Who rules The US

from a couple of days ago.

[Bank chiefs send US debt default warning - FT.com]:

Wall Street’s leading chief executives intervened in the US debt debate on Thursday, writing to President Barack Obama and Congress to warn of “very grave” consequences of a default and urging them to cut a deal “this week”.

Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JPMorgan Chase were among 14 chief executives of banks and insurers who signed the letter, along with Rob Nichols, the head of the Financial Services Forum, the umbrella association for the biggest financial groups in the US.

The letter said a default, which is still perceived as unlikely, or a downgrade from a triple-A credit rating, which analysts believe is increasingly likely, “would be a tremendous blow to business and investor confidence – raising interest rates for everyone who borrows, undermining the value of the dollar, and roiling stock and bond markets”.

It comes after bankers, from senior executives to traders, have been becoming frustrated that the Federal Reserve is refusing to engage in scenario planning for a US downgrade or default.

This also comes within a couple of years of the US government/taxpayers saving the banker's collective-asses from financial ruin.

The chain of events was
1. bankers trash world economy.
2. US government goes deeply in debt to save banks and financial system from collapse.
3. bankers demand US cut its debt or risk financial downgrade. BUT..... don't raise taxes on the bankers to do it just cut benefits to the lower classes.

We need politicians that look out for the people and not the bankers.

tnb

The Rating Agencies

A couple of post on the Rating Agencies

Economists View: A Perfect Case Study of Flawed Incentives

Digbys blog: I for one welcome our idiot overlords

I think they should be dissolved. Sure, they serve a purpose but they damned-near destroyed the world's financial system by conspiring with the banks to overrate junk mortgage securities. Now, they're dictating government policy with the threat of a credit downgrade. How can they have more power than the US government?

tnb

Oil Prices

noahpinionblog - Oil Speculation

But what happens when a bank/speculator/Goldman-Sachs accumulates oil futures then releases a statement or has a media outlet promote a story like "Goldman Sachs sees higher oil prices in the future" just to create a current profit for themselves. Wouldn't this drive oil prices higher unnecessarily?

tnb

The Finance Sector

The Finance Sector

It makes sense that the finance industry could grow too big. Initially they help grease-the-wheels of the economy, adding value, but eventually they become so big that there's not enough economy for the amount of finance. It's driving the economy, sometimes right into a ditch. Really, very similar to the big-government argument.

tnb

Alan Greenspan

Alan Greenspan's housing bubble coffee break - How the World Works - Salon.com

It's amazing how someone can go from being a hero to goat so quickly. During most of Greenspan's twenty year reign the economy was booming and he was widely seen as the one person most responsible those good times. He was a genius. The great financier of the great US capitalist empire. Now that we've hit harder times, he's seen as the one who created, or at least helped create, the monster. He not only created it but missed the warning signs of its collapse and failed to use his power to reign it in before it crashed down on the world 's economies.

Was he lucky in the good times? Unlucky in the bad times? Short sighted? Evil, purposly sacrificing the future for current profits for his banker friends? I guess history will decide.

tnb

Fed Debit Card Fee Rule

Rep. Frank critical of Fed debit card fee rule | Reuters

The credit card market reminds me of our healthcare markets. The true cost of the service is hidden from the buyer so there are no mechanisms to allow the market to work toward efficiency and both are captured by the current players, with everyone trying to wring as much profit from the system as possible.

The healthcare market has many incentives to increase costs but few to reduce them. The employer pays for the insurance and the insurance company pays for the health care so the buyer will use healthcare whether they need it or not and they won't look for the best deal. The provider doesn't have to worry about cutting operating costs to be competitive with other providers and the insurance company is just a parasite in the system with their profits adding to the overall cost.

The insurance companies and health care providers battle over the profits of the system with both lobbying for regulatory changes that help funnel more of those profits into their respective pockets.

If you had to pay cash for that appendectomy, you'd be shopping around for the best price, health providers would be running their ship like a real business and the insurance company employees would be working in some other industry. The country's overall health costs would be lower. The market would be efficient. Of course people who couldn't afford health care would be dying in the streets so a free market is not a viable answer in this case BUT,.. the current system with it's misdirected encentives is not ever going to reduce costs by any significant amount.

The true cost of credit card purchases are also hidden from the user since most people do not have any sense of the true cost of the interest fees they pay, the cards allow/encourage over spending which raises prices by increasing demand accross the board, and all the processing fees are hidden in the cost of the item.

The banks and Visa/Mastercard (again the banks) have the markets locked up preventing efficiency and they own enough members of our government to prevent any real change in the system. The profits keep rolling in.

In both industries, the market is far from free, the total costs are more than necessary hurtiong consumers and the profits of those at the top are excessive.

Of course the extra costs of these systems, the healthcare provider, insurance companies and bank profits, could be returned to the economy but for some reason our leaders think think rich people shouldn't have to pay more taxes.

Here are a few links about credit card processing:

Interchange fees

Visa, Mastercard, and the FED

Interchange fees

tnb

Fed Bailouts

naked capitalism

In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks….

Spending taxpayer dollars to bail out them furiners seems like a big deal. Could this knock Wikileaks off the front page?

tnb

Wall Street Pay

Them rich Folk seem to be doing all right...

Wall Street Pay Heads Toward New High - WSJ.com

The Mess We're In

A good article about Wall Street capturing our government.

The Atlantic - The Quiet Coup

Some comentary on the Atlantic article here:

Naked Capitalism

Wall Street Reform Passes

Here's a pretty good overview of what's in the bill and a little about the process that created it.

Wall Street Reform Passes

This bill may help protect the economy from the greedy elites but i'm not holding my breath. Bankers have a way of working around regulation and after a few years they'll have their people in all the right "regulatory" positions and will be gaming the system again.

Also, I liked this line.

A team of Goldman Sachs analysts predicted in a Tuesday research note that the legislation will annually cost Bank of America about $4.4 billion, Citi about $3.7 billion, JPMorgan about $5.3 billion, Morgan Stanley about $900 million, and Wells Fargo about $2.2 billion....

I wonder how much it will cost Goldman Sachs?

Government of the People, by the People

shouldn't that be....

...government of the corporation, by the corporation, for the corporation...

The revolving door spins faster on healthcare reform

and an older one....

Another Goldman executive named to key government post as its profits skyrocket

The G20 Summit

Here's a good commentary on the G20 Summit.

The Reaction: Vandalism, violence, and deficit reduction: Thoughts on the G20 Summit in Toronto

Goldman-Sachs owns this country

Video Marketing and Mortgage News Designed for Mortgage and Real Estate Sales

Goldman-Sachs in Rolling Stone