Hey, brother, can you spare a trillion – nation’s Corporations singing a different song

While CEOs lay off thousands, rake in millions, “A new report concludes that chief executives of the 50 firms that have laid off the most workers since the onset of the economic crisis in 2008 took home 42 percent more pay in 2009 than their peers at other large U.S. companies” and reveals that:

“five of the 50 top layoff leaders received taxpayer-funded bailouts. American Express, for example, gave CEO Kenneth Chenault $16.8 million in 2009, including a $5 million cash bonus…but…has laid off 4,000 employees since receiving $3.4 billion in taxpayer bailout funds…”.

Meanwhile, yesterday, USA Today reported that “Despite record federal debt, Uncle Sam isn’t having any trouble staying afloat. Neither are most large corporations…”

“U.S. corporations are sitting on more than $1 trillion in cash, more than the government is spending on the massive federal stimulus package that Congress approved in February 2009. Earnings are strong, according to Standard & Poor’s, especially in technology and for raw materials producers.”

Contrast wealth of U.S. corporations with the plight of “consumers and homeowners…[who]…are drowning in the USA’s great ocean of debt…are going under at record rates”.

“They used to tell me I was building a dream…I was always there right on the job…
They used to tell me I was building a dream with peace and glory ahead…
Why should I be standing in line just waiting for bread… Hey, brother, can you spare a dime…”

Given record unemployment and a housing market that may not have yet hit bottom but the compensation of layoff leaders is at the top, USA Today defies reason in attributing the difficulty of “consumers and homeowners” in  part “to their own greed” – particularly when the Institute for Policy Studies calculates: Continue reading “Hey, brother, can you spare a trillion – nation’s Corporations singing a different song”

About the financial crisis and free market ideology. Author Michael Lewis mocks House GOP book club.

….they are ideologically aligned with the industry. They want to believe that the free market system can and should work in this country, like it does in other industries. So they don’t understand from an insider’s perspective like I have, what that actually means, and the consequences of that to Americans. ~ Wendell Potter, former Insurance PR Exec.

For the first time in our history, ideology and theology hold a monopoly of power in Washington. ~ Bill Moyers

Great ideology creates great times. ~ Kim Jong Il

Now that we are set up lets check in with noted financial author Michael Lewis and a recent talk he gave with Vanity Fair editor Graydon Carter:

Recently Vanity Fair editor Graydon Carter and V.F. contributing editor Michael Lewis sat together onstage in front of an intimate crowd at the Museum of Modern Art in New York City and discussed Lewis’s new book, The Big Short: Inside the Doomsday Machine, which tackles the question of what caused the U.S. economy to tank.

You will probably get sucked into Lewis’s hour-long talk, just as the House Republican book group became engrossed in a lecture Lewis gave about the financial collapse. “I was supposed to be there for an hour,” says Lewis in the clip above, referring to his visit with the Hill staffers. “I was there for almost three. And nobody left. And their questions were increasingly: ‘Oh my God, Goldman Sachs did what? A.I.G. did what?’ They didn’t understand it … The minute they started to understand, they were outraged. And I think the more things are explained, the more outraged people will get.” Continue reading “About the financial crisis and free market ideology. Author Michael Lewis mocks House GOP book club.”

Slabbed news miscellany: AROD remanded without bond. Backlash against government subsidized property and casualty insurers. UPDATED with scoop from the Ladder – Dr. Van Heerden filing suit against LSU!

We have so much going on here at Slabbed right now we could literally spend all our waking moments authoring posts on the various topics we’re covering but since Nowdy, Bam Bam and I all have day jobs that won’t happen. In order to save a bit of time I’m combining today’s other news in one post thus the title. Nowdy will be along later to chip in her two cents.

We start with a reader tip on Ashton O’Dwyer, a troubled man who now is in deep trouble. He has been remanded to federal custody without bond. Hopefully he is also being pumped full of meds and receiving some badly needed counseling.

Next up and certainly in keeping with today’s theme of folks that are delusional, here is a story from the National Underwriter on that Property Casualty Insurers Association of America meeting held last month in San Antonio which we began profiling yesterday. This report, written by my main man Sam Friedman, covered the remarks of David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America. Here are some excerpts:

Property and casualty insurers could easily be trapped in the “wave of political populism” sweeping the country in the wake of the nation’s economic and leadership crises, an insurer association leader warned.

“Many may believe that because people are so focused on bashing the bankers and Wall Street that the public and politicians will leave insurers alone, but I am not so sanguine,” said David Sampson, president and chief executive officer of the Property Casualty Insurers Association of America.

Of course Mr Sampson is not so sanguine as he certainly is aware the public is paying attention even though his script is not based in any sort of reality as we continue: Continue reading “Slabbed news miscellany: AROD remanded without bond. Backlash against government subsidized property and casualty insurers. UPDATED with scoop from the Ladder – Dr. Van Heerden filing suit against LSU!”

Will someone in a position of authority PLEASE put a bullet in AIG’s head and stop both the misery and insanity

If there is one reason (besides that special interest infested monstrosity also known as Health Care Reform) that the Democrats will get their asses kicked at the polls come November I’ll give it to you in 3 letters: A.I.G.

It’s bad enough the the company is insolvent and taxpayers will never see a return of all the money we sank into that bottomless snake pit, but to actually pay more bonuses to the dumb mother fuckers that caused the implosion of both AIG and our financial system simply defies description. Up next will by Timmy Geithner hitting the airways talking contract sanctity. Marketwatch has the story:

In the midst of bonus season, the people deciding compensation policy at American International Group Inc. believe they’ve reached a deal. The majority of the controversial financial-products group at the company will take a 10% haircut on their bonuses in return for an early payout, as soon as next week. Read AIG bonus story in WSJ. Continue reading “Will someone in a position of authority PLEASE put a bullet in AIG’s head and stop both the misery and insanity”

BREAKING! Bloomberg: Allstate

Mr CLS, a favorite commenter of ours on Yahoo ALL nailed this one well in advance in his post, “The Cheshire Cat who sat in the Willow tREe.”

A. M. Best now puts Lehman Brothers linked cat bonds on credit watch. The bonds in question are:
WILLOW RE Ltd
Ajax Re Ltd
Carillon Re Ltd
Newton Re Ltd.
As the guarantor of the swap counterparty has become bankrupt that technically means the swap agreements are terminated.

Willow weep for me, bend your branches down along the ground and COVER me.

Of course this all begs the question, who is covering Allstate’s Hurricane exposure? Was today’s commentary by AM Best on Allstate’s financial strength a bit premature? Perhaps leave out something? The good folks at Bloomberg tell the what and it is HUGE:

A catastrophe bond sold by Allstate Corp. faces “imminent” default following the collapse of Lehman Brothers Holdings Inc., Standard & Poor’s said. It would be only the second such security to fail in a decade.

New York-based S&P downgraded $250 million of debt sold by Allstate’s Willow Re Ltd. to D, the lowest grade, from CC, according to a Jan. 30 statement. Northbrook, Illinois-based Allstate set up Willow Re as a means of selling the bonds in 2007 to protect against claims from hurricanes, and investment losses by Willow Re aren’t tied to Allstate’s own portfolio.

The issuer has notified Standard & Poor’s that it will not have sufficient funds to make the scheduled interest payment,” S&P analyst Gary Martucci in New York wrote in the statement. Continue reading “BREAKING! Bloomberg: Allstate”

Digging in & Getting Dirty: Making the Bailout Work

I saw this a few days back at Clusterstock and thought the question made a bunch of sense. There are good reasons why accounting hocus pocus (ie banning mark to market accounting) is a bad idea. IMHO we are much better off taking our medicine now.

A key component of successful financial system bailouts in the past has been forced asset writedowns, in which the government makes banks reduce the carrying value of this assets to nuclear-winter levels before the government injects new equity. This move does several important things:

  • It removes the fear that banks and bank investors will be hammered by future writedowns
  • It turns the banks’ attention 100% to putting the new equity to work
  • It attracts private capital (because investors won’t worry about getting sandbagged)
  • It eliminates the death-by-a-thousand-cuts scenario that killed Japan. Continue reading “Digging in & Getting Dirty: Making the Bailout Work”

Digging in & Getting Dirty: Making the Bailout Work

I saw this a few days back at Clusterstock and thought the question made a bunch of sense. There are good reasons why accounting hocus pocus (ie banning mark to market accounting) is a bad idea. IMHO we are much better off taking our medicine now.

A key component of successful financial system bailouts in the past has been forced asset writedowns, in which the government makes banks reduce the carrying value of this assets to nuclear-winter levels before the government injects new equity. This move does several important things:

  • It removes the fear that banks and bank investors will be hammered by future writedowns
  • It turns the banks’ attention 100% to putting the new equity to work
  • It attracts private capital (because investors won’t worry about getting sandbagged)
  • It eliminates the death-by-a-thousand-cuts scenario that killed Japan. Continue reading “Digging in & Getting Dirty: Making the Bailout Work”