When Does It Stop Being Bush's Fault?

[OCinBuffalo]

I'm guessing you had to read lots of Diane Vaughn, a la, "normalization of deviance" theory?

Nope. That book came out a bit after , but thank you for reminding me that I am rapidly losing the ability to continue to refer to myself as a kid.

I will always be a "linux kid" though...so there.

 

We used the footage from the meetings, and basically a documentary IIRC. So who knows? It could have been her work, just not in book form yet. I do remember the "deviance" issue. It's kinda like what is happening now = "rounding of a rounding error".

 

Basically, the "normalization of deviance" is enemy #1 for our crew, and one of the many real-life issues(theory my ass) I based our architecture on. Except...we call it, "the client's being douchebags about us using finding out that half their business units hide their supplies for the weekend in the ceiling tiles, so they don't run out". I assume you can extrapolate the rest?

[OCinBuffalo]

It's the part that makes them irresponsible with money (in that they put it into an unsustainable corporation).

Well it's not so much covering my ass as it is doing proper planning which I guess covers my ass. The plans I create for my clients are 10,20, 30 years or more so I have to plan for all probabilities. I tell my clients that I plan for the best case scenario and worst case scenario. I plan in case they die too soon or live too long.

 

As Tom says government doesn't really plan at all seeing it's not their money.

That's the part I don't get. Where the hell was the planning? My experience with government work is with the Navy and CMS. I have routinely found "planning to plan" to the point of doing nothing...is the routine.

 

That's why this is so foreign, to me anyway.

 

When I think of government employee doing something, I don't think of cavalier people running around blowing money on 20 projects, because they know they only have to hit on one, like VC partners/investment bankers.

[Chef Jim]

That's the part I don't get. Where the hell was the planning? My experience with government work is with the Navy and CMS. I have routinely found "planning to plan" to the point of doing nothing...is the routine.

 

That's why this is so foreign, to me anyway.

 

When I think of government employee doing something, I don't think of cavalier people running around blowing money on 20 projects, because they know they only have to hit on one, like VC partners/investment bankers.

 

When I think of the government I think of cavalier people running around spending money on Vegas junkets and on hookers and blow so imagining them saying "just give it to them" regarding Solyndra is easy to believe.

[OCinBuffalo]

When I think of the government I think of cavalier people running around spending money on Vegas junkets and on hookers and blow so imagining them saying "just give it to them" regarding Solyndra is easy to believe.

 

I dunno. I remember this tiny little Navy Lt. Commander, with her dopey MS Project plan, wasting my time and forcing me to make my guys update her dopey gantt chart....for things like re-running unit tests and filling out our time sheets. Because that dopey gantt chart was her only job, most likely because it was the only job she could handle. I remember the VA clowns who told me my stack was the best thing they've seen in health care in 30 years, but that they were also deathly afraid of it, in the same sentence.

 

Not exactly cavalier....

[GG]

So Paulson convincing the SEC to allow GS (and the other IBs) to increase their leverage from 12:1 to 33:1 was minor?

 

That comes with the clueless about what they were regulating part. You can't simply look at the gross leverage ratio and think you've stumbled onto a Eureka moment. Net leverage was lower, because the regulators deemed certain assets to be risk free. Plus, the run up in assets was also matched by a run up in liabilities, which were effectively hedged in the regulators' eyes. So while the increase in gross leverage is one indicator, the more important factor is how that leverage increased over time and how everyone bought off on the concept of risk and liquidity. Said another way, the investment banks didn't fail because they had too much debt, they failed because they had too much short term debt.

Edited April 19, 2012 by GG

[DC Tom]

That's the part I don't get. Where the hell was the planning? My experience with government work is with the Navy and CMS. I have routinely found "planning to plan" to the point of doing nothing...is the routine.

 

That's why this is so foreign, to me anyway.

 

When I think of government employee doing something, I don't think of cavalier people running around blowing money on 20 projects, because they know they only have to hit on one, like VC partners/investment bankers.

 

All that is predicated on the plan not sucking. You're assuming they didn't plan, just because their plan didn't have a fiscal basis.

[Nanker]

http://abcnews.go.co...ory?id=15199603

 

 

"By October it was clear the government would be fortunate to recover even a small fraction of the loan money -- especially because the Energy Department made the unusual decision to let private investors recover $75 million of their investments first, before any of the federal loan was repaid."

 

 

"Top Solyndra executives invoked their Fifth Amendment rights when they were called before Congress to testify."

 

And I hope the next administration can and will prosecute Jonathan Silver and others. Holder won't do ****.

[Wacka]

And I hope the next administration can and will prosecute Jonathan Silver and others. Holder won't do ****.

 

 

I'm doing a job this week next door to Solyndra. If I see something strange or fishy, I'll let you know.

[3rdnlng]

I'm talking actual numbers here.

 

4.3 millions jobs lost after Obama took office. Since then, 3.6 million jobs have been gained back. 700k before November isn't impossible.

 

http://www.usnews.com/opinion/mzuckerman/articles/2012/04/20/mort-zuckerman-president-obamas-economic-programs-have-failed

 

 

"For the 80 percent of Americans born after World War II, this is their Depression. They have 5.5 million fewer jobs than at the recession's start in 2008, despite the most stimulative fiscal and monetary policy in our history. Employment has been below the pre-recession peak for over 50 months. It's the longest time since the Great Depression that payrolls have not made a new high. The 120,000 new jobs for March make no dent (and adjusted for the peculiarity of warm weather, the number of real net jobs created was 76,000); we need at least 125,000 jobs each month just to provide for new entrants in a rising population."

[DC Tom]

The 120,000 new jobs for March make no dent (and adjusted for the peculiarity of warm weather, the number of real net jobs created was 76,000);

 

Somewhere out there, there's an economist with a strong background in statistics who read that sentence, and is nodding his head and saying "Yeah, that makes complete sense."

 

That man needs to be beaten.

[3rdnlng]

Somewhere out there, there's an economist with a strong background in statistics who read that sentence, and is nodding his head and saying "Yeah, that makes complete sense."

 

That man needs to be beaten.

 

Yes, not really stated very well but not so egregious that it invalidates the entire article. My guess when I first read that was he was trying to include some adjustment for the warmer than normal weather putting people to work sooner rather than later. How often does your lawn in western NY get mowed three times before tax day?

Edited April 22, 2012 by 3rdnlng

[Nanker]

Yes, not really stated very well but not so egregious that it invalidates the entire article. My guess when I first read that was he was trying to include some adjustment for the warmer than normal weather putting people to work sooner rather than later. How often does your lawn in western NY get mowed three time before tax day?

 

Gotta hand it to you 3rdning. You're on a roll - finding all those high paying jobs that BO and his cretin sidekick Biden have created. Economic prosperity is here to stay. Thank you federal government. Thank you, thank you, thank you. Happy days ARE here again.

[3rdnlng]

Gotta hand it to you 3rdning. You're on a roll - finding all those high paying jobs that BO and his cretin sidekick Biden have created. Economic prosperity is here to stay. Thank you federal government. Thank you, thank you, thank you. Happy days ARE here again.

 

 

It's 3rdnlng (Third and Long) you numbskull. Please give credit when credit is due.

[Nanker]

It's 3rdnlng (Third and Long) you numbskull. Please give credit when credit is due.

 

I blame my eyes! Better get a new script!

Thanks for pulling me by the ear and putting my nose to my monitor.

Now it makes sense! Never could figure out was a 3rdn was yet alone the transitive form.

Ah ****. I'm laughing so hard. What a stoopid azz I am.

 

Here. Have a on me.

[TPS]

That comes with the clueless about what they were regulating part. You can't simply look at the gross leverage ratio and think you've stumbled onto a Eureka moment. Net leverage was lower, because the regulators deemed certain assets to be risk free. Plus, the run up in assets was also matched by a run up in liabilities, which were effectively hedged in the regulators' eyes. So while the increase in gross leverage is one indicator, the more important factor is how that leverage increased over time and how everyone bought off on the concept of risk and liquidity. Said another way, the investment banks didn't fail because they had too much debt, they failed because they had too much short term debt.

Wow! Where to start...

Of course net leverage is lower since government securities are given a zero weight in the "risk-adjusted" leverage ratio calculation. The gross ratio captures the change in the net because it darn well was not an increase in risk-free assets that were rising during the bubble. It's well known that Paulson got the SEC to relax the leverage standards, and the result was the dramatic rise in assets held by the IBs.

 

Your comment about liabilities...It's a balance sheet, so if the leverage ratio is rising, of course you have to fund assets with more liabilities. No regulator views this as "effectively hedged." Increased leverage means increased risk. The issue was all about the risk of their assets, because that's what covers your liabilities. As long as you have performing assets, then you are ok. Short term liabilities (CP for example) require trust so that you can continue to rollover, which of course means more risk with a greater proportion of short term, but it's the assets that matter. They didn't fail because they had too much short term debt, they failed because they held too much crap on and or off their balance sheet. You can always meet your obligations by selling assets, but if you can't sell your crappy assets, your in the shitter.

[3rdnlng]

I blame my eyes! Better get a new script!

Thanks for pulling me by the ear and putting my nose to my monitor.

Now it makes sense! Never could figure out was a 3rdn was yet alone the transitive form.

Ah ****. I'm laughing so hard. What a stoopid azz I am.

 

Here. Have a on me.

 

Thanks for the beer but Koch's wasn't what I had in mind. Third and long is a football term but I once had a reason for touting it. I was my wife's third husband and well.................... Anyway, should have figured out that maybe she wasn't the marrying type. Looks like I'll be changing my screen name to 3rdandnotforlong.

 

On the above note, I can answer my avatar---there is life after death!

Edited April 22, 2012 by 3rdnlng

[GG]

Wow! Where to start...

Of course net leverage is lower since government securities are given a zero weight in the "risk-adjusted" leverage ratio calculation. The gross ratio captures the change in the net because it darn well was not an increase in risk-free assets that were rising during the bubble. It's well known that Paulson got the SEC to relax the leverage standards, and the result was the dramatic rise in assets held by the IBs.

 

Your comment about liabilities...It's a balance sheet, so if the leverage ratio is rising, of course you have to fund assets with more liabilities. No regulator views this as "effectively hedged." Increased leverage means increased risk. The issue was all about the risk of their assets, because that's what covers your liabilities. As long as you have performing assets, then you are ok. Short term liabilities (CP for example) require trust so that you can continue to rollover, which of course means more risk with a greater proportion of short term, but it's the assets that matter. They didn't fail because they had too much short term debt, they failed because they held too much crap on and or off their balance sheet. You can always meet your obligations by selling assets, but if you can't sell your crappy assets, your in the shitter.

 

And you're wrong again. Yes, like Paulson was alone standing at the SEC doorstep demanding that that it loosen leverage requirements as if that's what caused Wall Street to run amok in a GLOBAL FINANCIAL COLLAPSE. Sorry for shouting, but the amateur sleuthing really bugs me when people base their conclusions off newspaper articles, without doing a thorough analysis of the financial statements, including the footnotes. Now, when you've done that maybe you can opine on it.

 

It wasn't just government securities that got zero weight. Read up on the Basel requirements.

 

Saying that assets matter more than liabilities is idiotic when talking about health of financial companies. If you can continue funding yourself overnight, you don't need to sell the assets. And it wasn't that the assets were crap. You don't wake up one morning and realize that your assets are worthless because they are crap. You wake up one morning and realize that nobody wants to buy those assets because they don't know if there are hidden risks behind those assets. Meanwhile, those assets continued to perform exactly like they did the day before.

 

The only reason that all the financial firms loaded up on assets was the available overnight funding sources that weren't from depositors of central banks. The system worked for over a decade, because everyone erroneously thought that you can hedge away enough risk and could always roll your exposure. There was enough belief that the GLOBAL system would continue to work even after Bear collapsed.

[meazza]

You don't wake up one morning and realize that your assets are worthless because they are crap. You wake up one morning and realize that nobody wants to buy those assets because they don't know if there are hidden risks behind those assets. Meanwhile, those assets continued to perform exactly like they did the day before.

 

exactly why distressed funds performed so well from 2009 onward.

[TPS]

And you're wrong again. Yes, like Paulson was alone standing at the SEC doorstep demanding that that it loosen leverage requirements as if that's what caused Wall Street to run amok in a GLOBAL FINANCIAL COLLAPSE. Sorry for shouting, but the amateur sleuthing really bugs me when people base their conclusions off newspaper articles, without doing a thorough analysis of the financial statements, including the footnotes. Now, when you've done that maybe you can opine on it.

 

It wasn't just government securities that got zero weight. Read up on the Basel requirements.

 

Saying that assets matter more than liabilities is idiotic when talking about health of financial companies. If you can continue funding yourself overnight, you don't need to sell the assets. And it wasn't that the assets were crap. You don't wake up one morning and realize that your assets are worthless because they are crap. You wake up one morning and realize that nobody wants to buy those assets because they don't know if there are hidden risks behind those assets. Meanwhile, those assets continued to perform exactly like they did the day before.

 

The only reason that all the financial firms loaded up on assets was the available overnight funding sources that weren't from depositors of central banks. The system worked for over a decade, because everyone erroneously thought that you can hedge away enough risk and could always roll your exposure. There was enough belief that the GLOBAL system would continue to work even after Bear collapsed.

As usual, I responded to what I thought was an extreme position by you, and you are doing the same. The truth is in between. I think we've both stated and agreed that there are many factors that "explain" the crisis, and there is no single explanation. My overall point is that the level of debt taken on by finance reached all-time highs, and with that leverage comes more risk. I accepted your point about the rollover problem with short term liabilities, but it is a two-sided coin. The FED took over a trillion $s worth of assets off the balance sheets of the big banks, so, yeah, maybe the remaining assets performed "just like before," both good and bad. The fact that the IBs all became bank holding companies also gave them the "phone a friend" option at the Fed....