60 minutes = $188 million in new debt

[joeninety]

Strictly speaking it was not 'missing' it was a decision that Flash Gordon made over two years not to allocate £5bn in each years for capital expenditure. If you really think that HM Treasury could not account for £9 or £10bn then you need to drink a glass of water and lie down -its [I]precisely

Pmsl of course i don't think they couldn't account for it, the underhand point i was making is we live in a bullshit society where the treasury can get away with such a fallacy but woe be tide my ass if i try spinning that line 2 H&M Revenue and expect to get away with it.

Something crooked is going on and the paper trail has been conveniently dismissed burnt or whatever..................

[Faldur]

Just take the US debt, it would be a stack of dollar bills from the earth to the moon, and back x2. And take a look at the type of individuals we have entrusted to keep track of that much money. One can only imagine how many billions have been siphoned off for dishonest use.

[trish]

Hey, if you stack it in pennies it would go beyond the Solar System. If you stretched out the human intestine it would cover a football field. So what???

One can only imagine how many billions have been siphoned off for dishonest use.

Evidently way less than the distance to the Moon.

[Stavros]

This book review in the New York Times makes interesting reading as it focuses mostly on the housing element in the downfall; I have a lot of respect for Gillian Tett's book Fool's Gold which focuses on the derivatives market's responsibility for the mess: in both cases, I suspect, we have yet to get the full picture from key politicians (in the UK as well as the US and also places like Iceland, Ireland and Greece) -in so many cases Politics in Command -a slogan from the Great Proletarian Cultural Revolution in China has led to ruin, just as 'bankers in command' would -the point being that by now modern societies ought to know that decision-making needs to balance varying sets of data with varying needs -but at some point politics won through, and the economy failed. Some people never learn. I reprint it in full here with the link at the end.

une 27, 2011Nation Goes on Its Merry Way to Ruin

By PAM LUECKE

RECKLESS ENDANGERMENT


How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon


By Gretchen Morgenson and Joshua Rosner
Illustrated. 331 pages. Times Books. $30.




Although the financial crisis of 2008 has left a long trail of casualties, one group has benefited from the cataclysm: financial journalists. Several have already published books shedding light on the unprecedented events that caused investment banks to fail, global stock markets to plummet and borrowers to lose their homes. “Reckless Endangerment,” by Gretchen Morgenson, assistant business and financial editor and a columnist at The New York Times, and the financial analyst Joshua Rosner, is a worthy addition to the genre.
The authors are forthright in their intentions. They are angry about the “outsized ambition, greed, and corruption” that led to “economic Armageddon,” as the book’s subtitle puts it. They view the actions that prompted the meltdown as reprehensible and regret that few of the perpetrators have been held accountable.
In a direct writing style familiar to those who follow Ms. Morgenson’s Sunday “Fair Game” column, the authors piece together the rapid rise in high-risk mortgages and the swift collapse of the complex financial scaffolding that supported them. Ms. Morgenson joined The Times in 1998 after working at Forbes, Money and Worth magazines and won a Pulitzer Prize in 2002 for her coverage of Wall Street. She also worked as a broker at Dean Witter. Mr. Rosner is a partner at Graham Fisher & Company, an independent research firm, and worked for many years at Oppenheimer & Company.
Drawing on their deep expertise, the authors ably trace the legal and regulatory changes that stoked the unsustainable housing boom. With a few exceptions, the book focuses more on policy and power than on personalities, and it illuminates several small decisions that later had huge, unintended consequences. For example, a modification in the handling of bundled loans, approved by the international Basel Committee on Banking Supervision in 2001, more than any other factor, “opened wide the floodgates for the mortgage securities mania,” the authors write.
The book begins in 1994 with President Bill Clinton’s kicking off a public-private partnership to extend homeownership to more Americans. At that time 64 percent of Americans owned their homes; within a decade the percentage would rise to nearly 70. Yet an idea that sounded so appealing would soon be exploited by institutions and individuals who detected the potential for astounding profits.
Ms. Morgenson and Mr. Rosner finger the usual suspects: subprime mortgage lenders, credit-rating agencies, investment banks, politicians, the Federal Reserve.
But the institution to which the authors devote the most ink is Fannie Mae, the government-supported enterprise created in 1938 to make home loans more accessible. And the person they hold most accountable is someone whose role in the “mortgage maelstrom” has until now “escaped scrutiny”: James A. Johnson, Fannie Mae’s chief executive from 1991 to 1998. Mr. Johnson was the “anonymous architect of the public-private homeownership drive that almost destroyed the economy in 2008,” the authors assert. “He was especially adept at manipulating lawmakers, eviscerating regulators and leaving taxpayers with the bill.”
The description of Mr. Johnson’s role is damning — and although the account lacks his perspective, it is thoroughly supported through scores of interviews with academics, government officials and industry executives, some of whom are granted anonymity. While Mr. Johnson didn’t respond to interview requests over five months, according to the authors, they overcome this obstacle with impressive use of public records and secondary sources, carefully attributed in the text or described in a two-page “Notes on Sources.” Still, more specific references in endnotes would have strengthened the book’s authority, and in some places would have improved the narrative’s flow.
“Reckless Endangerment” will never be mistaken for summer beach reading, but the authors explain the minutiae clearly, pausing often to explain a dense financial concept or to inject a clarifying metaphor. Lax regulation is effectively likened to “allowing the lead-footed drivers to set speed limits.” Less effective is a comparison of Wall Street’s hope for profits from subprime lenders to “Elmer Fudd envisioning a duck à l’orange dinner when stalking Daffy Duck.”
A particular strength of this book is the number of doubters the authors unearthed: the unsung government analysts, public lawyers and private researchers who dared to question policy decisions and stand up to the formidable “housers,” as the true believers in government subsidies for home ownership are called.
The reader has a sickening sense of missed opportunity as these prophets are ignored or, worse, vilified, by those in a position to halt the mania. When a Congressional Budget Office researcher in 1995 reveals the multibillion-dollar extent of the government’s subsidy to Fannie Mae and its brother institution, Freddie Mac (and that one-third of these benefits never reached borrowers), he suggests that “Congress may want to revisit the special relationship.” Unable to assail the merits of his analysis, outraged Fannie Mae executives resorted to ad hominem attacks, calling budget office officials “digit-heads” and “economic pencil brains.”
One of the doubters was Mr. Rosner himself, who in a 2001 report warned about the potential for economic ruin for American consumers as they took on more and more home debt. Washington regulators met his 30-page paper “with a dismissive silence,” the authors say.
Unlike some whodunits, “Reckless Endangerment” has no tidy ending. Millions of homes remain in foreclosure, high unemployment persists, and, the authors say, Congress failed to pass truly corrective legislation when it had the chance. Although Ms. Morgenson and Mr. Rosner hope that shining a light into the dark corners of this “economic Armageddon” might prevent another one, they sadly conclude that something similar “most certainly” will happen again.


Pam Luecke is the Donald W. Reynolds professor of business journalism at Washington and Lee University in Lexington, Va.
http://www.nytimes.com/2011/06/28/bo....html?_r=1&hpw

[Faldur]

Hey, if you stack it in pennies it would go beyond the Solar System. If you stretched out the human intestine it would cover a football field. So what???

Evidently way less than the distance to the Moon.

Ok, all politics aside. Trish thats one heck of a nice Avatar!

[hippifried]

Ok, all politics aside. Trish thats one heck of a nice Avatar!

See? there's always something we can agree on.

[trish]

I was inspired by Anthony Weiner's recent hormone driven bravado to send body part pictures all over the internet. Thanks, 'happy to provide a point of focus.

[yodajazz]

The book summary, sounds interesting and credible. However, it does seem that other researchers, such as the other books mentioned in the intro, can add to the total picture. The Wikipedia on the “subprime crisis” article that I often refers to, Subprime crisis impact timeline - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/File:Lehman_Brothers_Times_Square_by_David_Shankbo ne.jpg" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/commons/thumb/5/53/Lehman_Brothers_Times_Square_by_David_Shankbone.jp g/220px-Lehman_Brothers_Times_Square_by_David_Shankbone.jp g"@@AMEPARAM@@commons/thumb/5/53/Lehman_Brothers_Times_Square_by_David_Shankbone.jp g/220px-Lehman_Brothers_Times_Square_by_David_Shankbone.jp g mentions Countrywide, which was at one time the nation’s largest private subprime lender, as well as Goldman-Sachs and others.

One interesting tidbit, in the summary, was the fact that one third of Fannie Mae’s money from the government, did not reach borrowers. It seems to me that executive compensation may have something to do with this. I also question the part that executive compensations may have had in the total crisis. I’m speculating that compensation on the amount of yearly transactions, could have encouraging them to increase risk, for the sake of a yearly bonus. In fact Joseph Stiglitz, is mentioned as one who believes that executive compensation packages need to be restructured.
Subprime mortgage crisis - Wikipedia, the free encyclopedia@@AMEPARAM@@/wiki/File:Lending_%26_Borrowing_Decisions_-_10_19_08.png" class="image"><img alt="" src="http://upload.wikimedia.org/wikipedia/commons/thumb/2/24/Lending_%26_Borrowing_Decisions_-_10_19_08.png/220px-Lending_%26_Borrowing_Decisions_-_10_19_08.png"@@AMEPARAM@@commons/thumb/2/24/Lending_%26_Borrowing_Decisions_-_10_19_08.png/220px-Lending_%26_Borrowing_Decisions_-_10_19_08.png
This may seem like small potatoes, but years ago, I was the church treasurer. I changed the accounting system, and it looked like the total transactions went up by 20% in year, when in fact the total profit/loss was close to the previous year. My point is that if I had had some sort compensation for the percentage, of the transaction, I could have moved money around, for the sake of my compensation, at the expense of the church’s long term good.


One additional thing: does anyone know how or who, tries to put the blame on the financial crisis on the Community Reinvestment Act, or that of Barney Frank, assuming a Congressional committee chairmanship in 2007? I have read many people saying this, in net news article comments. Seems like there must be some media talking head, such as a Rush Limbaugh, saying this.

[Stavros]

Yodajazz -thanks for the links, which are very useful.

If there is a core problem, it is the belief that 'home ownership' as a form of 'private property' is an ideal condition in a free society. Owning a home only became a mass market phenomenon in the UK in the second half of the 1950s, up until then most people rented, as is still the case in a lot of European countries. It becomes like marriage, which for some inexplicable reason is also now an 'ideal condition' -and yet just as so many marriages fail, so the bleak or natural reality is that most people cannot afford to buy their own home -so why do governments support it? Allegedly the trade off is 'we give you homes, you give us votes'...Margaret Thatcher wanted to turn Britain into a 'property-owning democracy' -yet now first time buyers in particular find it hard to get onto the ladder, in Greater London its now almost impossible when even mediocre one-bedroom apartments cost £350,000 / approx $560,000.....

[yodajazz]

Yodajazz -thanks for the links, which are very useful.

If there is a core problem, it is the belief that 'home ownership' as a form of 'private property' is an ideal condition in a free society. Owning a home only became a mass market phenomenon in the UK in the second half of the 1950s, up until then most people rented, as is still the case in a lot of European countries. It becomes like marriage, which for some inexplicable reason is also now an 'ideal condition' -and yet just as so many marriages fail, so the bleak or natural reality is that most people cannot afford to buy their own home -so why do governments support it? Allegedly the trade off is 'we give you homes, you give us votes'...Margaret Thatcher wanted to turn Britain into a 'property-owning democracy' -yet now first time buyers in particular find it hard to get onto the ladder, in Greater London its now almost impossible when even mediocre one-bedroom apartments cost £350,000 / approx $560,000.....

I meant to answer this, earlier. I think home ownership was in the past the best way, for a working class person to accumulate something of value. This value could presumably be passed on to future generations. Until the housing bubble burst, its market value, kept up with inflation. The home that my parents purchased back in the late 50's for $8,500 could have been worth 60 thousand plus today, had it been kept up. I would say others factors have changed how accessible home ownership is to the average person. But that home ownership is still a good thing. One factor, I would cite would be lack of employee rights, today. The majority of jobs today are 'at-will', meaning the employee has little rights, to have job stability, through senority and other such things.