Saturday, September 12, 2009

Same as It Ever Was

"Backstopped by huge federal guarantees, the biggest banks have restructured only around the edges. Employment in the industry has fallen just 8 percent since last September. Only a handful of big hedge funds have closed. Pay is already returning to precrash levels, topped by the 30,000 employees of Goldman Sachs, who are on track to earn an average of $700,000 this year. Nor are major pay cuts likely, according to a report last week from J.P. Morgan Securities. Executives at most big banks have kept their jobs. Financial stocks have soared since their winter lows.

The Obama administration has proposed regulatory changes, but even their backers say they face a difficult road in Congress. For now, banks still sell and trade unregulated derivatives, despite their role in last fall’s chaos. Radical changes like pay caps or restrictions on bank size face overwhelming resistance. Even minor changes, like requiring banks to disclose more about the derivatives they own, are far from certain."

Note: "Derivatives created by the 5 biggest Wall Street Banks tally over 180 trillion dollars while the world's GNP is 56 trillion."- BRT

And last but not least, the masters of the universe continue to fiddle with our money with no regard to the inevitable impact of Blowback or the Law of Unintended Consequences.

"Simon Johnson, a professor at the Sloan School of Management at the Massachusetts Institute of Technology and former chief economist of the International Monetary Fund, said that the seeds of another collapse had already sprouted. If major banks are allowed to keep making bets that are ultimately backed by taxpayer guarantees, they will return to the practices that led them to underwrite trillions of dollars in bad loans, Professor Johnson said. “They will run up big risks, they will fail again, they will hit us for a big check,” he predicted."

Click on the NYTimes graphic below to see why banks are the real owners of this country and why politicians are but well paid indentured minions who do as they are told.

Had to add this little gem about the Fed and Goldman. Priceless.
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