Items of Interest:
Fed: Household Net Worth Cliff Dives in Q4 -- Hit by the double whammy of declining home prices and a falling stock market, U.S. households saw their net worth fall by $11.2 trillion, or 18%, to $51.5 trillion at the end of 2008, wiping out five years of gains...
S. Mitra Kalita / Wall Street Journal:
Americans See 18% of Wealth Vanish -- Past downturns have been mere blips compared with the losses Americans faced last year, which set them back to below 2004 levels...
Barry Ritholtz / The Big Picture:
U.S. Household Net Worth Falls 18% -- Not very good: The Federal Reserve reported that “Americans’ net worth fell in 2008, erasing four years of gains, as the value of their houses and stock market portfolios decline, according to new data from the Federal Reserve.” ...
Bernie Madoff is the Mirror of a Made-Off Ponzi Economy -- A reporter contacted me today with the following question:
“I am a reporter and I am doing a story on Bernard Madoff’s life after pleading guilty. As part of this I was wondering if you could comment on what significance he will have in the history of this period. Will he represent more than a scamster who stole a lot of money from a lot of people? As Bernie Ebbers and Ken Lay came to embody corporate greed and deceit, what will Madoff symbolize? I would really appreciate your insights on this”.
Here is my answer fleshed out in full:
Americans lived in a Made-off and Ponzi bubble economy for a decade or even longer. Madoff is the mirror of the American economy and of its overleveraged agents: a house of cards of leverage over leverage by households, financial firms and corporations that has now gone bust.
When you put zero down on your home and you thus have no equity in your home your leverage is literally infinite and you are playing a Ponzi game.
And the bank that lent you with zero down, a NINJA (no income, no jobs and assets) liar loan that was interest only for a while with negative amortization and an initial teaser rate was also playing a Ponzi game.
And private equity firms that did over a $1 trillion of LBOs in the last few years with debt to earnings ratio of 10 or above were also Ponzi firms playing a Ponzi game.
A government that will issue trillions of dollars of new debt to pay for this severe recession and to socialize private losses may risk to become a Ponzi government if - in the medium term - does not return to fiscal discipline and debt sustainability....
FT: You're a Ponzi. Nouriel Roubini's a Ponzi. We're All Ponzies Now
Nouriel Roubini / Forbes: How Low Can the Stock Markets Go? Much Lower
Congresswoman, Tied to Bank, Helped Seek Funds — Top banking regulators were taken aback late last year when a California congresswoman helped set up a meeting in which the chief executive of a bank with financial ties to her family asked them for up to $50 million in special bailout funds, Treasury officials said...
discussion:Susan Schmidt / Wall Street Journal: Waters Held Stake in Bank She HelpedGlenn Thrush / The Politico: Reports: Waters has ties to bankSteve / Sweetness & Light: Waters Got $12M TARP For Hubby's BankJammieWearingFool: Most Ethical Congress Ever! Maxine Waters Linked to Bailed-Out BankZachary Roth / TPMMuckraker: Report: Waters Set Up Treasury Meeting For Bank She Had Ties ToShelby Grad / L.A. Now: Maxine Waters' ties to bank questioned
discussion:New York Post: MADOFF PLEADS GUILTY IN $65B PONZI SCHEMEJohanna Neuman / Top of the Ticket: Feds now target Ruth Madoff, who claims $70 million hers to keepDownWithTyranny!: “Justice” Is A Pretty Subjective Thing …David Cote / Upstaged: 4 plays Bernie Madoff can read in jail while rottingConor Clarke / The Atlantic Business Channel: Should Bernie Madoff remain free?James Kwak / The Baseline Scenario: Bernie Madoff Day — As Bernie Madoff goes to his reward today …Zooey / TheZoo: Bernie Madoff goes directly to jailPetulant / Shakesville: Read These Now: Observations By PetulantAssociated Press: Madoff pleads guilty, taken to jail in handcuffs
- Neville Chamberlain Phase of Economic Crisis - David Ignatius, Wash Post
- G-20: Can They Find Common Ground? - LeVine & Francis, BusinessWeek
- Let's Put This To Rest: It's Not The End Of Capitalism - Paul Rubin, Forbes
- Crisis Doesn't Have To Be Great Depression 2 - Robert Kuttner, Boston Globe
- Elvis Lives, & Mark-to-Market Rules Fuel Crisis - David Reilly, Bloomberg
- Ignoring the Austrians Got Us in This Mess - Randall Forsyth, Barron's
- Feeding Conventional Wisdom into the Shredder - Jeff Kosnett, Kiplinger
- Big Pharma's New, Smaller Landscape - Alyssa Abkowitz, Fortune
- How Gen Y Is Coping With Unemployment - Katherine Ryder, Big Money
- Wall Street's Tsunami of Excuses - William Cohan, New York Times
- The Case For A Glass-Steagall 'Lite' - John Gapper, Financial Times
- Card Check Workers Can Only Check In - Diana Furchtgott-Roth, RCM
- Obama Puts Bull's Eye On Vital 1% - Daniel Henninger, Wall Street Journal
- Why Are We Blaming Obama for Socialism? - Robert Scheer, The Nation
- The World's Billion Poorest Are Starving - Sonni Efron, Los Angeles Times
- This Is How Things Looked In the 1930s - Edmund Conway, Daily Telegraph
- Just Say 'No' To Stimulus Money - Editorial, Investor's Business Daily
- The U.S. Capitalism Model Has Failed - Harold Meyerson, Washington Post
- Greenspan Forgets Where He Put His Bubble - Caroline Baum, Bloomberg
- When Policy Improves, So Will Stocks - Richard Rahn, Washington Times
- AAA Rated Companies: And Then There Were Six - Bespoke Inv. Group
- Is Obamanomics Conservative or Revolutionary? - Robert Reich
- Down Markets and Dumb Economic Myths - John Tamny, RealClearMarkets
- DeLong v. Zingales: Are We All Keynesians Now? - Economist
- Yes, Virginia, We Are in a Depression - Stephen Dubner, Freakonomics