It seems the Paulson-Bernanke-Geithner scheme to save the national bacon is finally bearing fruit. Yes, it has taken trillions of dollars funneled into the banking system by the Fed, the Treasury, and sundry other government agencies, but banks are again starting to be profitable. Just today JPMorgan Chase reported better than expected results. Wells Fargo and Goldman Sachs also came in with happy face quarterlies in recent days. The only problem here is that making banks profitable again wasn’t...

Ollie Wendell Holmes once said ‘Bout taxes in this nation, They are the price we gotta pay To have civilization. But recently I’m thinking That this rule we should relax, ’Cause I’d rather not be civilized Than pay my income tax. The money sinks of public ed, The vet and welfare rolls, The subsidies for geezer health, Who needs these wasteful doles Our streets would have no pot holes If we made them all toll roads, The market would go through the roof Without dull legal codes. To keep our...

When I first heard about credit card lending banks hitting their best customers with higher interest rates and new fees it didn’t seem to make sense. These changes were usually billed by banks as needed “risk management,” but clearly they actually increased bank risks. Many good customers currently meeting their card obligations on time would now fall behind because of these new exactions. Many others would simply stop using their cards and pay off existing debt. Where was the...

The other day I was sitting around with some friends and talking about the worst movies we’d ever seen. One friend said her choice was “Dune,” hands down. Another opined “Waterworld,” which he noted was not only awful but cost a lot to become that awful. Not surprisingly, another person in the group, steeped in bad movie lore, cited Ed Wood’s “Plan 9 From Outer Space”—though at this point I felt obliged to note that the pie plate cum flying saucer...

As governments anguish about ways to confront the challenge of Somali piracy, all sorts of solutions are being proposed. One that’s beginning to attract attention involves thinking small and looking to the past. We’ve learned in recent years that when it comes to modern asymmetrical land warfare, the best way to win is usually to get symmetrical with your opponents—only tougher and better armed in this diminished size range. The same lesson might be applied to confronting the Somali...

My 401(k) has now withered away I’m really not sure where it’s gone, They said if I chipped in each Friday payday It would grow—but it seems they were wrong. I’d heard that my company didn’t nitpick Toward workers it was most paternal But I’ve found as I’ve aged and been prone to get sick Its medical plan ain’t eternal. The firm’s pension fund I thought was secure Invested in good bonds and stock, My payouts this fund are now free to ignore Just by punching the bankruptcy clock. Which...

There’s an old joke about the way businesses in France do their accounting. It says the typical French company keeps three sets of books. One to show the tax man when he asks to see the books. One to show him when he asks to see the real books. And the real books. Clearly, the French have long experience in leading edge accounting. But compared to the way Americans banks are now allowed to do the job, the frenchies have once more fallen behind their American cousins. Banks in the U.S. now work...

Even in these tough times, wonderful money-making opportunities appear for guys with guts and a flair for the dramatic. A perfect example of this fact is seen in the growth of the Somali pirating industry. These entrepreneurs have hijacked scores of ships in recent months, and just today pirated a huge Danish vessel with a crew of 20 Americans. A good piece of ransom business here if past performance is a sign of future results. And heck, what’s there to lose anyway? Even if these pirates get...

The federal government via the Treasury and Federal Reserve have shoveled literally trillions of dollars into bank and other Wall Street coffers using various direct and indirect techniques. And in response to public outrage over the compensation being received by executives at these institutions, Congress passed laws to limit excess executive compensation at companies getting government bailout funds. Now, however, according to a report in the Washington Post, the Treasury and Fed are actively...

The stock market is on a tear. It has had one of the biggest four-week advances ever. Like episodes of Seinfeld, however, this surge is pretty much about nothing. Street watchers, of course, are obliged to assign a reason for the inherently silly or foolish gyrations that often seize hold of the professional traders who handle so much of other people’s money. And they have thus given a number of reasons for the present spasm: These include the view that the deep recession may have bottomed....

Some people think that current Obama administration policies are leading us to socialism, If only. Socialism, after all, is a recognized economic system that differs from capitalism in its views on ownership and wealth distribution. A rather benign system, whose only major defect is that it doesn’t work very well in the real world. What’s going on in Obamaland these days when it comes financial and economic matters isn’t socialist. It’s an approach to trying to save a faltering...

Everyone knows by now that derivatives are a major cause of the world’s present economic crisis. Some long used and very valuable derivatives known as options have always proven their worth as insurance vehicles in various markets. But a new crop of derivatives that started to appear in the 1990s, known in the trade as “exotics,” were untested, highly theoretical mathematical constructs like credit default swaps. Billed as free market alternatives to government regulation, these...

Every once in awhile you think that maybe, just maybe, this Congress and this President actually have some political courage. But it’s a fast dissipating illusion. Beltway courage is like bottle courage. Blows hard, talks loud and tough, then passes out before actually following up. Take this latest business with A.I.G. bonuses and fat cat Wall Street bonuses generally. They seem to embody perfectly for the average American the vast gulf between what’s good for denizens of The Street...

It’s hard to evaluate Treasury Secretary Geithner’s new bailout plan using traditional economic yardsticks. The government’s economic behavior in recent months has entered realms better understood by studying the works of Franz Kafka and Lewis Carroll, or the illustrations of Rube Goldberg. Here, in less literary and pictorial terms, is what Secretary Geithner hath just wrought. In an attempt to clear toxic assets from bank balance sheets and free these institutions to start lending...

As I’ve watched the response of Washington to the ongoing economic crisis, I’ve been reminded of that quote from Shakespeare: “Cowards die many times before their death, the valiant taste of death but once.” The newest, the latest effort to rid the economy of the toxic assets that are crippling the banking system, an effort that will be announced tomorrow, simply makes this observation seem even more pertinent. What are “toxic assets?” They are assets worth less...

AIG is suing the government for $306 million in tax refunds. But since the government owns 80 percent of AIG, the company is in essence suing itself. At first this struck me as being not so much a piece of financial news as a plot line for “The Twilight Zone.” But the more I thought about it, the more appealing was the idea of suing thyself… The Joys Of Suing Thyself I’m suing myself, I know that sounds crazy But since I can’t lose, the outcome ain’t hazy The guy...

In 1981 President Ronald Reagan took an enormous chance that delivered enormous benefits for his administration and its core beliefs. He broke the airline controllers’ union. Unions had been losing a lot of power and membership for years before this, but the controllers’ encounter seemed to be a unique situation. Airline controllers felt that had an unbeatable hand. Their union was small but its members seemed indispensable. What could the country do, after all, if there were no air...

This time they’ve gone too far. This time the spoiled, overpaid, toxic finance peddling crowd with its ferocious sense of entitlement and infinite capacity to avoid taking any responsibility for the horrors they have inflicted on their fellow citizens have just plain gone over the line. The bonuses to the 400 dingbats who ruined the world’s largest insurer and stuck the U.S. taxpayer with a humongous new debt load have crossed the last barrier of public tolerance. It’s no longer...

A lot of people are fuming today about news that the 400 A.I.G. employees in the company’s London office—the folks who sold trillions of dollars worth of “swaps” that brought the company to ruin and could end up destroying the world economy—are in line to get $450 million in bonus payments. The legal justification for this idiocy can’t be ignored. These employees have a contractual right to the money, and the contracts were signed before the government was forced to take...

Why did the stock market turn in such a strong performance this week. Why did the Dow rise about 10 percent? Why, indeed? People like to append a logical sounding reason for their behavior, especially when it involves institutions such as the stock market. We thus have heard in recent days such ‘good news’ as a major company’s bond rating that didn’t drop as much as it might have, retail sales falling off less in February than in January, new unemployment numbers that might...

At the time of this writing Bernie Madoff hasn’t officially admitted anything and the crimes he is believed to have committed are still just alleged. I nonetheless have been having an active correspondence with a fair number of people about this man and his legal travails and gotten a slew of opinions that are both fascinating and scary. My correspondents generally feel, for example, that he is gaming federal white collar crime fighters much as he gamed federal financial regulators. That he...

Analysts and commentators are debating what to call the present state of the U.S. economy. Is is a deep recession or an early depression? I have another suggestion in this regard. Perhaps we might more accurately term it a major economic reshuffling—a dramatic reordering of national wealth. The most obvious symptom of this reshuffling, of course, is wealth diminuation. A great many people are getting much poorer as asset values plummet from artificial levels to real levels of worth. This has affected...

The French have a lot of experience with economic loss. Not only the kind generated by collapsing markets, but loss generated by revolutions, wars, invasions and occupations. It is thus not surprising that they have sayings, even just phrases, that tell a story of dire financial straits in dramatically straight forward and unmistakable ways. One such phrase roughly translates out to “save what you can.” A bit of personal honesty here. When this economic crisis began I merely viewed it...

It seems that nothing can stop a stupid idea that gets up a good head of steam. We’ve seen the truth of this much of late in the marketplace. Home ownership is for everyone, one idea ran. The sub-prime fallout is the result. Derivatives are a substitute for regulation. That bit of idiocy has cost trillions to date and still counting. And oh, yes, we have to go into Iraq because they may have weapons of mass destruction, no proof that this is the case is required. It is therefore not so strange,...

Major newspapers are closing down these days almost as fast as insolvent banks. Many media people are not all that worried about this trend, however, because they believe Internet bloggers will pick up the slack when it comes to reporting stories and providing incisive editorial comments. Maybe so. But maybe, just maybe, a major new source of news and commentary won’t be bloggers who may be opinionated but at least are independent, but rather corporate peddlers of company-friendly, sales enhancing...