Hugest moral hazard from hell, ever

From The Big Picture:

Yesterday, in Backdoor Bailouts for Goldman Sachs?, we noted that GS, as well as Morgan Stanley, Merrill Lynch, and Deutsche Bank, were all made whole on their bad bets with AIG.

That’s right, what was misleadingly described as systemic risk turned out to be in large part little more than a counter-party bailout — money for the very same people who helped cause the problem.

Only the $25 billion figure I mentioned was off by 100% — the WSJ is reporting this morning it was $50 billion dollars, almost a third of $173 billion total AIG loot:

Here is the link to the WSJ article.

Meanwhile, what has become known as The Scariest Chart Ever has been updated (props to The American Prospect:)

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Here’s the link to Speaker Nancy Pelosi’s Flickr posting of the chart.

Someone should make a chart projecting sales growth in pitchforks, which is my growth industry of the day. (In best lunatic stock picker-screamer voice: “People, I am telling you to buy stock in pitchforks, now, because there is only one way pitchfork stocks are going, and that is up up up up up.”

If the Obama administration thinks they can continue the Paulson plan while employment goes off a cliff I’m afraid they are sadly mistaken. My crystal ball is being tuned up so I can hopefully get another 10-15,000 miles out of it somehow, but the “let them eat cake” aspect of this crisis is getting hard to dismiss. Sure, it’s early in the administration, and yes, the stimulus package, flaws and all, did get passed. But good Lord. Exactly how long are the American people supposed to stand for this outlandish thievery by Wall Street?

Is the RICO statute still around?

Comments

  1. 1

    Rujax! spews:

    Of course…this is all Obama’s fault.

    So here’s the cyniklown’s “invisible hand” giving him the finger. For real.

    Let’s hear more defense of unregulated markets, shitheads.

    Gotta new “Golden Goat” to award…let’s get busy trolls!

  2. 3

    spews:

    I’d like to see an investigation. If it’s been found that banks or Wall Street used taxpayer money to subsidize bonuses or dividends, instead of shoring up capital, people in those firms should be sent to prison for a long time.

  3. 4

    spews:

    That chart IS scary … because it is a lie.

    You surely know that there is no logic in comparing raw job loss numbers across decades, right?

    Don’t make me spell it out for you. The chart @2 measures it honestly: by percentage, not raw numbers. Pelosi does it dieshonestly.

    And the chart @2 also includes other recessions that Pelosi would have us not remember …

    Also, both charts use the somewhat arbitrary measurement of peak month. It’s not a bad choice, but it doesn’t give a complete picture.

  4. 5

    salliemac spews:

    @4 Don’t make me spell it out for you. The chart @2 measures it honestly: by percentage, not raw numbers. Pelosi does it dieshonestly.

    ———–

    The original presentation was clearly not an honest representation, leaving out the worse post war recessions.

    Jon, you should have caught that. Calculated Risk is a better source for this stuff.

  5. 7

    Giffy spews:

    Um, the counterparty risk is the systematic risk. If AIG went down it would have taken all the rest, as well as possibly a few governments, down with it. If that had happened say good bye to any semblance of credit or banking and you could draw that line straight down through 30 or 40 million jobs.

  6. 8

    Mr. Cynical spews:

    Rujax–
    You get the RUSTY PINHEAD Lifetime Achievement Award for never posting anything of value..and your dreaded Daily Kos and other Atheist Progressive Lunatic Pubs. Cut-and-Paste.
    A well deserved honor for the biggest moron in the history of Blog posting.
    Don’t you agree Puddy?

    As Puddy pointed out, the DEMOCRATS got the vast majority of contributions from these loser financial orgs.

    Wake up and smell the coffee….
    Your guys are corrupt…lead by the KLOWN with severe Bastard Child Syndrome.

  7. 9

    whatsmydegreereallyworth spews:

    @8 Um, the counterparty risk is the systematic risk.

    Um, Ritholtz begs to differ:

    “That’s right, what was misleadingly described as systemic risk turned out to be in large part little more than a counter-party bailout — money for the very same people who helped cause the problem.”

    Post your argument here:

    http://www.ritholtz.com/blog/2...../#comments

  8. 10

    Rujax! spews:

    oooo…the cyiniklown is CRANKY!

    Stocks are tanking and the vodka’s almost gone.

    I’m sure he’s really pissed he didn’t get the “Golden Goat”.

    Too fucking bad.

  9. 11

    correctnotright spews:

    @3 Troll: I agree. We should be investigating these CEOs and looking at the taxpayer money they are stealing.

    @4: Pudgie moron: Just because the comparison is raw numbers does not make it lie (the favorite Pudgie word, used incorrectly and indiscriminantly for anything the puny brain of Pudge disagrees with).

    Pudgies point (and he does have one) is that the job losses should be normalized to be put in perspective. Now they could be normalized to GDP or to population. The second graph does that (to total jobs) – however, it is not any less scary. While not quite as steep as previous graph – it shows no sign of bottoming up. Private industry is still shedding jobs at a record rate. Only the 1948 recession was deeper and longer at this point.

    And pudgie – do you want the graph to NOT start at the peak employment month? The whole point is to show the downturn. What else would you propose? That is standard for this type of data. Start with the peak and show the downturn.

  10. 12

    Michael spews:

    From Calculated Risk

    The current recession is now the worst recession in percentage terms since the 1950s – although not in terms of the unemployment rate.

    No matter how you slice it, it comes up nuts!

  11. 13

    Mr. Cynical spews:

    From today’s Rasmussen:

    Saturday, March 07, 2009

    The Rasmussen Reports daily Presidential Tracking Poll for Saturday shows that 39% of the nation’s voters now Strongly Approve of the way that Barack Obama is performing his role as President. Thirty-one percent (31%) Strongly Disapprove to give Obama a Presidential Approval Index rating of
    +8

    This is Obama’s lowest rating since Inauguration when it was +32.
    It was +16 several days ago.
    This huge drop is the result of the backlash of the Limbaugh sideshow.
    Obama is starting to wear his own shit.
    He stinks real bad.
    Obama is plummeting and cannot figure out why.
    Rush just kicked his ass.
    Rush has nearly doubled his listeners to 25 million!
    Thanks to Obama the Knucklehead.

    This is what happens when you elect someone with ZERO experience in making decisions.
    You elected a Community Organizer (aka Voter Registration Cheater)!

    There are 56 Dem Congressional Seats in Districts McCain won. 56!
    2010
    is just around the corner.
    Conservatives are mobilizing.
    1994 all over again.

  12. 15

    Richard Pope spews:

    Cynical @ 13

    There are 56 Dem Congressional Seats in Districts McCain won. 56!

    Somehow, I doubt that very seriously. The only source for this 56 number is some posting by some right-wing TWIT on his TWITTER channel.

    If McCain could have actually carried 56 of the Democratic-held U.S. House districts in last November’s election, he would have beated Obama by several percentage points nationwide, and the electoral vote totals would be reversed.

    More likely, there are 56 Democratic-held U.S. House districts in (the relatively few) STATES that McCain won, as opposed to McCain actually winning 56 Democratic-held U.S. House districts.

  13. 16

    salliemac spews:

    @14

    Good catch, it is stale. I fired off an email to calculated risk to see what he says.

  14. 17

    Richard Pope spews:

    Okay, I counted them up pretty carefully, and there are 55 Democratic-held U.S. House seats in STATES that McCain carried in 2008. The vast majority of these seats are in safe Democratic districts that Obama carried, often by a substantial margin.

    I would doubt that there are even 20 Democratic-held U.S. House seats in DISTRICTS that McCain carried in 2008. But you get one Republican TWIT to post this “56 seats” (or was it “46 seats”?) claim on TWITTER — without any references to back it up — and all of a sudden it becomes the gospel truth among the rest of the Republican TWITS.

  15. 18

    Mr. Cynical spews:

    Richard–
    I stand corrected…
    But watching Obama blow most of his political capital in less than 2 months probably means many more contested House Seats.
    Obama promised lots of stuff…and has consistently done the opposite.
    Having his Right-hand man Emmanuel up to his asshole in this Limbaugh partisan politics scheme is really going to hurt him.
    So is the Porkulous Package when Americans see where the money is going.

    Richard..
    I’ll bet you the R’s pick up at least 20 House seats in 2010.

  16. 19

    Tlazolteotl spews:

    Geithner’s head comes first. The whole reason the stock market is tanking right now is because all those smart people on Wall Street know that a lot of large banks, and GM, and AIG, are insolvent, and are waiting for Treasury to really do something about them other than infusing money into zombie companies.

    Just put them into receivership and get it over with already!

  17. 20

    ArtFart spews:

    5 Dude, you need new glasses. Either chart shows the same thing: We’re headed for hell in a bucket.

  18. 21

    ArtFart spews:

    If Obama doesn’t see the handwriting on the wall and quit trying to be nicey-nicey with the Republicans and the “magician”* bankers, pretty soon most of the Democrats will “hope he fails”, or at least not give a shit. We’ll all be too busy rummaging in garbage cans.

    (* They’re magicians with a single trick: They can take gigantic amounts of other peoples’ money, and make it disappear!)

  19. 22

    Puddybud, Hey it's the new year... spews:

    Jennie Tlazolteotl@19

    Geithner’s head comes first.

    Wow Jennie. You want to throw Tim TurboTax Geithner under the bus? He was touted as the saviour of the marketplace.

    Don’t you remember the November 24th 2008 news conference from the “Office of the Preznit Erect” in Chicago? Well it is more than 24 hours ago…

    Tim TurboTax Geithner was president of the NY Federal Reserve Bank. Obama mentioned Tim TurboTax Geithner brought a “unique insight” into the market failures and the steps that need to be taken to fix them. Tim TurboTax Geithner was working with the Bush administration on ways to solve the credit crisis.

    All ready to can the man on March 7, 2009.

  20. 23

    steve spews:

    “I’ll bet you the R’s pick up”

    I bet that you’ll do no better with your election forecasting than you have with your Wells Fargo “buy” recommendations.

  21. 24

    spews:

    Yawn @11: Just because the comparison is raw numbers does not make it lie

    Yes, it does, actually. There’s nothing meaningful in the raw numbers. The only point to do it if you’re trying to make a point — as Pelosi obviously is — is to deceive. Unless, of course, she’s plain ignorant.

    job losses should be normalized to be put in perspective.

    Obviously. The point of the current chart is to say that these job losses are a certain degree worse when compared to the last two recessions; but since it is not normalized, it is therefore a lie.

    The second graph does that (to total jobs) – however, it is not any less scary.

    Sure it is, especially since it includes recessions that most people today don’t even know about, like the recessions in 1948, 1953, and 1958 when most Americans think we had a great economy. Remember how the war fixed all our economic problems?

    While not quite as steep as previous graph – it shows no sign of bottoming up.

    Neither did the recession in 1980 at this point. The 1948 recession showed signs of improvement before this point … and then it got a lot worse. So what? We know it will turn around, unless the government gets in the way. Why do we need to see it on a graph to know it will bottom out, and pretty soon?

    do you want the graph to NOT start at the peak employment month?

    It’s a bit misleading. Take the other graph, for example, that shows the 1980 and 1981 recessions. If we didn’t cling too hard to this “peak” concept, but instead tried to map out the time since the beginning of the downturn, we’d probably push the 1981 numbers a good 12 months down the line, which would make it a much longer-lasting recession. It’s not like most people thought, “hey, the economy is fixed again” in between the end of the 1980 line, and the beginning of the 1981 line.

    As I said, I am not saying there’s necessarily a better way — it’s not like with non-normalized losses, where there is a right way and a wrong way — I was just pointing out that it doesn’t tell the whole story very well.

    That is standard for this type of data. Start with the peak and show the downturn.

    Well, there’s various ways to do it. Another way is to look at peak to peak, or valley to valley, etc., to get a wider view of things. That would be difficult to horizontally normalize for this type of comparison, of course. Again, just pointing out that it doesn’t tell the whole story, and the 1980/1981 lines demonstrate this for us.