joi, 17 februarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


40% of Madison Teachers call in Sick, Schools Shut; Video of Massive Protest in Wisconsin Capitol Building; If Jackasses Could Think

Posted: 17 Feb 2011 12:44 AM PST

Public unions objecting to Wisconsin Governor Scott Walker's plan that will save 6,000 jobs flooded the state capitol in protest. 40% of Madison area teachers called in sick.

Those teachers should all be fired. Unfortunately they cannot be fired because their union protects them.

Please consider this amazing video from the Wisconsin state capitol building.



Time Magazine reports Public Workers Protest in Wisconsin
Thousands of Wisconsin's union workers and supporters crowded into the state capitol in Madison for a second day to protest a bill that would strip key collective-bargaining rights from public employees. The measure, introduced last Friday by new Republican Governor Scott Walker, would take away public-worker unions' ability to negotiate pensions, working conditions and benefits. State and local workers would have to foot more of the cost for their pensions--around 5.8 %--and more than twice that percentage of their health-care costs. Nearly all public workers--the bill exempts police, firefighters and state troopers--would be able to bargain only for salary, and any wage increases would be tied to the Consumer Price Index. (Raises beyond that capped figure would require a special referendum.)

"I'm just trying to balance my budget," Walker told the New York Times. "To those who say why didn't I negotiate on this? I don't have anything to negotiate with. We don't have anything to give. Like practically every other state in the country, we're broke. And it's time to pay up." He says the measure will help avoid up to 6,000 layoffs.

The measure has infuriated the state's 175,000 public-sector employees, who say they're being scapegoated by a governor whose party has no love for unions. Other newly installed Republican governors, from Florida's Rick Scott to Ohio's John Kasich, have zeroed in on cutting state-employee rolls and rights as a way to close sagging budget gaps. But Walker's plan, which guts entrenched rights, is perhaps the most dramatic. "It is up to us to fight for the right of workers to have a collective voice on the job," said Wisconsin AFL-CIO president Phil Neuenfeldt. "This proposal is too extreme."
Walker's Proposal Not Extreme Enough

I have a problem with Walker's proposal. It is not extreme enough. There is no good reason to exempt police and fire and there is no good reason to allow any bargaining of wages.

Union workers can accept a wage offer or take employment elsewhere. That is how it works in private industry and that is the way it should work everywhere.

Millions in the private sector lost their jobs. Millions more took pay cuts. Public union workers have the gall to think they are special. This country has a severe problem with mountains of public union workers who think they are better than everyone else.

No one is special.

Teachers Should Be Fired

Every teacher who called in sick is guilty of fraud.

They cheated school kids out of a day of school. They cheated taxpayers who have to pay for it. They also placed tremendous burdens on many parents who were not prepared for school closing.

Amazingly, teachers are constantly whining about how they do everything "for the kids".

This clearly was not for the kids. This action by teachers was 100% for greedy teachers who walked out on their kids for their own benefit, at taxpayer expense.

There is absolutely no other way of looking at it.

Washington Post Columnist Compares Uprising to Egypt

Disgusted minds are reading Workers toppled a dictator in Egypt, but might be silenced in Wisconsin a misguided rant by Harold Meyerson in the Washington Post.
In Egypt, workers are having a revolutionary February. In the United States, by contrast, February is shaping up as the cruelest month workers have known in decades.

The coup de grace that toppled Hosni Mubarak came after tens of thousands of Egyptian workers went on strike beginning last Tuesday.

But even as workers were helping topple the regime in Cairo, one state government in particular was moving to topple workers' organizations here in the United States. Last Friday, Scott Walker, Wisconsin's new Republican governor, proposed taking away most collective bargaining rights of public employees. Under his legislation, which has moved so swiftly through the newly Republican state legislature that it might come to a vote Thursday, the unions representing teachers, sanitation workers, doctors and nurses at public hospitals, and a host of other public employees, would lose the right to bargain over health coverage, pensions and other benefits. (To make his proposal more politically palatable, the governor exempted from his hit list the unions representing firefighters and police.) The only thing all other public-sector workers could bargain over would be their base wages, and given the fiscal restraints plaguing the states, that's hardly anything to bargain over at all.

It's a throwback to 19th-century America, when strikes were suppressed by force of arms. Or, come to think of it, to Mubarak's Egypt or communist Poland and East Germany.

Our unions have already been decimated in the private sector; the results are plain. Corporate profits are soaring, while domestic investment, wages and benefits (particularly at nonunion companies) are flat-lining at best. With nobody to bargain for workers, America increasingly is an economically stagnant, plutocratic utopia. Is everybody happy?

American conservatives often profess admiration for foreign workers' bravery in protesting and undermining authoritarian regimes. Letting workers exercise their rights at home, however, threatens to undermine some of our own regimes (the Republican ones particularly), and shouldn't be permitted. Now that Wisconsin's governor has given the Guard its marching orders, we can discern a new pattern of global repressive solidarity emerging - from the chastened pharaoh of the Middle East to the cheesehead pharaoh of the Middle West.
If Jackasses Could Think

If jackasses could think they would not be jackasses.

In Egypt, a revolution began to restore democracy. There is nothing democratic about union thugs using bribery, extortion, and coercion to get what they want.

For the benefit of Harold Meyerson I am going to repeat something I have talked about before. Perhaps if he reads it, something will sink in.

Collective Bargaining is Extortion

Collective bargaining is not what its name indicates. In fact, it means exactly the opposite of what you'd guess. Collective bargaining refers to the obligation of an employer to recognize the elected representatives of a group of workers and his further obligation to negotiate with those representatives. This last part is what makes 'collective bargaining' extortion.

Under collective bargaining laws, employers have to recognize an elected union and have to negotiate with them.

Imagine if the tables were turned and employers had the right to 'employer bargaining', under which the employer could demand whatever pay reductions or workday increases he wanted, the employees had to negotiate with the employer, and employees couldn't quit!

Such an arrangement could only be classified as slavery.

The right to terminate the employer-employee relationship is a fundamental right of both employer and employee. Employment should be mutually beneficial to employer and employee and open to termination by either when it becomes non-beneficial (limited of course by any voluntary contractual agreements).

Second, the misnamed term 'collective bargaining' has given an aura of moral righteousness to the unions who pretend to be fighting for true American values like the freedom of association. However, they are fighting for values quite foreign to the United States, values that come from Marxist collectivism, i.e. the expropriation of the property of employers and the negation of their rights.

Collective Extortion

Meyerson's comparison to Egypt is 180 degrees reversed. Those Madison protesters were not fighting for democracy but rather to preserve a system of collective extortion.

Unions threaten, bully and bribe their way into power and want more every step of the way.

At a minimum, please play at least the first two of these videos, preferably all of them.

Give Up the Bucks



SEIU Spokesperson Threatening California Lawmakers with Union Retaliation



Colorado Teachers Unions Abuse Non-Union Teacher Paychecks



New Jersey Governor Chris Christie explains how public sector unions control politicians




Governor Christie Explains Who Is To Blame For Teacher Layoffs



California Treasurer Bill Lockyer on Public Sector Union Influence



Armand Thieblot on Public Sector Unions (part 1)




Armand Thieblot on Public Sector Unions (part 2)



Unions Under Attack

Unions piss and moan and bitch and whine about how they are under attack. Yes, they are under attack.

The public is fed up with their public union greed, arrogance, vote buying, fraud, and extortion as noted in the above videos.

Uniquely Dysfunctional Relationship

Please consider this short snip from the New York Times article Public Workers Face Outrage as Budget Crises Grow
Fred Siegel, a historian at the conservative-leaning Manhattan Institute, has written of the "New Tammany Hall," which he describes as the incestuous alliance between public officials and labor.

"Public unions have had no natural adversary; they give politicians political support and get good contracts back," Mr. Siegel said. "It's uniquely dysfunctional."
Indeed. Public unions bribe politicians and get into bed with management in backroom deals that raise wages and benefits for both of them. Taxpayers suffer from those alleged "negotiations".

Freedom of Choice

No person should be forced to join a union to get a job, nor should union dues be used to extort money from taxpayers.

That last sentence says all you need to know. Unions rob people of their right to choice. Unions then go on to threaten others to do the same. Eventually they extort, bribe and coerce their way to salaries and wages that the private sector does not get.

The solution is to end collective bargaining of public unions, repeal Davis Bacon and all prevailing wages laws, and make every state in the union a right-to-work state.

Please Read the Following Paragraph Carefully and Guess Who Said It
All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management.

The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.

Particularly, I want to emphasize my conviction that militant tactics have no place in the functions of any organization of Government employees. Upon employees in the Federal service rests the obligation to serve the whole people, whose interests and welfare require orderliness and continuity in the conduct of Government activities. This obligation is paramount. Since their own services have to do with the functioning of the Government, a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied. Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable and intolerable. It is, therefore, with a feeling of gratification that I have noted in the constitution of the National Federation of Federal Employees the provision that "under no circumstances shall this Federation engage in or support strikes against the United States Government."
So.. Who do you think said that?

If you did not already know the answer may shock you ...

The quote is contained in Letter on the Resolution of Federation of Federal Employees Against Strikes in Federal Service written August 16, 1937 to Mr. Luther C. Steward, President, National Federation of Federal Employees ...

By FDR

One of the solutions to the fiscal mess states are in is national right-to-work laws and the end of collective bargaining. Franklin D. Roosevelt would agree.

Instead we have to listen to misguided union sympathizers compare bribery, coercion, and extortion to democratic uprisings in Egypt.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Good News: Chicago Population Sinks to 1920 Level

Posted: 16 Feb 2011 08:53 PM PST

The Wall Street Journal reports Chicago Population Sinks to 1920 Level
A larger-than-expected exodus over the past 10 years reduced the population of Chicago to a level not seen in nearly a century.



The U.S. Census Bureau reported Tuesday that during the decade ended in 2010, Chicago's population fell 6.9% to 2,695,598 people, fewer than the 2.7 million reported back in 1920.

After peaking at 3.62 million people in 1950, Chicago underwent a half century of decline that ended only when the 1990s boom years produced a small gain in the 2000 count. At that time, the city loudly celebrated its comeback.

But the recent recession accelerated a migration both to the metropolitan area's farthest suburbs and to the Southern U.S. Chicago nonetheless is expected to remain the nation's third-largest city, behind New York and Los Angeles and just ahead of Houston, for which final census numbers aren't in yet.

The explosive growth of suburbs far outside Chicago produced huge gains in neighboring counties. Kane County grew by 27.5%, Will County by nearly 35% and Lake County by 9.2%, while DuPage grew a more modest 1.4%.

This population shift to traditionally conservative counties could alter the balance of power in both the state house and the Illinois congressional delegation.

The influx of residents to outlying areas could translate into additional Republican seats, though the arrival there of Chicagoans—particularly minorities—could make those regions more politically diverse. For instance, said University of New Hampshire demographer Kenneth Johnson, "DuPage County could become less Republican." Mr. Johnson said his analysis of census data showed that metropolitan Chicago grew 4% to 9,683,000 people.
Anything that helps break Chicago's grip on statewide politics is a good thing. This alone will not do it, but it cannot hurt.

The startling thing is Houston may pass up Chicago. So much for "second city". Chicago may become "fourth city".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Germany Needs to Contribute More to European Bailout Fund; EFSF Agreement in Doubt? At What Point will German Citizens Revolt?

Posted: 16 Feb 2011 11:59 AM PST

I keep wondering when the tipping point will arrive for mass German protests against the bailouts or against the Euro itself. I do not have the answer, and perhaps it does not come.

However, not a week goes by without some bureaucrats somewhere, sometimes even within Germany, expecting more from German citizens.

Here is a case in point. Germany's Finance Minister Wolfgang Schaeuble says Germany Needs To Contribute More To New ESM
Germany's contribution to a future mechanism to rescue troubled euro-zone countries will need to be higher than its contribution to the current bailout fund, German Finance Minister Wolfgang Schaeuble said Tuesday.

The 17 countries using the euro Monday agreed a future bailout mechanism--or European Stability Mechanism--to be used from mid-2013 onwards, will have an effective lending capacity of EUR500 billion, the chairman on the Eurogroup of finance ministers and Luxembourg's prime minister, Jean-Claude Juncker, said.

The euro zone's European Financial Stability Facility that expires in mid-2013, has been set up for EUR440 billion, but its effective lending capacity is seen at around EUR250 billion, in part due to the aspiration to reach a triple-AAA rating for bonds raised by the EFSF. The European Union provides another EUR60 billion to the current rescue fund.

To ensure the new, post-2013 rescue mechanism will have EUR500 billion available in aid if needed, "Germany's participation will need to be a bit higher," than in the current fund, Schaeuble said at a press conference after meeting European Union finance ministers.
EFSF Agreement in Doubt

Note: Links in the following article are in German. I posted one of them. They all point to the same site, and a login is required.

Euro Intelligence comments EFSF agreement in doubt
There will be some agreement on March 24-25, but there is a potential for a major shock. Frankfurter Allgemeine, deeply hidden in a news story on yesterday's Ecofin, writes that Wolfgang Schäuble said he was no longer sure whether they would deal with the EFSF in March.

Two weeks of reduced market panic, and the EU's political system is reverting to its default mode of complacency. The European Council's pledge to do whatever it takes the eurozone, and to agree a one-and-for-all crisis resolution mechanism is gradually being expose as the lie that it always has been.

There are also some legislative problems to overcome. Reuters reports that Finland, where elections are held next month, says that it can only approve an agreement reached at the special eurozone summit on March 11. If there were any material changes between Mar 11 and the Mar 24-25 EU summit, the Finnish government would not be able to sign off on those.

The Frankfurter Allgemeine article has some more details on the financing of the ESM, the successor mechanism. Ministers are discussing two models, one where the six AAA-rated countries alone increase their guarantees, which would involve a doubling of the German guarantee to €250bn, or if the non AAA rated countries would deposit cash. It looks as though the compromise will involve a mixture of both, but any increase in the German contribution would require a vote in the Bundestag (and this, as we reported this week, may require a two thirds majority).

There is an angry editorial in Frankfurter Allgemeine this morning, which complains that the likely German contribution to the ESM would amount to two-thirds of the federal budget, and would invariable trigger a total loss of sovereignty of the German parliament. (The latter is a particularly sensitive point, as the German Constitutional Court is extremely inflexible on that issue. If it views the EFSF/ESM as impacting the parliament's sovereignty, the court could still jeopardise the project.)
Risks rise along with increasing complacency everywhere.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


Bank of America Preys on Elderly Depositors; Culture of Greed, Arrogance, Incompetence

Posted: 16 Feb 2011 09:56 AM PST

In Citigroup, Chase, Bank of America CD Ripoff I talked about guaranteed to blow up Borrow-Short Lend-Long strategies that banks are using.

I also talked about absurdly low CD rates offered by Bank of America, Northern Trust, JPMorgan Chase, and Citigroup.

Here is the pertinent snip regarding CDs with a couple additions in brackets.
According to Bankrate, national average for 5 year CDs is 1.61% and the rock bottom low is .95%. The site average is 1.98% and the top yielding 5-year CD yields 2.75%. Thus Citigroup's claim of competitive rates is absurd.

[Citigroup 5 year CDs yield 1.5%]

Although Bank of America makes no such claims, its CD rate is priced so preposterously low, that Bank of America must not even want to deal with them.

Alternatively, B of A has an incredibly large pool of moronic depositors begging to be ripped off.

[Bank of America 5 year CDs yield 0.95% (annualized monthly not daily to extract every possible cent from its clients it is blatantly ripping off]
In response to the possibility that "Bank of America has an incredibly large pool of moronic depositors begging to be ripped off", I received this email from a reader.
Hi Mish

I'll tell you what fools buy Bank of America CDs at less than treasury rates. Little old ladies do. B of A has found that little old ladies will do just about whatever a good looking middle aged "financial advisor" tells them to do.

My mother-in-law complained about the value of her investments falling, and I found that they had split her $125,000 investment into three parts. $50k was in an account that paid 0.05% interest. Yes, the decimal point is in the right spot. 50K was in 20 year Freddy Mac bonds and 25k was in 30 year Fanny Mae bonds.

I hit the roof! I told her that all three investments were a bad idea, and that she ought to move her money to 3, 5 and 7 year treasuries. Fortunately she is taking my advice.

She called the bank, and the nice man explained to her that the up and down in valuation didn't matter since she'd get all her money back at maturity.

The bonds will mature around her 110th and 120th birthdays.

I believe that B of A's "financial advisors" serve only the interest of the bank. They seem to me to be more than willing to complete the screw job to those on fixed income that Bernanke has started by pushing interest rates so low.

Best Regards,

Bill
Culture of Greed, Arrogance, Incompetence

Telling someone not to worry about losses on assets held to maturity, when maturity would put an investor at age 110 or 120 is either gross incompetence or gross greed.

I am quite sure that Bank of America will offer some nonsense that this is an isolated case not reflective of their desire to blatantly rip off its client base. Yeah right. Offering CDs at .95% annualized monthly instead of daily (to extract every possible last cent) is proof enough of what they are doing.

By the way, this is exactly why banks do not want tighter regulation regarding fiduciary responsibility.

If you have an elderly parent or grandparent with money tied up in CDs or in investments at Citigroup, Bank of America, JPMorgan Chase or for that matter any place, please do what you can to make sure they are not being ripped off and their investments are suited to their age and risk tolerance.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


The Next Borrow-Short Lend-Long Guaranteed to Blow Up Bank Lending Scheme; Citigroup, Chase, Bank of America CD Ripoff

Posted: 16 Feb 2011 12:33 AM PST

Borrow-short lend-long strategies have caused more pain and grief than nearly any play in the book. They are virtually guaranteed to blow up given enough time if the duration mismatch and leverage is too great.

For those who do not know what I am describing, a couple examples below will help explain. The first example is a look at "cost of funds" and guaranteed profits that banks can make. It is not a borrow-short lend-long strategy but will morph into such a scheme as I vary the parameters.

Citigroup CDs

Inquiring minds investigating Citigroup's cost of funds note that Citigroup 5 year CDs yield a mere 1.5%. For this example, Citigroup's cost of funds is 1.5%, the rate it pays depositors. Here are a few snips from Citi's website.
Who said there are no guarantees in life?

Some things in life are a sure thing. Like a Citibank CD, which offers a guaranteed—and highly competitive—interest rate. You also get a wide range of terms, from 3 months to 5 years.

Guaranteed Ripoff

Citigroup has the gall to brag about "guarantees in life" when the "guarantee" in question is a complete ripoff. It's a ripoff because 5-year US treasuries currently yield 2.35%.

Anyone buying CDs at less than the treasury yield rate is a fool.

Rates at Bank of America, Northern Trust, JPMorgan Chase

I will tie this together shortly, but first make note that the Northern Trust, Bank of America, and JPMorgan Chase offer even lower 5-Year CD rates.

Here are some rates courtesy of Bankrate.Com as of 2011-02-15.



According to Bankrate, national average for 5 year CDs is 1.61% and the rock bottom low is .95%. The site average is 1.98% and the top yielding 5-year CD yields 2.75%. Thus Citigroup's claim of competitive rates is absurd.

Although Bank of America makes no such claims, its CD rate is priced so preposterously low, that Bank of America must not even want to deal with them. Alternatively, B of A has an incredibly large pool of moronic depositors begging to be ripped off.

Guaranteed Free Money

Anyone buying 5-year CDs from Citigroup, Bank of America, Northern Trust, or JPMorgan Chase is giving those banks a shot at guaranteed free money.

All those banks have to do is take that money and invest in 5-year US treasuries to have a guaranteed profit. Here are the reasons for that statement.

  1. There is no duration mismatch. The banks secure funding for 5 years and invest that money for 5 years.
  2. The US government is not going to default no matter what nonsense you may hear elsewhere.

Purists may point out the play is not entirely risk-free because people can pay a penalty, cash out the CD, then take the money elsewhere. However, from a practical standpoint, fools dumb enough to accept 1.5% or lower are probably not bright enough to pay a penalty and take the money elsewhere even if rates dramatically shoot up.

Borrowing-Short and Lending-Long

Please note that those 5-year CDs are borrowed money. Banks have to pay that money back plus interest (pathetic interest in this case) to the depositor. Banks keep those deposits on the book as a liability.

However, what if the banks borrowed money for 5 years and lent it out for 21 years? Perhaps banks could get 4% interest on those loans (much higher if they assume more risk), but what if interest rates 5 years from now are 6%?

All that has to happen to turn this scheme into a guaranteed loss for the bank is for the cost of funds (CDs, savings accounts, or borrowing from the Fed), to rise above the rate the bank lent that money out.

Borrowing-short and lending-long thus poses a significant risk if interest rates raise.
Moreover, duration mismatch and rising cost of funds are not the only risks. Banks also need to lend at a rate sufficiently high to cover default risk.

To be fair, banks can hedge the risk of rising rates, but then one must ask "who is the counter-party to that hedging risk, and what happens if they blow up?"

The Next Borrow-Short Lend-Long Guaranteed to Blow Scheme

With the discussion about duration mismatch out in the open, please consider Banks Go Straight to Public Borrowers
Banks are setting aside billions of dollars to do something that until now was rarely heard of: making big loans to cities, states, schools and other public borrowers that otherwise might have turned to the bond market.

When Riverside, Calif., was ironing out a bond offering recently to expand its performing-arts center, several banks pitched a radical idea: Why not take out a loan instead? The city scrapped the bond plan and borrowed $25 million from City National Bank in Los Angeles.

"This was a method we'd never even heard of before," says Scott Catlett, the city's assistant finance director. He says Riverside now intends to seek a bank loan for a conference center that it had planned to build with bonds.

J.P. Morgan Chase & Co. is devoting billions of dollars to direct loans this year to both refinance deals and for new projects, according to a bank official. Last year, the bank made a few hundred million dollars of direct loans to municipalities. Now, the bank would consider making a single loan for hundreds of millions of dollars, the official said. It also is dispatching teams to explain the concept to wary public borrowers.

Citibank also is courting municipal borrowers with direct loans, according to several bond issuers. A spokesman for the Citigroup Inc. unit declined to comment.

"This used to be unheard of," says Eric Friedland, managing director of public finance at Fitch Ratings, noting that in the past, banks would occasionally loan a municipality less than $1 million to finance projects too small for a bond offering. For bigger loans, they would form a syndicate with other lenders.

It remains to be seen what land mines may be lurking for lenders and borrowers. Some municipalities are going through significant struggles, raising questions about whether they will prove good credits. And direct loans are less liquid, meaning banks can't sell them as easily as bonds.

For banks, this is a potentially lucrative business at a time when they are sitting on cash that isn't earning huge interest and are reluctant to make loans for mortgages and other areas they see as risky.

In the event of a bankruptcy, analysts say, it is unlikely that a bank extending a direct loan would be given priority over bondholders.

The city saved hundreds of thousands of dollars in issuance costs, says Mr. Catlett, the assistant finance director. Plus, he says, the interest rate is 3.85% versus at least 5% if it had floated a public offering. The term is slightly lower—21 years versus perhaps 30 years in the bond market.

"This was all new to us," he says. "I don't know now when we'll go back to the bond market. This is easier."
Fed or FDIC Should Stop this Fraudulent Scheme Now

The Fed or FDIC should step in right now. There is no way banks can secure cost of funds for 21 years for 3.85%. Moreover, the risk of default is hardly zero, and banks will not be first in line should default happen.

I think borrowing-short and lending-long is fraudulent. How can you lend something for 21 years when you only have the right to use it for 3, 5, or 7?

Want to know what those banks thinking? This is what ....

  • They are too big too fail
  • The Fed will bail them out
  • Cities won't default but who cares anyway because the Fed will bail them out
  • They have a hot pile of cash the Fed crammed down their throats at 0% and they want to put it to use
  • They got burnt badly on mortgages and home equity loans so they need to find something new
  • One idiot bank made an absurdly risky deal so like sheep they all want to do it

Right now they are all thinking there is nothing to lose from this. The Fed or Congress will bail them out at taxpayer expense if they get in trouble.

Then, when this does get out of control and blows sky high, they will all scream, "no one could possibly have seen it coming".

Addendum:

For a follow-up post with further discussion including an email from a reader about someone being taken advantage of by B of A, please see Bank of America Preys on Elderly Depositors; Culture of Greed, Arrogance, Incompetence.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List


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