right now. We should be into 2007 about 3-4 months after the credit expiration. There will be a SERIOUS reckoning for anyone that listed their house in the last 6 months and received no offers before the credit expired.

Wake up, America, and read the handwriting on the wall. The Greek future can be our future if we do not drum the high-level Wall Street Megabank corruption out and start over with a transparent and competitive financial system subject to a rule of law. Crony capitalism and too-big-to-fail have to go.

My wife and I foolishly try to pay every penny that we owe. Like Greek citizens who play the rules, I know that I am a fool and I am proud of it.

* THE WALL STREET JOURNAL
* ECONOMY
* APRIL 15, 2010

Tragic Flaw: Graft Feeds Greek Crisis

By MARCUS WALKER

ATHENS—Behind the budget crisis roiling Greece lies a riddle: Why does the state spend so lavishly but collect taxes so poorly? Many Greeks say the answer needs only two words: fakelaki and rousfeti.

Fakelaki is the Greek for “little envelopes,” the bribes that affect everyone from hospital patients to fishmongers. Rousfeti means expensive political favors, which pervade everything from hiring teachers to property deals with Greek Orthodox monks. Together, these traditions of corruption and cronyism have produced a state that is both bloated and malnourished, and a crisis of confidence that is shaking all of Europe.

A study to be published in coming weeks by the Washington-based Brookings Institution finds that bribery, patronage and other public corruption are major contributors to the country’s ballooning debt, depriving the Greek state each year of the equivalent of at least 8% of its gross domestic product, or more than €20 billion (about $27 billion).

“Our basic problem is systemic corruption,” Greece’s Prime Minister George Papandreou said after he took office late last year, vowing to change a mentality that views the republic as a resource to plunder. He later berated the chief of public prosecutions, saying Greeks believe “there is impunity in this country.” The chief prosecutor said that wasn’t so.

Greece moved closer to a bailout Thursday, requesting aid talks with the International Monetary Fund and the European Union. Many investors and economists say aid would buy Greece time, but wouldn’t solve its underlying problems.

The Brookings study, which examines the correlation between corruption indicators and fiscal deficits across 40 developed or nearly developed economies, highlights how corruption has hurt public finances in parts of Europe, especially in Greece and Italy, and to a lesser extent in Spain and Portugal.
…
Corruption undermines public finances in myriad ways. Cheating the government, especially on taxes, is widespread. Government-procurement bribery and political patronage bloat government spending. And pervasive petty bribery erodes the state’s authority over taxpayers.

“The core of the problem is that we don’t have a culture of civic society,” says Stavros Katsios, a professor at Greece’s Ionian University who specializes in economic crime. “In Greece, complying with the rules is a matter of dishonor. They call you stupid if you follow the rules.”
…

Posts by Aaron Task

“Rotten to the Core”:
Bill Black and Barry Ritholtz React to Goldman Fraud Charges
…

I miss Georgous George with his Gold plated Georgie Pins he handed out to the audience.

“You have a mandate that’s accessible in theory, but not in practice, because it’s too expensive”

Will BOcare be any different?

wwwnytimescom/2010/04/18/nyregion/18insure.html

The problem stems in part from the state’s high medical costs and in part from its stringent requirements on insurance companies in the individual and small group market. In 1993, motivated by stories of suffering AIDS patients, the state became one of the first to require insurers to extend individual or small group coverage to anyone with pre-existing illnesses.

New York also became one of the few states that require insurers within each region of the state to charge the same rates for the same benefits, regardless of whether people are old or young, male or female, smokers or nonsmokers, high risk or low risk.

Healthy people, in effect, began to subsidize people who needed more health care. The healthier customers soon discovered that the high premiums were not worth it and dropped out of the plans. The pool of insured people shrank to the point where most of them had high health care needs. Without healthier people to spread the risk, their premiums skyrocketed, a phenomenon known in the trade as the “adverse selection death spiral.”

“You have a mandate that’s accessible in theory, but not in practice, because it’s too expensive,” said Mark P. Scherzer, a consumer lawyer and counsel to New Yorkers for Accessible Health Coverage, an advocacy group

According to the cover of Newsweek

“AMERICA’S BACK”

i guess once this Goldman Sachs dust up blows over the market can resume its ascent.

I am going to post a couple of old chestnuts which might be good to revisit on this weekend after Gollum got served notice by the SEC of a fraud suit.

Economy
May 2009 ATLANTIC MAGAZINE
The Quiet Coup
By Simon Johnson

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7604196/No-prospect-of-any-more-German-rescues-as-Portugal-hits-a-brick-wall.html

Just when we’re finding out the Greek debt crisis is not so contained, the Portugal debt crisis rears its ugly head. Soon to be followed by the Spanish debt crisis, the British debt crisis, the Ireland debt crisis, etc. All of which will barely rate any but the most dismissive mention by the MSM.