Debt revamps hindered by credit default swaps Dealscape

Chrysler files bankruptcy.  Let's be clear about who is responsible here.  It is the banks, bondholders, and Wall St. that created the derivatives and Credit Default Swap (CDS) monster.  Derivatives have already created the current economic depression (Bear Stearns, Lehman, Merrill, etc).  Now the presence of CDS's distorts the normal workings of a market economy … Continue reading Debt revamps hindered by credit default swaps Dealscape

GM: Some Bondholders Want Bankruptcy – BusinessWeek

Business Week catches up to Econproph from last month. The barriers to getting a deal done with GM bondholders, and negotiating away enough of that debt to strike a deal and avoid a planned, government-assisted bankruptcy, remain very big, with five weeks to go before the deadline. ...And second, some of the bondholders own credit … Continue reading GM: Some Bondholders Want Bankruptcy – BusinessWeek

Using Anti-trust to remedy “too big to fail”

Simon Johnson, along with Joseph Stiglitz, and Thomas Hoenig argued yesterday in hearings that we need to break-up "too big to fail" banks. I heartily agree. But of course our argument, both in the Atlantic and more broadly, is not against finance per se. In fact, we’ve received some strong expressions of support from within … Continue reading Using Anti-trust to remedy “too big to fail”

Krugman: Make Banking Boring

If the real economy, the economy of making goods and services that improve people's lives is to recover, we need to make banking boring again.  We need to focus on how to create goods, services, productive processes and real businesses.  These means giving up the gin, poker, and roulette games of high finance.  It will … Continue reading Krugman: Make Banking Boring

The Geithner-Summers Plan: Let the games begin

In economics, "games" are not about recreation and fun.  Instead, "gaming" a system is figuring out how to get around the intent and profit by out-smarting the rules.  It looks like the Geithner-Summers plan to bailout the banks and get rid of their "toxic assets" is ripe for gaming. From Jeff Sachs of Columbia Univ … Continue reading The Geithner-Summers Plan: Let the games begin

“Ersatz Capitalism”, a.k.a. Crony Capitalism, aka Lemon Socialism, aka Obama Plan for Banks

Joseph Stiglitz (Nobel economist) writes in the NY Times (registration may be req'd) how the the Obama/Geithner plan is bad for taxpayers and ordinary citizens.  This is not real capitalism folks, it's gamed capitalism for the oligarchs. The main problem is not a lack of liquidity. If it were, then a far simpler program would … Continue reading “Ersatz Capitalism”, a.k.a. Crony Capitalism, aka Lemon Socialism, aka Obama Plan for Banks

Why GM will almost certainly go bankrupt.

Right now, for GM to avoid a bankruptcy filing, it has to get concessions or "sacrifice" from the "stakeholders".  In plain terms this means the union and the bondholders.  The union has already stepped up to the plate. It has sacrificed and offered additional sacrifice contingent on the bondholders.  So far, though, the bondholders haven't … Continue reading Why GM will almost certainly go bankrupt.

Why GM could still go bankrupt: Banks & AIG are the problem

GM has a problem.  It's not the cars or the union.  GM needs to get it's costs down as required by the govt loan terms.   The union has agreed to it's share of the restructuring.  Waggoner is now gone.  What's left and what's blocking GM's turn-around are the the banks and bondholders.  They refuse to … Continue reading Why GM could still go bankrupt: Banks & AIG are the problem

Why GM’s CEO is out, but no bank CEO is gone

Yesterday the Obama admin forced GM CEO Rick Waggoner to resign as a condition of continued support for GM's restructuring.  Yet, the administration has not yet demanded any of the banks change management (except AIG & Fannie last Sept), despite the banks using 18-20 times as much bailout money. Several folks have asked me why? … Continue reading Why GM’s CEO is out, but no bank CEO is gone