Thursday, May 14, 2009

Obama's "economic recovery" takes effect.

I don't know if I've mentioned this, however banks began hiring for their derivative departments right after Obama's inauguration.

Here's the latest on the supply of derivative payouts (through interests and "principle" paid on ARM loans). An economic recovery doesn't work too well without job creation, see current account deficit. Asia points out that a healthy surplus from global trade does rob the US of it's GDP (see multiplier effect) and benefits their economy quite well.
U.S. Foreclosure Filings Hit Record for Second Month (Update1) -
Foreclosure filings in the U.S. rose to a record for the second consecutive month in April as banks increased efforts to seize homes from delinquent borrowers.

It's time for Obama to duke it out with the WTO and demand they not defend China's trade war against the U.S.
If Obama is indeed the world citizen that he claims to be, this should be his main priority.

And this is how Geithner proposes that the derivatives be regulated. Instead of repealing the Commodities Futures Modernization Act and enabling the SEC to regulate it (since they're called out anyways when they can't regulate it), Geithner is putting the same people in charge that allowed the fraudulent derivatives to be sold in the first place.
Geithner Urges Electronic OTC Derivatives Trading (Update1) -
<"">"Treasury Secretary Timothy Geithner proposed requiring increased transparency in the over-the- counter derivatives market by making prices available on centralized computer platforms."

"The need for transparency in the over-the-counter derivatives market was stressed by Theo Lubke, a senior vice president at the Federal Reserve Bank of New York, last month at a derivatives industry conference in Beijing."

"Lubke, who was appointed in 2007 to oversee OTC derivatives by Geithner when he was president of the New York Fed, said the credit swap prices now available are not sufficient, according to a transcript of his comments."

"“ISDA welcomes the recognition of industry measures to safeguard smooth functioning of privately negotiated derivatives,” Robert Pickel, chief executive officer of ISDA, said in an e-mailed statement. "

"Congressional concerns about oversight of the derivatives market have led some to block President Barack Obama’s nominee to head the Commodity Futures Trading Commission, Gary Gensler. Gensler was involved in legislation that exempted these markets from oversight, a law that will be amended if these proposals are accepted. "

"Harkin, whose committee oversees the CFTC, introduced legislation earlier this year that would require all over-the- counter derivatives contracts be traded on regulated exchanges. "

Did they just figure this all out? The derivatives we're referring to are Credit Defaults in the forms of CLOs and CMOs and they've been trading without being backed by bonds for a few years now. They didn't miss anything, they ignored it.

And here's more evidence that our government is tying strings onto the banks with these bailouts. Mind you, banks like Wells Fargo did not need a bailout.
Bankers Told by Paulson to Accept U.S. Aid or Be ‘Vulnerable’ -
Former Treasury Secretary [bn:PRSN=1] Henry Paulson [] said nine U.S. banks would have to accept $125 billion in government investments or be forced to by regulators, according to a memo prepared for a meeting with the lenders’ chief executive officers in October.

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