Bank On It
Roger J. Burke
March 08, 2009
"I am the last guy in the world that you wanna f*** with!" (James Caan in Thief [1981])
***
In a veiled critique of the endemic corruption within unfettered capitalism, film director Michael Mann used a thief as his anti-hero to expose and gut the symbiotic relationship between outright thievery on the street and entrenched corporate cannibalism of the nation - and with law enforcement as an active partner of both. Nihilistic? You bet. And entertaining.
It is in that movie, and in perhaps his most impressive role, that James Caan, as Frank the Thief, utters the gutsy line, quoted above, to the not-so-small-time crook who'd stolen his money already stolen from a business by Frank earlier, of course, he being the entrepreneur that he is. Naturally, Frank wants his money back and makes that clear, when he aims his .45 Colt pistol at the guy's head: give me my money or you're dead.
It's what you call being frank about what you want.
Such is the movie business.
In real life, your money is often stolen, of course. Yes, still often by small time crooks, but these days it's more often a bank, insurance company, finance company, investment bank or some other corporate entity that has used and misused your money to make high risk loans, credit default swaps, derivatives, or some other financial instrument to offload risky assets.
Long ago, you could trust your banker or broker, sort of. Not any more; not a bit. Those days are gone, baby, gone
It's a sad day to admit it, as an ex-banker and with friends who were bankers (all retired now, though). Especially in a week that's seen so many dramatic events but topped, without doubt, by the additional billions injected, like a shot of adrenaline, into the failing heart of the insurance world, American International Group (A.I.G.).
The situation is now totally serious and getting worse with each passing day for the U.S.A. and the rest of the world that depends upon a financially sound America.
Before we reached this new A.I.G. crisis, however, and just a couple or weeks back, the new Treasury Secretary, Tim Geithner, was interviewed by Jim Lehrer on PBS. Jim Lehrer was asking Geithner about the administration's plan for "stress testing" the failing financial system. Over the next twenty minutes or so, I sat, watched and listened with increasing alarm as Geithner continued to provide what appeared to be less-than-confident answers.
JIM: 'Will the banks be nationalized?' TIM: 'Let's talk about keeping banks in private hands, and the best way to do that, instead.' The conversation went back and forth, round and round, with the distinct impression that the banks would finally recover if the administration drip feeds the system with funds, as and when needed creeping nationalization, by default, from one perspective or a distinct lack of confidence, from another.
And as I watched Geithner, I realized that he bore more than just a passing resemblance to a younger James Caan, even down to his accent and mannerisms. So, when that interview was finally brought to its close, for an insane moment (yes, we all have 'em) I really wanted Geithner to lean forward to Jim Lehrer and say: "Frankly, this is what I'm gonna tell the banks, Jim: Don't f*** with me, or you won't last. Get that credit rolling out or I'll shut ya down and deal only with other banks who'll play ball. And this is loan, buddy I want my money back. Got that?" The only thing missing is the .45 Colt.
In my dreams
So, what's happened instead? Total disaster now, as the Dow dips below 6500, and bank stocks begin to look like bargain-priced candy bars. Hence, many people are still scratching their heads about whether the Obama administration will or will not partially nationalize the U.S. banking system. Meanwhile, businesses that need credit can't get it; only rock-solid enterprises are considered for continuing lines of credit.
That sort of perceived wishy-washy indecision just makes things worse in the short term and thus public unease grows. So, it's no wonder that Paul Krugman who continually urges bold action to fix the financial system once again accuses the Obama administration of dithering around.
I think he's right.
And I wasn't surprised to note, earlier in the week, the prestigious New York Times perhaps in a first for that newspaper editorialize about The Never-Ending Bailout and highlight the fact that "A growing chorus of economists and commentators — including this page — are urging the Obama administration to adopt a more comprehensive solution: a government-run restructuring, or nationalization."
Which is the harder pill to swallow? The knowledge that fundamental capitalist principle must be subverted to save the economy or the ultimate irony we did it to ourselves, as in "we have seen the enemy and they is us"? GOP adherents will no doubt choke on the former, with Democrats coughing and beating their chests once again over the latter.
Does it matter? As President Obama has said, at various times (I paraphrase): Let's get on with the job of recovery doing nothing is not an option, anymore.
Despite all the world-wide financial stimulus, however, and as the tanking stock markets show, the end is not in sight yet. Not by a long shot, according to most economists and bankers who were queried in an article, When Will the Recession Be Over?, in the New York Times this week. Every writer of the solicited opinions showed a gloomy face, with the most sanguine hedging his bet by writing that the recession will end after mid-year 2009, although he admitted he doesn't have "great confidence" that it will actually happen.
The financial problems are not confined to the U.S. system, however, with the biggest fear being that of deflation a decline in prices that insidiously dampens the need to buy today because it might be cheaper tomorrow, or next week. Or who knows when?
Across the Atlantic, in the U.K., the Bank of England is set to pump cash into economy to avoid deflation. Further east, the E.U. is in potentially even more serious trouble as a New 'Iron Curtain' will split EU's rich and poor. Gordon Brown, the U.K. Prime Minister was in Washington, almost begging for cooperative and concerted action to do more to fix the banking system, according to BBC News Online. And, even as far away as in Australia, foreign traders threaten banks, with the Reserve Bank (equivalent to the Fed in U.S.A.) trying to hold off naked short sellers.
In a very real way, all of that is academic, however. Because, as the street knows, the real problem is that jobs keep disappearing, and unemployment lines keep getting longer. With fewer and fewer people in jobs, the GDP of all countries will inexorably decline. So, at some point, if trends continue, the world will be in the next Great Depression. For a snapshot of what unemployment is like across U.S.A., take a peek at this Geography of a Recession and see just how bad it is.
So, when will it all end? More importantly, when will we know when we've reached bottom?
There are many indicators as the above link shows. For my money, I think bottom will be reached when the stock price for largest retailer in the world Walmart begins to approach that of General Motors which, as we know, is now agonizing about declaring bankruptcy. As consumer spending continues to fall, manufacturing continues imploding, and lines of credit remain elusive, excessive debt and inventory will take their toll, even for the biggest enterprise.
Bank on it? We'll know if a Walmart executive delegation arrives in D.C.
Copyright © Roger Burke, 2009. All rights reserved.
***
In a veiled critique of the endemic corruption within unfettered capitalism, film director Michael Mann used a thief as his anti-hero to expose and gut the symbiotic relationship between outright thievery on the street and entrenched corporate cannibalism of the nation - and with law enforcement as an active partner of both. Nihilistic? You bet. And entertaining.
It is in that movie, and in perhaps his most impressive role, that James Caan, as Frank the Thief, utters the gutsy line, quoted above, to the not-so-small-time crook who'd stolen his money already stolen from a business by Frank earlier, of course, he being the entrepreneur that he is. Naturally, Frank wants his money back and makes that clear, when he aims his .45 Colt pistol at the guy's head: give me my money or you're dead.
It's what you call being frank about what you want.
Such is the movie business.
In real life, your money is often stolen, of course. Yes, still often by small time crooks, but these days it's more often a bank, insurance company, finance company, investment bank or some other corporate entity that has used and misused your money to make high risk loans, credit default swaps, derivatives, or some other financial instrument to offload risky assets.
Long ago, you could trust your banker or broker, sort of. Not any more; not a bit. Those days are gone, baby, gone
It's a sad day to admit it, as an ex-banker and with friends who were bankers (all retired now, though). Especially in a week that's seen so many dramatic events but topped, without doubt, by the additional billions injected, like a shot of adrenaline, into the failing heart of the insurance world, American International Group (A.I.G.).
The situation is now totally serious and getting worse with each passing day for the U.S.A. and the rest of the world that depends upon a financially sound America.
Before we reached this new A.I.G. crisis, however, and just a couple or weeks back, the new Treasury Secretary, Tim Geithner, was interviewed by Jim Lehrer on PBS. Jim Lehrer was asking Geithner about the administration's plan for "stress testing" the failing financial system. Over the next twenty minutes or so, I sat, watched and listened with increasing alarm as Geithner continued to provide what appeared to be less-than-confident answers.
JIM: 'Will the banks be nationalized?' TIM: 'Let's talk about keeping banks in private hands, and the best way to do that, instead.' The conversation went back and forth, round and round, with the distinct impression that the banks would finally recover if the administration drip feeds the system with funds, as and when needed creeping nationalization, by default, from one perspective or a distinct lack of confidence, from another.
And as I watched Geithner, I realized that he bore more than just a passing resemblance to a younger James Caan, even down to his accent and mannerisms. So, when that interview was finally brought to its close, for an insane moment (yes, we all have 'em) I really wanted Geithner to lean forward to Jim Lehrer and say: "Frankly, this is what I'm gonna tell the banks, Jim: Don't f*** with me, or you won't last. Get that credit rolling out or I'll shut ya down and deal only with other banks who'll play ball. And this is loan, buddy I want my money back. Got that?" The only thing missing is the .45 Colt.
In my dreams
So, what's happened instead? Total disaster now, as the Dow dips below 6500, and bank stocks begin to look like bargain-priced candy bars. Hence, many people are still scratching their heads about whether the Obama administration will or will not partially nationalize the U.S. banking system. Meanwhile, businesses that need credit can't get it; only rock-solid enterprises are considered for continuing lines of credit.
That sort of perceived wishy-washy indecision just makes things worse in the short term and thus public unease grows. So, it's no wonder that Paul Krugman who continually urges bold action to fix the financial system once again accuses the Obama administration of dithering around.
I think he's right.
And I wasn't surprised to note, earlier in the week, the prestigious New York Times perhaps in a first for that newspaper editorialize about The Never-Ending Bailout and highlight the fact that "A growing chorus of economists and commentators — including this page — are urging the Obama administration to adopt a more comprehensive solution: a government-run restructuring, or nationalization."
Which is the harder pill to swallow? The knowledge that fundamental capitalist principle must be subverted to save the economy or the ultimate irony we did it to ourselves, as in "we have seen the enemy and they is us"? GOP adherents will no doubt choke on the former, with Democrats coughing and beating their chests once again over the latter.
Does it matter? As President Obama has said, at various times (I paraphrase): Let's get on with the job of recovery doing nothing is not an option, anymore.
Despite all the world-wide financial stimulus, however, and as the tanking stock markets show, the end is not in sight yet. Not by a long shot, according to most economists and bankers who were queried in an article, When Will the Recession Be Over?, in the New York Times this week. Every writer of the solicited opinions showed a gloomy face, with the most sanguine hedging his bet by writing that the recession will end after mid-year 2009, although he admitted he doesn't have "great confidence" that it will actually happen.
The financial problems are not confined to the U.S. system, however, with the biggest fear being that of deflation a decline in prices that insidiously dampens the need to buy today because it might be cheaper tomorrow, or next week. Or who knows when?
Across the Atlantic, in the U.K., the Bank of England is set to pump cash into economy to avoid deflation. Further east, the E.U. is in potentially even more serious trouble as a New 'Iron Curtain' will split EU's rich and poor. Gordon Brown, the U.K. Prime Minister was in Washington, almost begging for cooperative and concerted action to do more to fix the banking system, according to BBC News Online. And, even as far away as in Australia, foreign traders threaten banks, with the Reserve Bank (equivalent to the Fed in U.S.A.) trying to hold off naked short sellers.
In a very real way, all of that is academic, however. Because, as the street knows, the real problem is that jobs keep disappearing, and unemployment lines keep getting longer. With fewer and fewer people in jobs, the GDP of all countries will inexorably decline. So, at some point, if trends continue, the world will be in the next Great Depression. For a snapshot of what unemployment is like across U.S.A., take a peek at this Geography of a Recession and see just how bad it is.
So, when will it all end? More importantly, when will we know when we've reached bottom?
There are many indicators as the above link shows. For my money, I think bottom will be reached when the stock price for largest retailer in the world Walmart begins to approach that of General Motors which, as we know, is now agonizing about declaring bankruptcy. As consumer spending continues to fall, manufacturing continues imploding, and lines of credit remain elusive, excessive debt and inventory will take their toll, even for the biggest enterprise.
Bank on it? We'll know if a Walmart executive delegation arrives in D.C.
Copyright © Roger Burke, 2009. All rights reserved.
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