New York Times:
It was the best of times, it was the worst of times. O.K., maybe not literally the worst, but definitely bad. And the contrast between the immense good fortune of a few and the continuing suffering of all too many boded ill for the future.
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Economists who criticize the federal reserve and point at their easy money printing schemes and its negative effects on a country's economy, do not keep their jobs very long. Paul doesn't do this, therefore is employed and given a platform to speak/write his thoughts.
Bank of America reported losing a billion dollars on its consumer accounts. It is all very well for JPMorgan and Goldman to make money. They're investment banks. And they're making money thanks to the US government's generous bailouts. They pay almost nothing for borrowed funds...in dollars, of course. And then they take the money and bet against the dollar. So far, those bets are doing pretty well.
Meanwhile, the Bank of America is a real bank. With real mom and pop customers. And the poor moms and the poor pops are going bust. They can't pay their bills. Or, at least so many of them can't pay their bills that it cost BoA $1 billion in loans write-offs.
The banks have to be in even worse shape than the article outlines.
Many are still holding billions of toxic assets at book value as they effectively suspended mark to market, which would have written down those assets to pennies on the dollar.
There is a tremendous financial shock still to come.
about $30T
JPM holds $90 T in notional value derivatives alone. But who counts after it hits a ridiculous number.
the debt slaves are revolting.
we can see the light of freedom down this dark road, and there is no turning back now!
join the resistance:
www.crimet
protest the ABA meeting in chicago:
www.showdo
The banks are just fine Mr. Krugman, as you well know. The reason is because of this bank.
http://www
As a matter of fact Paul, this is what journalism may look like in the future so if you can't get a job at the IMF, World Bank or the Bank for International Settlements may you can clean their toilets.
Not really. .... Banks are taking the money the Fed is printing and the government is giving them and putting it back at the Fed. Bank reserves at the Fed are exploding. And they are likely to continue to do so, since bank balance sheets are still deteriorating, especially at smaller and regional banks exposed to commercial real estate loans. Banks own 45% of commercial real estate loans, compared to only 21% of single-family loans. Banks (in general) are going to have to raise capital and reduce their loan portfolios in order to keep within the guidelines for adequate reserve capital. Small wonder that we will see over 400 banks fail in this cycle.
"The continuing weakness of many banks is helping to perpetuate that economic distress. Banks remain reluctant to lend, and tight credit, especially for small businesses, stands in the way of the strong recovery we need."
We should have done this a year ago, but it is not too late. Nationalize B of A and Citi, strip them of their toxic assets and toxic management, and then privatize them
"Beyond that, we desperately need to pass effective financial reform. For if we don’t, bankers will soon be taking even bigger risks than they did in the run-up to this crisis. After all, the lesson from the last few months has been very clear: When bankers gamble with other people’s money, it’s heads they win, tails the rest of us lose."
I know that Obama has a very full plate, but financial reform legislation is critical.
Is it important enough that PK be proven right that
the government ought to finally get around to
nationalizing the Big Banks? Maybe so.
I'd like a better explanation for why this is so, and
how worse damage would not be incurred by doing it.
Some say Rule #1 is: Krugman is always (all ways?)
right, and #2 is, when in doubt, see Rule #1. But not
everyone believes that. Tell us about derivatives, again,
Professor.
FTA: "After all, the lesson from the last few months has been very clear: When bankers gamble with other people’s money, it’s heads they win, tails the rest of us lose."
Truer words may never have been spoken.
Had a nice long talk with my wife about this last night. She's now agreeing with me to take our money out of the bank to transfer it into our credit union account.
I really fear for the future. I fear for all of us in Gen X and beyond.
Do you really think it's that serious, Antiks? Should people begin pulling their money out? And if they do, what would the repercussions be? Would this hurt America's economy or the banks more?
Your thought raises a lot of questions and I was just curious as to your answers. I'm not financial expert by any means (I can't even balance my own checkbook!) but I would like to hear more about your ideas on this as I ponder your suggestion.
Based on what I'm reading yes, it's serious. Banks are in trouble still, and we're not out of the woods yet. There are still toxic mortgage assets on their books by the dozen.
Well, if enough people do it, we could have a bank run which wouldn't be good. I don't think this is going to happen, but I'm sure the general public is paying attention to what is going on.
I'm not an economics expert by any means, so take what I say with a grain of salt.
Why would a credit union help?
If there is going to be true reform, Obama has to change the leadership of the FED and the Treasury. Replace Bernanke with Krugman.
Replace Geithner with Ms. Warren.
Next step would be to nationalize the banks.
I remember during the TARP agreement, Goldman Sachs converted their corporation to be a Bank Holding entity. Therefore they can be nationalized as well as the other banks responsible for this financial crisis that are just too big to fail.
If the administration doesn't nationalize the banks and straighten out our economic crisis, we are going to have a very severe depression. The un-official and true un-employment is 18%. That's 54 million americans un-employed or under-employed, working at barely living wages.
There are definitive actions that can be instituted to save our economy, but the window of opporunity is closing very fast.
By the way, the wake up call for the government will be during this holiday season when the retail sector will show severe declines in sales and related tax revenues. I know I will buy very in-expensive items for presents this holiday. And I believe most people will do the same.
Fanned and faved. We will be buying nothing, just having a family dinner which will be my gift.
Looking to provide handcrafted things for Yule this year, myself. And anything needing direct purchase will be from small, independent shops.
Faved - I especially like the idea of Ms. Warren being in on things. She knows what she is talking about and puts the people first. She is disgusted with Wall St. and big banks just as we are.
And some wonder why many think Obama has a socialist agenda.
We need less sensationalism and more reporting about the problems real people face on a day by day basis. There's a lot of angry & scared people who have lost jobs, house, and sanity.
good articles; http://ow.
Need more change from Obama
The reality is that Joe Average voter does not understand derivatives or most of our banking system. It has gotten too complicated to follow, unlike the times when branch banking was illegal. When the banks were locally owned and operated, we had a clue. Now, most of us don't.
The financial crisis has proved that there are a few people at the top who are ready, willing, and able to throw the rest of us to the wolves for the sake of their bonuses. We have 10%+ unemployment and rampant forclosures because of them. They have ruined lives through their greed. All of us taxpayers will be footing the bill for their abuse of the system for generations.
Regulate the banks so that they can never do this again. Any politician who is not part of the solution is part of the problem. Vote 'em out of office.
I don't want to be part of the last generation who lived in America when it was great, because these theves are destroying our country through their greed. We'll go from the most successful country on the planet to a secondary nation because of our huge national debt generated by bailing out the banks.
Actually, I believe quite a few of us "average" voters understand criminal activity when we see it. The problem is, we can't do anything about it as individuals, but collectively we can close our accounts, refuse to buy stock in and from them (including those investment "banks" now converted to bank holding cos), vote out those in Congress who side with them and do nothing to relieve the pain of people losing everything, including jobs. Once people start understanding how the banksters control absolutely everything in this country and drive investments (such as the military industrial complex), perhaps we will be able to take action.
Of course, I don't really see most people ceasing to bank or shop. But, if you don't want bloodshed, it's about the most efficient and cleanest way to take them down.
It does sound like an efficient and clean way to go about it, but getting everyone on board would be your problem. As a whole the American people are known for doing what is in their least best interest. /sigh
It's sobering to realize just how much these big banks and big corp owners completely own this country. How did we let it get this far? What will become of America? Because I promise you, they will not stop - they don't care if it destroys the lower and middle classes, ruins lives, or any of it. Greed propels them. Just like those who gleefully and with no conscious rape the Earth of her natural resources with no thought to putting anything back, these big money people are doing the exact same to us. We are the Earth and they are raping and bleeding us dry.
It's time to take a stand - but what can we really do?
Are you suggesting a barter economy? That would cut out the FED and a lot of other institutions which could be a good thing.
So well said. Thank you - favorited.
Someone tell the NYT to get a better editor for their headlines.
The NYT actually knows better. Or at least their IHT cousin did.
http://www
Did the NYT actually hoist this foul petard this morning? If so, it's been defused.
The greed of a few outweights the needs of the many......
I totally enjoy being used as a doormat.
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First Posted: 10-19-09 08:12 AM | Updated: 10-19-09 08:16 AM