Economic Collapse--The Trainwreck is Now in SuperSlo-Mo

[DC47]

Nice.

[Rush2112]

So Howard and others with more of a grasp on economic matters than I....I read this idea in a discussion on Reddit, what say ye?

create a new small business class, 50 employees or less, making less than 500k a year. Make them tax exempt, and loosen regulations that were obviously written by the larger corporations more able to handle them.
Boom, job creation.

[Shirley]

So Howard and others with more of a grasp on economic matters than I....I read this idea in a discussion on Reddit, what say ye?

create a new small business class, 50 employees or less, making less than 500k a year. Make them tax exempt, and loosen regulations that were obviously written by the larger corporations more able to handle them.
Boom, job creation.

So every hot shit lawyer, consultant, Dr, etc. now doesn't pay taxes? It's pretty easy to disguise salary as business revenue (dividends) when you are the company.

[DC47]

Good concept. But of course water flows downward through the tiniest crevices. Thus do creative legal and business minds exploit well-intended concepts.

Boom -- justlikethat businesses reorganize into units that qualify for this category, and which have very tight operational links. Co-location, shared executives, overlapping ownership, and most important (and harder to eliminate by modifying your special IRS rule), contractual relationships.

Breaking up like this adds transaction costs. This includes money, but is defined broadly. For example, two businesses in a contractual relationship must spend time contracting and monitoring each other. An important reason that large businesses exist is to reduce these transaction costs. By doing so, other things equal, the larger business has a competitive advantage.

Small businesses get many advantages in America. Looking for more which don't have unintended consequences is always a good idea. But it may well be that this ground is pretty well raked over and rare coins, old whiskey bottles and Native American artifacts will not be found.

[Steve of phpBB]

But I'm not going to throw in my hand if I have reason to think I can play winning poker despite the cheating.

Having a clear understanding of the added risk that the cheating entails is a good thing; few people have this clear understanding. The majority are in denial about this added risk. You can absolutely make plenty of money playing in a rigged game.

I can't, in this particular rigged game. Too much cognitive dissonance between my ears. That is just me. It cost me money to learn this lesson, but once learned it (probably) has saved me much more. There are plenty of people who are getting rich, with their eyes wide open. Good on all of you, no sour grapes from me.

I stay away from investing because I don't want to give my money to those crooks who are only in it for their own short-term interests.

So I keep it in a nice bank account. Earning 0.25 percent interest, if I'm lucky.

[Gunpowder]

Till I economic collapse I'm feelin' these low yields when I'm gettin' em

[Keg]

I started investing about a month and a half ago. My lone goal is to make more than what I get from my savings account.

[brian]

Like a stopped clock, I know Howard is going to be right one day, but for now I'm enjoying the double-digit annual returns in my retirement account. If monetary policy keeps things in slow enough motion maybe I'll be able to jump off when I'm ready to retire and you suckers can visit me in my casita on the Ecuadorian coast.

[The Sybian]

We had a money market account that was 5% when we opened it. Now it is down to .1% Unbelievable.

I was going to Rant this one, but it works here. We closed the account with the intention of putting half the money into my company. We went public last week, and we were told we would have the opportunity to buy in at the IPO price. That never happened, and the stock went up 39% from where it opened. We would have been locked in for 3 months, and it will probably go down by then, but damn was that some mixed emotions watching it soar in the first day. I'm pretty sure Jim Cramer gave our CEO a handy after interviewing him. PLEASE, NO GUESSING the name of the company. I don't need to be traced back to this board.

[rass]

PLEASE, NO GUESSING the name of the company. I don't need to be traced back to this board.

Your secret is safe with us!


EDIT - just in case I was right?

[sancarlos]

But I'm not going to throw in my hand if I have reason to think I can play winning poker despite the cheating.

Having a clear understanding of the added risk that the cheating entails is a good thing; few people have this clear understanding. The majority are in denial about this added risk. You can absolutely make plenty of money playing in a rigged game.

I can't, in this particular rigged game. Too much cognitive dissonance between my ears. That is just me. It cost me money to learn this lesson, but once learned it (probably) has saved me much more. There are plenty of people who are getting rich, with their eyes wide open. Good on all of you, no sour grapes from me.

Far more people are getting killed due to what goes on between their ears than due to the multiple forms of cheating in the securities market. Witness the rather large and permanent gap between the average returns of mutual funds and the average return on shareholder's mutual fund dollars. That is, most retail investors have terrible timing, so they vastly underperform market averages. After inflation, taxes, and costs, a fairly large percentage are actually net losers (despite believing otherwise). So I'd say you are doing what Socrates suggested -- knowing yourself -- in a world where that is rare. This leaves you free to profit in other domains where you have a genuine competitive advantage.

Stepping back from the endemic cheating in the financial world, of which high-frequency trading may not crack the top 10, it is possible to see a bigger picture where global capitalism is massively cheating humanity.

Put simply, the elite capitalists use power to rig politics to extract vast profits that few would find legal and fewer would find fair. Massive amounts of bribery, government corruption, theft, pollution, and human exploitation are the obvious detritus (i.e., externalities imposed on human beings now and in the future).

The securities markets allow relatively small players to get a cut of this action, in addition to being rewarded for taking the baseline level of capitalist risk. Put another way, most investors benefit in some way from the power of global capitalism to dominate humanity.

I decry getting ripped off by the front-runners, inside traders, accounting scammers, and other assorted evil-doers in the finance ecosystem. It's not just bad in theory, or bad for the other poor fool -- this has probably cost me several hundred thousand dollars over my investing life. And there is more damage to come.

But I try to remember that at the same time I am being defrauded, I benefit from a global capitalist system that is far more evil and corrupt. I'm not happy about my role as beneficiary. But I'm not willing to sacrifice the rewards that come from being a (minor) capitalist in order to stand aside from the corrupt system. I try to do good in my everyday life; that includes protesting the evils of the global capitalist system. And that has not come free for me. But at the same time I know that no matter how much good I do, I am in no sense pure. Not even close. This darkness on my soul tempers a bit of my outrage about governments allowing obviously corrupt practices like high-frequency trading to continue. Sure, it's bad. But there are worse things, and I get my cut.

Which way to the Confessions thread?

I missed this on Monday and just saw it now. That is really good, DC. Applause. (And, I say that as one who is peripherally employed by the securities industry)

[The Sybian]

I was going to Rant this one, but it works here. We closed the account with the intention of putting half the money into my company. We went public last week, and we were told we would have the opportunity to buy in at the IPO price. That never happened, and the stock went up 39% from where it opened. We would have been locked in for 3 months, and it will probably go down by then, but damn was that some mixed emotions watching it soar in the first day. I'm pretty sure Jim Cramer gave our CEO a handy after interviewing him. PLEASE, NO GUESSING the name of the company. I don't need to be traced back to this board.

Cheerfully Withdrawn!

[howard]

The investing discussion in the economic collapse thread is an indication brian won't be waiting much longer for that clock metaphor to strike.

Of course, as I described events as they unfolded in the spring and summer of 2008, well, y'all remember that.

[DC47]

Like a stopped clock, I know Howard is going to be right one day, but for now I'm enjoying the double-digit annual returns in my retirement account. If monetary policy keeps things in slow enough motion maybe I'll be able to jump off when I'm ready to retire and you suckers can visit me in my casita on the Ecuadorian coast.

If Howard is truly right, you'll be sweeping floors at Hilary Clinton's casita.

[DC47]

We had a money market account that was 5% when we opened it. Now it is down to .1% Unbelievable.

I was going to Rant this one, but it works here. We closed the account with the intention of putting half the money into my company. We went public last week, and we were told we would have the opportunity to buy in at the IPO price. That never happened, and the stock went up 39% from where it opened. We would have been locked in for 3 months, and it will probably go down by then, but damn was that some mixed emotions watching it soar in the first day. I'm pretty sure Jim Cramer gave our CEO a handy after interviewing him. PLEASE, NO GUESSING the name of the company. I don't need to be traced back to this board.

I too bitterly regret missing the Mt. Gox payday. I was going to go all-in on that one. This bitecoin stuff is The Future!

[howard]

He's giving the Blind Side treatment to the massive ripoff of society that is High Frequency Trading, HFT. Selling a bunch of books writing about an already well-known phenomenon, spinning a tale in an entertaining fashion.

A twist though. The catch phrase of his marketing plan is "Wall Street is Rigged". The reaction, by wall street, by the media, is quite hilarious to me. He writes about one small part of wall street which is obviously rigged, which on its own is trivial compared to the rigged aspects of wall street and the economy at large (i.e. The Fed printing $80 billion a month and the direct relation to your grocery bill.) But the catch phrase is toxic and dangerous far beyond the total contents of his new book. Hijinks ensue--for a couple of days until everyone's gnat-lengthed attention span moves on to another missing white girl or airplane that has dropped out of the sky.

Anyway, I do have a point. For those who happened to see Lewis' CNBC appearance this week, and the attack on him and on one of the characters in his book by a panicked, deranged CEO of one of the biggest firms directly profiting tens of millions a year from the HFT ripoff, blatantly lying to the TV camera (not me calling him a liar--the NYS attorney general, who nudged his firm to publicly 'corrected statements made by a senior executive during a televised interview' (wsj quote), this column used this amusing episode as a jumping off point for a nice essay.

Lies, Damn Lies and Rigged Markets

Money bits:

…We all participate in the collective lies because we all perceive we have something to gain in not fighting the collective lie. And that something might just be to avoid scrutiny and stay under cover while the wolves circle the flock looking for the injured and newly aware to pick off for a snack or early supper.

Bottom line…the more dependent we are upon something, anything, the more likely we are to enable and support that ‘thing’ regardless of the fact that it might no longer be supporting us in the manner it previously did and might actually be killing us. Once this realization is fully denied, usually by never acknowledging its existence as it applies to us personally, we can then all go about our life laughing or mocking whatever ‘it’ is because ‘it’ is no longer, or never was, perceived as directly harmful to us.

Thus the collective lie is seen for what it really is; a lie, while still being promoted and enabled by all of us as truth. When ‘the’ truth is finally spoken about the lie, we are all personally attacked because we enabled, no…we embodied the lie and thus we must all act in mock surprise and horror that we were lied to. The result is monumental hypocrisy by all parties involved, even the so called innocent bystanders and spectators, on par with the outrage expressed that there was actual gambling going on in Casablanca. The games people play.

This says much better than I ever state, exactly what I am constantly ranting and railing against, and why.

[DC47]

I saw that interview. Riveting TV. I felt sorry for the guy trying to defend high frequency trading. I missed the obvious contextual story of how the mainstream financial media give HFT a pass. As they give virtually all financial services abuses a pass. Is this because a repeated horror is no longer news? Or because they are pawns in the game?

I haven't read Lewis's book. But I thought everyone knew the HFT people were using a combination of technological advantages and payments to the exchanges to get ahead of others in the trading queue or have superior information. His interview suggests that he discovered things that surprised him. So maybe this situation is worse than I know.

[degenerasian]

What are your interest rates?

Here in Canada the bank offer 1.4% and other subsidiaries may offer 2.0%. I got a rate a Tangerine (formerly ING Direct) at 2.5% for 3 months and then 1.6% after that. After 3 months. So I was shocked to see you guys talking about 0.1%.

Every morning I turn on the tv and see the Dow going up. It's over 16000. Is that good or just a cover for something else?

Also I work for the Securities Commission, I got some good fraud stories.

[howard]

I haven't read Lewis's book. But I thought everyone knew the HFT people were using a combination of technological advantages and payments to the exchanges to get ahead of others in the trading queue or have superior information. His interview suggests that he discovered things that surprised him. So maybe this situation is worse than I know.

I have read the published excerpts, but not the book. You are correct, HFT is not news. This is Lewis' recipe--find an interesting thing that is common knowledge in the particular industry, but not widely known or understood by the wider public. Pick a colorful character or two and tell their story in a detailed but entertaining way, encouraging if not outright making broad generalizations and assumptions that the one characters' involvement is the beginning and the end of the whole story.

Moneygame--as if Billy Beane didn't exist in the years he was using nontraditional valuation analyses prior to Lewis' revelations (much less Theo Epstein winning a championship using not just the same techniques, but one of the same players.)
Blind Side--as if I never recognized the impact Deacon Jones had on NFL passing offenses, until Lewis explained it.
The Big Short--as if the four traders he profiled were the only four individuals in all of finance who saw what was going on. Shit, if you read The Swamp during those years, Lewis' revelations were not news.

I like Lewis, a lot. He is a great storyteller, and in the process he informs literal millions of his readers to truths they were otherwise unawares. His smugish, 'this is the real inside story, and all you need to know' tone puts me off, but it is just a technique used to tell great stories. I bought, read and enjoyed Moneygame and The Big Short--and I learned a lot. But, like so many things these days, he is a business first, he is selling/marketing his product, and he is not exactly what his brand might lead you to believe.

As for this story, I didn't know shit about this kid Katsuyama and his new trading exchange. (I've tuned out 99% of finance news; I'm content to quietly await the other shoe dropping, w/o trying to get rich shorting it when it breaks.) I find this story extremely fascinating, but more the subtext that Goldman is allied with this IBX exchange thing. Frankly I think the powers are setting up HFT as a scapegoat for when they pull the plug, and that Lewis is one of the tools to this end, but that is just my 'crazy talk'. I am comfortable with Goldman literally having their filthy hands in everything they think can give a profit/control.

Anyway, I am much more entertained by the reaction to Lewis, and to the 'market is rigged and here's how' sales pitch. Few of these talking heads/critics have read the fucking book either. Were I collecting a paycheck to discuss it, I'd at least read the thing. But they don't understand what the Fed does either, much less read their minutes/publications.

[phxgators]

What are your interest rates?

Here in Canada the bank offer 1.4% and other subsidiaries may offer 2.0%. I got a rate a Tangerine (formerly ING Direct) at 2.5% for 3 months and then 1.6% after that. After 3 months. So I was shocked to see you guys talking about 0.1%.

Every morning I turn on the tv and see the Dow going up. It's over 16000. Is that good or just a cover for something else?

Also I work for the Securities Commission, I got some good fraud stories.

I laugh at the mail we get from American Express each month offering their 'high yield' savings accounts at 0.8%. We're getting 0.75% right now at Craptial One (also formerly ING Direct). Or you could go the 3/6/9/12/15/24 month CD route for 0.4%. Or the 30/36/48 month CDs for 0.7%. Or 60 month CD for a whopping 0.9%.

[DC47]

... I like Lewis, a lot. He is a great storyteller, and in the process he informs literal millions of his readers to truths they were otherwise unawares. His smugish, 'this is the real inside story, and all you need to know' tone puts me off, but it is just a technique used to tell great stories. I bought, read and enjoyed Moneygame and The Big Short--and I learned a lot. But, like so many things these days, he is a business first, he is selling/marketing his product, and he is not exactly what his brand might lead you to believe.

As for this story, I didn't know shit about this kid Katsuyama and his new trading exchange. (I've tuned out 99% of finance news; I'm content to quietly await the other shoe dropping, w/o trying to get rich shorting it when it breaks.) I find this story extremely fascinating, but more the subtext that Goldman is allied with this IBX exchange thing. Frankly I think the powers are setting up HFT as a scapegoat for when they pull the plug, and that Lewis is one of the tools to this end, but that is just my 'crazy talk'. I am comfortable with Goldman literally having their filthy hands in everything they think can give a profit/control.

Interesting thoughts about Lewis and his game. I haven't read much of his work. I'll think about what you said when I do.

So you're saying Goldman owns Lewis and Katsuyama too? Clever. I hear rumors that Snowden is also one of theirs. That's plausible. I don't believe the one about Putin though. But come to think of it, how many people can move commodities prices like he can?

[howard]

So you're saying Goldman owns Lewis and Katsuyama too?

No. Not at all.

The excerpt I read mentioned Goldman in the story of Katsuyama and IBX. At some point Goldman started routing some orders through IBX, and understandably many others followed.

Goldman is one of the biggest (if not the biggest) beneficiary of the HFT game. And they lend their support (by giving some of their business) to a trading exchange expressly founded as the anti-HFT exchange. Things that make you go hmmm. That's all.

There are plenty of internet chatterers who do say Goldman owns Lewis and Katsuyama…but those guys are a bunch of conspiracy nuts!

[DC47]

I've long suspected that the so-called 'conspiracy nuts' were actually the puppets of the powers-that-be, designed to fool us into thinking there is no conspiracy.

[The Sybian]

I've long suspected that the so-called 'conspiracy nuts' were actually the puppets of the powers-that-be, designed to fool us into thinking there is no conspiracy.

Does that make you a double conspiracy theorist?

[DC47]

I've long suspected that the so-called 'conspiracy nuts' were actually the puppets of the powers-that-be, designed to fool us into thinking there is no conspiracy.

Does that make you a double conspiracy theorist?

How much did they pay you to say this about me?

[sancarlos]

I've read most of Michael Lewis' books and I'm a fan. I was all set to embrace his tales about evil High Frequency Trading in Flash Boys. But, first, our estimable Doc got me doubting the narrative, and now, I read an interesting article today, which makes a solid case that Lewis is off base. This isn't an unbiased article - the author runs an HFT. But, for anybody interested in the subject and arguments about HFT, I'd suggest they read it.

link

[Keg]

I'm thinking about investing in some precious metals just in case some more Benghazi stuff pops off. Do any of you guys have any experience in buying gold coins or silver bars? Are there any fees I should be aware of? How do I know if the broker I am dealing with is selling me legit stuff? Anything in particular I should stay away from?

[P.D.X.]

I'm thinking about investing in some precious metals just in case some more Benghazi stuff pops off. Do any of you guys have any experience in buying gold coins or silver bars? Are there any fees I should be aware of? How do I know if the broker I am dealing with is selling me legit stuff? Anything in particular I should stay away from?

Haven't bought any in a while, but you can shop around for stores in your area just by going on-line. They should post their current buy/sell rates and you can just select the one that offers the best. They're usually pretty close though. There should be no fees beyond those. I'd usually go to a legitimate jeweler to buy rather than some pawn shop or "We buy gold!"-type place. I prefer bars since they're easier to stack in my bunker which doesn't exist.

[Keg]

Thanks, PDX. I prefer bars as well but I thought that they only made gold bars at heavier weights which I wouldn't be able to afford, but now that I look into it, they have smaller gold bars. Is there some type of stamp or marking on the bar that certifies it as legit?

[The Sybian]

Ask Glenn Beck for some recommendations. Maybe he will throw in a survival seeds kit.

[Keg]

Is Beck still on the gold bandwagon? I thought Howard was the only one left...

[The Sybian]

Is Beck still on the gold bandwagon? I thought Howard was the only one left...

He is on whatever bandwagon is paying him.

[howard]

The Secret Goldman Sachs Tapes

Our financial regulatory system is obviously dysfunctional. But because the subject is so tedious, and the details so complicated, the public doesn't pay it much attention.

That may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.

Nice turn of phrase. I haven't heard them yet. I am sure it will be further hard evidence confirming what is already widely known. I am also sure it will change nothing; no more than video of another cop shooting an unarmed civilian.

[DC47]

[start transcript]

Goldman Sachs #1: Thanks for making this call. We've got some serious business to discuss.

Goldman Sachs #2: Okay, based on our exchanges to date, are we all clear on how this plays out going forward?

Fed Reserve #1: Yes. We bail Bear Stearns, but Lehman goes down. We cover for the top 50 financial institutions. Citi and AIG come out whole. Or was that Bear goes down, Lehman gets bankrupted and sold off, we cover the top 50, and Citi and AIG ...

Fed #2: What the hell is AIG anyway?

GS #1: Some chumps in Bermuda. We raped them on the credit default swaps. But they got it so bad that it could blow the system up. The CDS's turned out to be like STD's -- we're all exposed now.

GS #2: It's more like the second scenario. But to simplify it for you, think of it as just kicking the first two to the curb as a sacrifice and then making good on the rest.

GS #1: The big picture is that you flush the system by providing massive loans to everyone, everywhere, so that all the derivatives and counter-party payments are allright.

GS #2: You have to understand, this could become a tragic disaster with no precedent as to scope and scale. Lives will be destroyed. Families will be broken up.

Fed #1: That's what Tim said. Epic national fail.

GS #2: Well, yeah, but let me break it down for you in a bit more detail. If AIG has trouble paying up, Goldman is screwed. That means my bonus comes up short. That means I can't close on the place at Hilton Head. That means my wife becomes my ex-wife. After her lawyers are done with me, my personal burn rate doubles. Then I'll only be able to afford a second-tier next trophy wife.

Fed #2: I didn't know it was that bad.

GS #1: If things unravel, we'll be working behind a desk at a credit union on Long Island. And that means the gravy train for your people will be over.

Fed #2: You might still be good for a home equity loan on my condo. Will you give out toasters?

GS #1: Gallows humor. I like that. But if we're passing out toasters to janitors so they'll open up checking accounts, that means you'll be living in the woods under a tarp.

GS #2: No place to even plug in a toaster.

GS #1: Tarp -- I like that concept. Make a note.

Fed #1: Okay, okay. You know that this will be very expensive. All told, it's the T word -- trillions. The equivalent of funding another big war.

Fed #2: But no worries -- Tim says the President is on board with this. And that's no small accomplishment.

Fed #1: He's getting leaned on by the oil guys. Now that they can see Iraq winding down, they want him to invade the Middle East under some new bogus premise. Iranian reactors, genocide in Syria, whatever. State can fake anything.

Fed #2: They just wave a few documents under a New York Times reporter's nose, and presto change-o -- a headline story that reads like we wrote it. You know, like a yellowcake uranium kind of deal.

Fed #1: We invade, Big Oil controls the oil fields for decades. The usual thing.

Fed #2: So if the big guy allocates a trillion to your bailout, he might have to delay that oil war. That would be costly to him in the upcoming elections.

GS #1: I know oil and gas operators are good for pretty big money in a political campaign. But, look, we pay our share. And we're in greater need right now. We're looking at extinction. Total annihilation. Or worse.

GS #2: We'll work something out with the energy folks. You know the old capitalist maxim: From each according to his ability, to each according to his need.

GS #1: So it's our turn right now, but in the end we split the pie two ways. Like we always do.

Fed #1: You guys in the private sector really know how to work together for the common good.

GS#1: That's us. Big hearts, pushovers. Looking out for the little capitalist.

GS #2: Back to the business at hand. If Obama is on board, we're all set. We've got our arms around all the key players on the Hill, so they'll go along.

GS #1: Just a little campaign cash work wonders with those hicks. Sprinkle in a few jobs here and there, and we can get them to vote for just about anything.

GS #2: We could get them to abolish democratic elections if they get too expensive to keep fixing.

Fed #2: Well, that might be necessary down the line. So hold that thought.

Fed #1: Speaking of citizen unrest, we need to pass some legislation that can be perceived by the gullible public as really taking the big financial companies to the woodshed.

GS #1: Well sure. Legislate the hell out of Bear Stearns, Lehman, and some foreigners like Credit Suisse. Merrill Lynch can suck my ...

GS #2: Those pricks. We had that Quatar arb deal sewed up until they walked in and cut their fees. I was personally going to make $5 mill bonus on that one. So let Merrill swing in the legislative wind.

GS #1: Even better, let's have Bank of America take them over.

GS #2: That's sheer genius. Guess what honey, we're moving to Charlotte!

GS #1: Yeah, that will play well. Park Avenue divorce lawyers ought to be paying us commissions.

Fed #1: Okay, I think we can get that kind of legislation done. We'll just keep the big boys like you out of it.

GS #1: That's just the ticket friends. Say, I wonder if you'd like to golf with Jamie Dimon next weekend? He's always looking for good people. And by good, I mean well compensated.

Fed #1: JP Morgan Stanley Chase or whatever he's calling that thing he runs can stay off the burner then. For the good of the country, we need stability in the financial system.

GS #1: So Main Street can prosper.

GS #2: That's the ticket. Let's talk more about the rhetoric angle. We understand that the President has to rip the rich guys. He can burn anyone he wants, as long as it's just words. But he's not going to be talking about Goldman, right?

GS #1: That would be hurtful. We have feelings too.

Fed #1: Well he's not going to mention Goldman by name of course. That would be class warfare or something.

Fed #2: But he can't specifically exclude Goldman. That would look like we're working back room deals with you guys.

GS #1: Oh, all right. But he should remember where all the good things come from. Perhaps Larry will have to give him a call.

GS #2: Mr. Crimson -- what a douche. But I guess this is why we've got him on retainer.

Fed #1: I thought Dr. Summers was working for the government?

GS #1: Well, yeah. But don't people think that about your boss Geithner too?

Fed #2: Point taken.

GS #1: Back to the game plan boys. We can accept the necessity of a Presidential speech or two ripping the elite. He can even be eloquent if he likes. After all, some serious Wall Street bashing will get the rubes attention. They have to think we're all going down hard on this one.

GS #2: Yeah, we're going to need that cover once it's obvious to anyone with a working cerebral cortex that the government is bailing out our executives and shareholders, with everything from cash to favorable regs.

Fed #1: So the public will think we're putting you guys in jail by the bus load. But actually we'll be putting up the trillions to keep your firms afloat and even to pay your lush annual bonuses.

GS #2: That's the ticket. But if it makes you feel better, we'll toss you a couple of underlings.

GS #1: Right. That French punk who went home with that girl I was moving in on at the Christmas party. Him. Gone.

GS #2: Yeah, people that we want to boot anyway. They'll be responsible for some kind of minor financial fraud. We'll have an email trail, stuff like that. You can put them away in Camp Fed for a couple of years. But no one with a VP title can be touched.

GS #1: And you know that after a couple of years we've all got VP titles.

GS #2: My secretary has a VP title!

GS #1: Carlos in the mailroom ...

GS #2: Vice Presidente Carlos to you, man.

[laughter]

GS #1: Enough about the atmospherics. On the rules front, we've got the staff for Dodd and Frank working on this. Our guys say they can string the actual delivery or finished regs out for years, and have them riddled them with loopholes.

GS #2: Think swiss cheese with less cheese and more hole. The gaps will be so big that all the 'too big to fails' can easily get a lot bigger and still pass muster.

GS #1: The new regs will be so huge that it will take a forklift to physically move the drafts into congressional meeting rooms. No one will be able to grasp them. And they'll be no more effective than blank sheets of paper.

Fed #1: Okay, got it. Tim said he's good with all of this.

Fed #2: He also told me that you've worked out his departure date and guaranteed a nice soft landing.

GS #1: Not with us of course. That wouldn't be good optics. But we've worked something out. Starting at seven figures.

GS #2: Right, nothing too big. We don't want to draw attention.

GS #1: But after a couple years people will think Tim Geithner was an actor on that sitcom they liked but didn't get to watch much before it got cancelled. Nobody. Then we move him up to eight figures-ish. With a serious bonus if Bob Rubin likes him.

Fed #1: Tim said we'd be taken care of too.

Fed #2: My wife is already house shopping in Greenwich.

GS #1: You can count on it. But don't get greedy -- you're not moving up to eight figures unless we work it out with Hilary for you to get senior jobs in Treasury or the SEC.

Fed #1: I don't want to play too much hardball with you guys. But we need one more thing.

GS #2: I understand. We can get your kids into the best kindergartens in Manhattan. The ones where only the big hitters have a hope. Just let us know if you want Harvard or Princeton. I think there's one for Yale too.

GS #1: Also, there are some nice places on the water in the Hamptons that could be available at a steep discount, with a super-friendly mortgage.

Fed #2: The kind that got you all in so much trouble?

GS #1: [laughter] Those were for the peasants. We're talking $10 mil at 1.5% with no payments for 5 years. That's sweet for a guy who is on a government salary until July 1.

Fed #1: Well, thanks for all that. Done and done. But that's not what I'm talking about.

Fed #2: The President is going to be hit hard for bailing out the one-percent. He's going to be hammered, at least by the loose cannons on the left, because none of you people gets prosecuted even though the economy is wrecked and millions of people are losing their jobs and their houses. You get your bonuses, everyone else gets foreclosed.

GS #1: Yeah, yeah. Life is hard. I learned that at Exeter, Harvard, Wharton and Columbia. Or was that Princeton?

Fed #1: To be perfectly clear, we want permission for the president to bash Wall Street a few times. Really hard. On TV even.

Fed #2: Nothing specific of course.

GS #2: Of course. This guy has made a career of being non-specific. He can't order a cup of coffee if it requires saying black or with cream.

Fed #1: It's not a racial thing. We're post-racial.

GS #1: Hey, aren't we all. My daughter's room-mate at Andover is Jay Z's daughter. Illegitimate of course. That's how they are, you know.

Fed #2: So just to nail this down, you're okay with the president saying that someone, somewhere on Wall Street did something kind of bad? And that something bad ought to happen to them, sometime and somehow?

GS #2: You drive a hard bargain. But if that's that's what you need.

Fed #1: Well, yeah. The President's pollster says that the American people will buy that.

GS #1: They buy just about anything.

GS #2: Hell, think of all the pension fund managers who bought our derivatives.

Fed #2: Exactly.

Fed #1: Those retiring teachers and firemen will just have to suck it up.

GS #1: Just Costco caviar for those losers.

Fed #2: But what about the media?

[laughter]

GS #2: They get to report on the nasty, vicious speeches on the Hill that rip us a new one.

GS #1: But that will be it. No follow up. Nothing about what's actually going down. On to the next crisis.

GS #2: The politicians will scream at us so the hometown boobs will see it in print, but they'll be spreading their legs at the same time.

Fed #1: The politicians or the reporters?

GS #1: Both.

GS #2: We own the important ones. Anyone else we need, they sell it to us by the hour.

GS #1: So, President Obama goes off a few times, but there are no indictments? The penalties at the corporate level are trivial compared to the fact that the U.S. government is keeping us from going bankrupt? No effective regulatory changes?

Fed #2: That's the picture.

GS #2: It's a done deal then. We'll endure the harsh punishment meted out by our nation's noble leaders with stoicism and honor, for the good of the country.

GS #1: As long as there is no actual harsh punishment.

GS #2: We have to think about the children, the future.

GS #1: Right. Your childrens' posh kindergartens in Manhattan.

Fed #1: Our future place in the Hamptons.

GS #1: I think we can wrap this up now. Our people will get to you about the details as to where the bailout money should go, and exactly how the loopholes should be punched in the regulatory legislation.

GS #2: Yeah. Now that I think about it, who can even define the term 'derivative?' Or 'leverage?'

Fed #1: The phrase 'trading your own book' actually means nothing to me. And what is this thing they call 'speculation?'

Fed #2: To be perfectly frank, I always thought 'front-running your clients' had to do with horse racing. How is anyone ever going to figure out how to prevent what can't even be explained?

GS #1: Great call people. You guys are going to fit right in on the Street.

GS #2: Let's go serve the national interest in this terrible time of trouble.

[end transcript]

[howard]

You cheated, you obviously peeked!

100% accurate, except this one teeny tiny little detail:

Fed #2: The President is going to be hit hard for bailing out the one-percent. He's going to be hammered…

Nope. That part didn't happen. And that part is why the American people deserve all that is coming; you re-elected this shit.

[DC47]

More of the first tape has been released, so the transcript got a bit longer.

I have to say, this is reassuring. At the time of the financial crisis, there were moments when I thought things were getting out of hand and there was no one steering the ship of state. How naive.

[Brontoburglar]

Couldn't someone theoretically buy some rubles to stash in an account and then sell them in a while when it's back to where it was? Or does the threat of a default make that possibility pointless?

[Keg]

There's also the threat of Putin doing something batshit crazy if he's unable to regain control of the economy. And the White House is getting ready to implement a new round of sanctions. I don't think this is over yet.

[tennbengal]

So this thread was really referring to Russia - stealthy.

[A_B]

In russia, economy stimulates you.