CRASH 2: Division, greed & sub-prime sovereigns are still the norm.

The evidence that the asylum inmates are on the roof is as strong as ever

Rather like their equivalents in the EU, US Federal Reserve officials are more deeply divided then they’ve ever been about how to get their economy back on track.  Transcripts of the most recent discussions were released yesterday, and the spectrum of opinion seems to go all the way from full-on QE via no QE to ringing up God with a view to further guidance.

But as the Euro-American axis of poo seeps out of its gilded cage towards the Big Fan prior to ignition, twenty-five of the best-paid chief executive officers in the U.S. had little or no motivation to consider the West’s problem in more depth. This is because they earned more in salary and other compensation in 2010 than their companies’ federal income tax expenses. Now that’s a shedload of money, and not conducive to concentrating the mind. This news reaches us in a report from the Institute for Policy Studies, a Washington-based nonprofit group, which surveyed 100 publicly traded U.S. corporations with the highest-paid CEOs.

It found that companies whose CEOs’ compensation exceeded reported tax expense in 2010 had average global profits of $1.9 billion. Now: do I care if the IPS has traditionally been a tad Kennedy Democrat rather than Tea Party in its outlook? Not really, because – as in the case of Newscorp depravity – facts are facts. And facts raise ethical questions like “Should you really pay your CEO more than you pay for the privilege of living in what is still the best ordered and richest, safest society on the planet?”

It might even raise the question, is your selfishness  helping to downgrade the US credit rating? Or was it really those wicked ratings agencies all the time? Well, Standard & Poor’s is giving a higher rating to securities backed by subprime home loans – the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns to the U.S. government.

What are we supposed to make of that? The possibilities are more terrifying than endless, but thus far in 2011, S&P has awarded AAAs to more than $36 billion of securities in America. Equally mind-boggling is that these loaded guns were created by bankers who continue to gather thousands of loans, bundle them into bonds of varying risk…..and then pay ratings firms a fee to assign credit rankings. Pretty much as they did in the fat years leading up to the near-disaster of 2008.

This article was brought to you by Slog Spot the Ball Random Bollocks, a wholly-owned subsidiary of  Bollockslog Enterprises. In case you missed it, the conclusion I draw from the content is that the authorities are all over the place, business is engaged in an orgy of blinkered greed, ratings agencies can’t be trusted, and I’d rather invest in the Venusian Klop than the American Dollar. But I appear to be in something of a minority.

16 thoughts on “CRASH 2: Division, greed & sub-prime sovereigns are still the norm.

  1. Well I’m in that minority with you, John. My problem is, as a lowly salary earner my only future asset is my final-salary pension (UK Rail Industry – so I don’t think they would give Crow a present like trying to downgrade it) but even that won’t be great, after only 17 or 18 years membership. Even my pension obviously depends on the vagaries of the stock market, so I’m probably bolloxed by that, anyway.

    My real anger is based upon a feeling of such impotence – I can see the runaway train heading for the buffers, the sheeple can’t hear me or won’t listen, so WTF can I do about it?

    Even the UK gov. looks disapprovingly upon armed insurrection. That and their seizure of opportunities past to pander to an emotional public by disarming all citizens – well, all law-abiding ones. Suited the elite down to the ground.

    • Im in the same boat as you TT, but i have just stopped paying into my pension after 20 years. Im telling people that pay into that very scheme, they are doomed to get nothing from it. Unfortunately for them i am a minority of one and they continue to follow the herd.
      Gold and silver is the only hope!
      Thanks to JW and other sloggers on this forum for keeping me abreast of issues that would otherwise baffle me.

    • The reason that you’re not getting anywhere with the ‘sheeple’ is because you are threatening to take toys away from them and not offering them lots of ‘free’ goodies. You are wasting your time, as nothing is going to change until the money eventually runs out and the ‘sheeple’ finally get the message that Liam Bryne’s note foretold. When that happens it will be time to be far removed from scene of the accident, and I would suggest booking your ticket ere to long.

  2. I feel that it’s all just Bollocks Inc. on this whole planet now. And its not just the morons you mention in this article. Everywhere, there are dysfunctional systems at work. And those who are the the most boorish bullies and the most inept managers are taking the advantage of consolidating things to their own benefit. I cannot see a way out. Depressing though that seems.

  3. I know that many people do not appreciate the fineries of RT and especially Max Keiser. But having just caught up with last thursdays issue it appears that the Banks are pressurising Obama into letting them pay an insignificant sum in order to let them off the hook for any future liability claims from organisations which they sold a pig in a poke.
    That Obama seems to be going along with this is a tad scary in the ‘who is he supposed to be representing’ stakes.
    I suggest peeps go along and give it a good look. It really is quite amazing to see what Keiser and Herbert get to announce to the world – yet no one seems to care. One must assume that when Cameron sees the brown smelly stuff sputtering though his window ventilator he will probably give the banks the same sort of get out of jail free card.
    Does anyone know if it is possible to prosecute a president for ‘complete dereliction of duty’ ? If not I can see him doing the old Abe tumble before the elections get around to (possibly) putting him out of office. If it is possible, somebody needs to do it quick smart – before he signs away any chance the people have of recovering any of the left over meagre pickings after the bankers have covered their own interests and billfolds.

    • Yes RT is the only news station worthy of a following. I never imagined that I would have to look to Russia to get the lowdown on the UKs financial systems. If you look on Youtube and type in “George Carlin on the American dream” this anti establishment comedian says it all.

  4. Has it occurred to you that corporate tax rates and income tax rates are similar in the US? That profit that is paid as wages to the CEO (and therefore not taxed inside the corporation) is instead taxed as income to the individual? In the US the effect is the same whichever way you cut it, while in the UK its better (for the chancellor) if companies pay their MDs huge amounts – income is taxed at 50%+ on the margin, whereas corporation tax is 26% (I think). If the aim is the maximum amount of tax revenue then (in the UK at least) you should encourage companies to pay as much as possible to their Directors and CEOs.

  5. http://en.wikipedia.org/wiki/Josiah_Stamp,_1st_Baron_Stamp
    Another quote often attributed to Stamp is:
    “Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again. However, take away from them the power to create money and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money.” (Said to be from an informal talk at the University of Texas in the 1920s, but as yet unverified.)

    Nothing much has changed since the great mans ‘chat’ in the 1920′s..

  6. Here’s a market analyst that agrees with John’s view about Crash II:
    https://phoenixcapital.infusionsoft.com/app/hostedEmail/18640534/c7f896712a825a38

    “The market is BROKEN. This rally
    is perhaps the unhealthiest I’ve ever
    seen. The volume is putrid and neither
    the credit markets NOR the bond
    market are buying into it.

    Do you remember a time when credit
    and bonds were on Red Alert while
    stocks kept rallying?

    Does this look familiar?

    [graph]

    That’s right… the last time stocks rallied
    while the bond and credit markets jammed
    up was right on the eve of the Great Crash
    of 2008.

    Let’s consider the real situation in the
    markets today: Bank of America is on
    the verge of a collapse and getting closer
    to being the Lehman Brothers event of
    this Crash by the minute.

    Europe is collapsing. French banks are
    in a free fall. Germany is facing internal
    revolt and probably won’t even be able
    to back up any bailouts. Greece has now
    entered the END GAME for its financial
    system. The US economy is a disaster
    with more and more Americans losing
    jobs and then falling off the unemployment
    numbers.

    To be blunt, the financial system is more
    in danger of systemic collapse than at
    any point in history (including 2008).
    Do NOT be fooled by the rally of the
    last few days. We saw rallies of 8%,
    11%, even 17% during 2008. Those
    investors who bought into them got
    taken to the cleaners.”

    Sheesh!

  7. “you pay for the privilege of living in what is still the best ordered and richest, safest society on the planet?”

    trust this was tongue in cheek !!

  8. Aha, We all hanker for the old days? My particular interest in my ‘Economics class’ was about a real ‘crash’ early on in the last century, the gamblers/bankers took to opening a window, walking along a ledge then,a deep breath, they would jump. Some stayed behind pretended not to be in any way to blame and: gave us the ‘banking system’ we have grown to love and admire. Sorry,’ THEY’ have grown to love and admire. Now we don’t see these people jumping; on account that it doesn’t matter how much you fail; you are in a win – win situation as a banker. As a lowley girl student I was shocked to discover what banking was really about, I am equally shocked a suggested 80% of the population have no idea still!. We seriously need a strong willed ,people friendly, politician to come in and weild an axe! Sure they will hate it but, do we really care about their feelings? Tens of thousands of people in this country are being forced into the most henious of situations: Homelessness, joblessness, hopelessness. And as the bankers rub their grubby hands as they sell off (REPOSSESSED) homes ( only to relend the money to other poor unsuspecting families) they make on misery AND this government is blaming single parent families for civil unrest.(?) There is only so much you can blame them for before someone stands up and say’s “erm hang on about this banking system”. One day, when the work has dried up, the service industry has no one to serve, commuters can no longer afford to commute, and there is very little tax to collect to provide the luxuries once afforded onto the social climbers- public funded parasitical corporations. They shall have to eat that cake when the bread is gone. The Uk will experience a fiscal imploding. AND the weak shall inherit what is rightfully theirs. The poorest will survive because they have been forced to survive, and they know how to do it. Political will, with intergrity, IS here in the UK. It needs to show it’s face now. 1940′s Poland ghetto was NOT the end of the Jewish race… And Britain won a mere battle of will, as we see the Germans still Rule Europe and: they still have the dear French under their proverbial thumb… Just like the old days.

  9. We are almost certainly heading for a depression here,not a recession.
    The last one took ten years to end, only a world war sorted it out.
    I remember as a child playing in the ruins of an old wartime depot used for the D Day landings.
    To me the aftermath was all too evident ,the empty plot along the road where a home had been flattened by the Luftwaffe 20 years before.
    The UK never really recovered from that war.
    All the investment from the US went to rebuild mainland Europe we in the UK kept our outdated infrastructure most of it still intact.
    This gave the UK an advantage in the post war era until the economies of Europe came back on line in the late 60′s.
    What to expect next ?
    Anarchy, I think we have to take into account the population of the UK is not the same as it was in the thirties ,everyone wore flat caps worked in the same factories kept allotments and watched football on Saturday afternoons So this time we will undoubtedly experience some form of mass social breakdowns,we are a far more divided society ,are you ready for that ?
    Food prices will rise as the currency falls, home produce will fill the gap but it is still more expensive to produce than for example a pack of spuds from the Nile Delta.
    I see good coming out of the chaos though I suppose we could take the view that the system needs to be scrapped ,a clean sheet of paper is the solution.
    We are to be handed one soon ,lets get it right this time.
    Are you brave ?
    Soon you may surprise yourself when faced with adversity how brave you can be.

    • “All the investment from the US went to rebuild mainland Europe we in the UK kept our outdated infrastructure most of it still intact.”

      Google Marshall Plan and see where the money went. The difference is that Attlee spent it on the Welfare State and Europe on reconstruction. The UK received more than any other country.
      M.

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