Strikes to Be Much Less 'Limited' than Advertised
2--Lehman; 5 years later, WSJ
Richard Fuld, Lehman's CEO, told the Financial Crisis Inquiry Commission that he believed to the very end that his company could be saved with government help. He said he told Mr. Paulson, "If you would give us a bridge [loan], let's put Lehman back together. We can wind down these positions, and we can make a lot of this ugliness go away."
The government, of course, refused.
"We knew we were very sure the collapse of Lehman would be catastrophic," Mr. Bernanke told the Financial Crisis Inquiry Commission a year after the event. The Treasury and the Fed tried to sell Lehman, but couldn't. And though they offered different explanations at the time, Messrs. Bernanke, Geithner and Paulson today all say that they had no choice but to let it go.
"I will maintain to my deathbed that we made every effort to save Lehman, but we were just unable to do so because of a lack of legal authority," Mr. Bernanke has said.
Mr. Paulson says that if the government's financial overseers had in 2008 the powers that Congress granted them in 2010, they would have taken over Lehman. "It would have been messy, but it would have been better," he says.
The next day, with global markets in full panic, the Fed, reluctantly, bailed out American International Group, AIG +0.81% a huge insurer that had made big, losing bets on complex financial transactions known as derivative investments.
All in all, the Fed and Treasury committed $182 billion to AIG. In exchange, taxpayers got the bulk of the shares in the company. Those shares have all been sold now, and by Treasury calculations, taxpayers got all their money plus another $23 billion. AIG is half the size it was before the crisis.
But the takeover provoked political backlash, especially after it was revealed that Goldman Sachs GS +1.07% and other firms AIG made transactions with had been made whole and some AIG executives and traders who had been at the scene of the crash got big bonuses to clean it up.
Surprise Under TARPThe collapse of Lehman and all that followed led Congress, with substantial hesitation, to approve President George W. Bush's request for $700 billion of taxpayer money for TARP to rescue the banks. The game plan Mr. Paulson outlined to Congress changed before a nickel was spent, but it did largely accomplish the government's aims and at less ultimate cost to taxpayers than even optimists expected back in 2008
Mr. Paulson told Congress that the TARP program would be used to buy "toxic assets"—mortgages that would never be paid back in full—from the banks. It wasn't. Instead, the Treasury bought shares in the banks to shore up their capital footings.
"The severity and constantly expanding nature of the crisis meant we frequently operated on the fly," Mr. Paulson says today. "We got TARP to do one thing that didn't work," he said later, "but it succeeded brilliantly in doing another
3--Lehman: No prosecutions, NYT
The S.E.C. quietly reached the decision in 2012 after officials sparred for months over whether Lehman omitted “material” information in disclosures to investors, an important legal standard. Mr. Canellos argued that the omissions were not material. And those who questioned that reasoning — like Ms. Schapiro, as well as some accountants and enforcement officials — acquiesced to Mr. Canellos’s team, which was closest to the evidence.
The S.E.C. also debated the culpability of top Lehman executives. But Mr. Canellos’s team argued that Mr. Fuld did not know that Lehman was using questionable accounting practices despite testimony from another Lehman executive that suggested otherwise. Ms. Schapiro did not override his judgment after S.E.C. officials cautioned her that it could be unethical for a political appointee like herself to do so. Mr. Canellos also had the backing of Robert S. Khuzami, who ran the S.E.C.’s enforcement unit at the time.
4---Fed Uberdove Admits Policy Causes Asset Bubbles (And They're Here To Stay) - Full Speech, zero hedge
5---Japan’s Frantic Redo Of An Artificial Boom Followed By A Bust , Testosterone Pit
6---July Student And Car Loans Soar As Consumers Continue To Pay Down Credit Cards, zero hedge
7---If Norway’s housing market isn’t a bubble, what is?, northern heights
8---Housing”…Where We Sit, Mark Hanson (Must read)
9---China embraces 'British Model', ditching Mao for Edmund Burke, Telegraph
10---Summers at the Fed?, counterpunch
In a New Yorker magazine article last year, it was reported how in early 2009 Summers argued in the Obama administration stronglly for a minimalist stimulus program—no more than $800 billion—again n composed mostly of business and investor tax cuts—as well as for a bail out of the banks that involved the Federal Reserve essentially writing a ‘blank check’ for the banks. He argued banks had to be bailed out first, at whatever the cost. But the rest of the economy could not spend more than $800 billion in fiscal stimulus, he further recommended to Obama. While others in the Obama administration—like CEA chair Romer—advocated inside the administration for more than a $1 trillion in fiscal stimulus, Summers insisted on the lowest ball stimulus. Even Congress initially proposed more than $900 billion. But the consumer tax cuts were largely stripped out from the Congress proposal in the final $787 billion package that Summers recommended, and President Obama chose to approve. (For a more detailed analysis of these details, see this writer’s 2012 book, ‘Obama’s Economy: Recovery for the Few’, Pluto press).
The barely 5% of GDP stimulus of $787 billion soon dissipated after a year, the economy relapsed in the summer of 2010, housing foreclosures spiked, job losses reappeared, the states ran out of their subsidies, and the US economy ‘bounced along the bottom’—and has continued to do so for the past five years.
Meanwhile, bankers and investors feasted on the more than $10 trillion in free money generously doled out by the Federal Reserve—in the form of five years of nearly zero interest rates and three editions of ‘quantitative easing’ (QE) Fed direct purchases of bad subprime and other bonds from investors, most likely bought at above prevailing market values for those securities. But the public will never know the exact price the Fed paid for the junk via QE, since the Fed refuses to reveal details even to Congress.
11----'CIA fabricated evidence to lure US into war with Syria', RT
The intelligence gathered against Syria’s Assad was manufactured by elements within the spy community in order to mislead the US President to take punitive action, Ray McGovern, a veteran CIA analyst, told RT.
McGovern was among the signatories to the letter from veteran intelligence professionals to Obama, warning the US president that Assad is not responsible for the chemical attack, and that “CIA Director John Brennan is perpetrating a pre-Iraq-War-type fraud on members of Congress, the media, [and] the public.”
12---Like Lehman never happened, Salon