by digby
The other day I wrote a little post about the front page of the NY Times wondering if it would be one of those things that future scholars would study.
Today, I looked at Eschaton and had a similar reaction. Being an economist by training, Atrios has been following Big Shitpile far longer than most of us and has been sounding warnings about it for years. But these days I read his blog and just get a sick feeling in the pit of my stomach. Here’s just a sampling of his posts as of noon PST today. (I copied them in full because I wanted to make a record, kind of like that NYT front page.)
The Scariest Chart EverIt is scary. And next month will be scarier.
How about some new ideas, Timmeh?
Dr. Doom Gets Gloomier
Kinda scary.
March 6 (Bloomberg) — The global recession may continue until the end of 2010 as the response by governments to rectify it is “too little, too late,” said Nouriel Roubini, the New York University professor who predicted the financial crisis.…
The situation can be improved by appropriate policies, including governments taking over insolvent banks, cleaning them up and re-selling them to private investors, he said. The Group of Seven and the Group of Twenty economies “must act together to get out of this mess,” Roubini said.
History will not be kind to Geithner. Or his boss, unless he changes directions quickly.JobsWell, I just barely won the under bet. -651K. And unemployment hits 8.1%
The broader measure of unemployment, U6, jumps from 13.9 to 14.8%.
Lighting A Pile Of Money On FireI don’t know if these people are corrupt or fools, but they’re just shoveling money out the door as fast they can.
They Fucked Everything Up, So Obviously They Can Fix ThingsAnyone else see a small problem with this idea?
The government is seeking to resuscitate the nation’s crippled financial system by forging an alliance with the very outfits that most benefited from the bonanza preceding the collapse of the credit markets: hedge funds and private-equity firms.The initiative to revive the consumer lending business, outlined by officials this week, offers these wealthy investors a new chance to make sizable profits — but, thanks to the government, without the risk of massive losses.
They made bad bets when they at least theoretically thought they could incur losses. Now the cunning plan is to hope they make good bets even though…no chance of losses!
This is all going to end really badly.
Shitpile: Actually Really ShittyAs Krugman explains, someone really needs to sit Geithner down and explain to him that all those pieces of shitpile are indeed really shitty. This fantasy of undervalued assets is just a fantasy.
Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.
Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.
InquiryIt’s hard to know exactly how to read these stories as there’s this kind of pass the buck game going on between BoA and Merrill.
CHARLOTTE, N.C. — One Merrill Lynch trader apparently gambled away more than $120 million in the currency markets. Others seemingly lost hundreds of millions on tricky credit derivatives.But somehow all this red ink did not spill into plain view until after Merrill earmarked billions for bonuses and staggered into the arms of Bank of America.
And in case you hadn’t heard, the Dow dipped below 6500 today. Oy.
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