The Fourteenth Banker Blog

December 17, 2010

Sell Your Soul To The Devil This Christmas

Filed under: Running Commentary — thefourteenthbanker @ 9:47 AM

Krugman and Ritholtz are singing from the same songbook today.  Ritholz points out that the subprime debacle was a creation of Wall Street, not caused by Federal Government housing policies, per se.

Federal Reserve Board data show that:

-More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
-Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
-Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that’s being lambasted by conservative critics.

Krugman points out the disinformation campaign that is going on in his post on the Wall Street Whitewash.

It’s a straightforward story, but a story that the Republican members of the commission don’t want told. Literally.

Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.

And to add a timely note on the incoming legislative power shift, this one says it all.

Last week, Spencer Bachus, the incoming G.O.P. chairman of the House Financial Services Committee, told The Birmingham News that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

Maybe it is time to buy bank stocks for the short ride, if you don’t mind selling your soul.






  1. I bought mine back recently. I had held a small position in Goldman and I just couldn’t justify it. When I sold it, I left money on the table, but at least I could look at myself in the mirror.

    Have no computer at home right now, so got the tax cut news the old fashioned way – NPR. I had read Bill Gross’s monthly newsletter to shareholders (PIMCO) Wednesday and something he said was brought into focus by the passage of the “stimulus/tax cut” bill. Gross pointed out that until we start making things in the US again -besides paper – we will continue to go down the porcelain appliance. That got me thinking – we can never compete on labor costs in a global economy, but do we have to? As Gross pointed out, we have to start making things here that we can do cheaper OR better. Well, we can’t compete on labor, so we’d better get out quality control cred back and start competint there, as the Germans do.
    I recently bought a chain saw sharpener for a family member. It was made in China by an American manufacture. It was a piece of crap. It was obvious there was no quality control. He said this was ba out the fifth mechanical item he’d gotten made in China and the same thing held true throughout – there seems to be no attempt to manufacture quality.
    It’s one thing to but cheap toys, etc. from WalMart that are made in China, but when someone wants a well engineered, well made piece of equipment, China is NOT the place you want to go. Why don’t we start working that angle? Because the business community in the US wanted to destroy the unions, which they did. And this is where it got us. We make very little here, and what we do make suffered quality-wise for years. We have repeatedly shot ourselves in the foot, near as I can tell, and without the decent paying jobs of the manufacturing base, what will support the service industries in fly-over country? The coasts have their high-paying white collar jobs, but what does middle America have? The service industry can’t support itself; it’s a notoriously low-paying sector. So, where are the hairdressers, the dry cleaners, the mom and pop jewelry store, etc, going to find patrons? Are we all going to be saying, “Welcome to Walmart”? And how long can THAT last?
    We really, really need to get off this fast track to third world status before it’s too late.

    Comment by Sandi — December 17, 2010 @ 12:00 PM | Reply

  2. The people have decided with their recent votes that the banks and finance get all possible aid by the state. Is this a reasonably correct summation of what happened in the November elections? Voters can hardly claim to be grifted given the events in financial system in the last two and one half years. One might claim that the citizen is simply stupid, but this time the citizen made his choice quite evident.

    Comment by Jerry J — December 17, 2010 @ 1:56 PM | Reply

    • You said it, Jerry. The citizen is stupid. As my old friend is fond of saying, “Don’t confuse me with the facts,just dazzle me with the BS.” The same people who can’t tell you what their congress critter’s name is can name every member of their favorite football team, Survivor team, NASCAR pit crew, etc. And we wonder why our world ranking continues to slide.

      I wonder where we’d be rated if we didn’t have a grunt-load of nukes? Just askin’.

      Comment by Sandi — December 18, 2010 @ 5:54 PM | Reply

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