2 ‘Europe grapples with youth unemployment,’ Financial Times, Feb. 16, 2011.
3 James Boxell, ‘Chirac and de Villepin accused over cash,’ Financial Times, Sept. 11, 2011.
4 See Robert Rubin profile on Bloomberg Businessweek (www.businessweek.com). For Hank Paulson, see David Davis, ‘The great bailout,’ Spectator, Feb. 20, 2010.
5 Timothy Burger and Kristin Jensen, ‘Summers earned millions in D. E. Shaw salary, bank speech fees,’ Bloomberg, April 4, 2009.
6 Burger and Jensen, ‘Summers earned millions.’
7 Jesse Hamilton, ‘Ex-Goldman exec started SEC job after earning $57 million,’ Bloomberg, Sept. 1, 2011.
8 Donal Griffin, ‘Pandit’s payouts climb toward $200 million as top bailout recipient slips,’ Bloomberg, July 1, 2011.
9 Louise Armitstead and Harry Wilson, ‘Bob Diamond bites back at Treasury Select Committee,’ Daily Telegraph, Jan. 12, 2011.
10 Andrew Grice, ‘£850bn: official cost of the bank bailout,’ Independent, Dec. 4, 2009.
11 Thomson Reuters, thomsonreuters.com, or widely available online.
12 Jill Treanor, ‘No bank should be a burden to the taxpayer, says Barclays’ Bob Diamond,’ Guardian, Feb. 21, 2010.
13 Ann Busby, ‘Fuel protests: UK government gets the blame,’ CNN.com, Sept. 12, 2000.
14 Esmé Deprez and Alison Vekshin, ‘Anti-Wall Street protesters march from NYC to San Francisco,’ Bloomberg Businessweek, Oct. 6, 2011.
15 For a useful survey, see ‘The Middle East in revolt,’ Time Specials (via www.time.com/time/specials), 2011.
16 Sangim Han, ‘Saudi Arabia uncomfortable with crude oil price, Aramco’s Al-Falih says,’ Bloomberg, April 26, 2011. See also ‘Running dry,’ The Economist, June 9, 2011 and International Energy Agency, Oil Market Report, Oct. 12, 2011, omrpublic.iea.org/currentissues.
17 For a reminder that all is not well in the Emirates, see ‘Arab unrest puts focus on UAE’s northern emirates,’ Reuters, July 6, 2011.
18 ‘North Caucasus: guide to a volatile region,’ BBC News, Jan. 25, 2011.
19 Adam Nossiter, ‘Western officials seek softer approach to militants in Nigeria,’ New York Times, Aug. 30, 2011.
20 John Collins Rudolf, ‘Mexico oil exports could end within decade, report warns,’ New York Times, April 29, 2011.
21 ‘Oil leak,’ The Economist, Feb. 24, 2011.
22 ‘Ex-chief says FEMA readiness even worse,’ Boston Globe, April 1, 2006.
23 Julie Ann Dobbs, David W. Held, and T. Evan Nebeker, ‘Status of Mississippi gulf coast Live Oak trees after Hurricane Katrina,’ SNA Research Conference, vol. 51, 2006.
24 ‘No safety net,’ The Economist, Sept. 8, 2005.
25 ‘El Niño doubles risk of civil wars: study,’ Reuters, Aug. 24, 2011.
26 Henry Ridgwell, ‘Japan tsunami damage cost could top $300 billion,’ Voice of America, March 25, 2011.
27 ‘Japanese urge “farewell” to nuclear power six months after quake,’ Reuters, Sept. 19, 2011.
28 ‘Bright ideas needed,’ The Economist, Sept. 17, 2011.
29 Stuart Biggs and Yuriy Humber, ‘Tepco failed to disclose scale of Fukushima radiation leaks, academics say,’ Bloomberg, May 27, 2011.
Chapter 21: Doing a Caporetto
1 Ron Suskind, Confidence Men (Harper, 2011). See also ‘A cantankerous crew,’ The Economist, Oct. 1, 2011; ‘Critics slammed Ron Suskind’s “Confidence Men.” But how closely did they read it?,’ Washington Post, Sept 30, 2011.
2 I don’t know which exact article is being referred to either, but see e.g. Mark Pittman and Bob Ivry, ‘U.S. taxpayers risk $9.7 trillion on bailout programs,’ Bloomberg, Feb. 9, 2009.
3 Go to www.youtube.com and search for ‘Alan Grayson: is anyone minding the store at the Federal Reserve?’ Your jaw will drop as you listen.
Chapter 22: Crunching the numbers
1 And by the way, isn’t it amazing that we don’t know this figure even to the nearest hundred trillion dollars? Even those high-level guys at the Fed might start to get twitchy at this degree of unknowing.
2 Haldane, ‘The $100 billion question.’
3 Data available via www.banker.com. You need to register to access the data, but registration is free.
4 ‘Banks disclosed 80 pct of subprime losses – Fitch,’ Reuters, May 14, 2008. See also IMF data presented later in this chapter.
5 Fuld’s compensation for the decade in which he wrecked his firm and destroyed the financial system: $484 million.
6 Cayne’s compensation: $155 million in the five years to 2007. Forbes estimated the value of his stock in Bear Stearns at $966 million in 2007. What Cayne said about Geithner is too obscene to reprint but the endnotes point you to a source where you can find it.
7 For Fuld’s non-apology, see ‘Dick Fuld testimony: no apologies here,’ Wall Street Journal, Sept. 1, 2010. For Fuld’s compensation, see Brian Ross and Alice Gomstyn, ‘Lehman Brothers boss defends $484 million in salary, bonus,’ ABC News, Oct. 6, 2008. I’m not going to reprint Cayne’s outburst here, but unshockable readers can expand their vocabulary by checking out Heidi Moore, ‘Bear Stearns’ Jimmy Cayne’s profane tirade against Treasury’s Geithner,’ Wall Street Journal, March 4, 2009. For Cayne’s compensation, see Forbes, ‘CEO compensation for James E. Cayne,’ May 3, 2007.
8 Data available from the Federal Reserve. Go to the website (www.federalreserve.gov) and search for ‘Mortgage debt outstanding.’
9 John Gittelsohn, ‘Shiller says U.S. home-price declines of 10% to 25% “wouldn’t surprise me”,’ Bloomberg, June 9, 2011.
10 ‘Rooms with a view,’ The Economist, July 7, 2011.
11 Mortgage data from European Mortgage Federation. Go to the website (www.hypo.org), click on ‘Facts and figures,’ then look for ‘Value of mortgage debt.’ The data in the table are for 2009, the most recent figures available. I’ve used an exchange rate of €1 = $1.371 to convert to US dollars.
12 Tracy Alloway, ‘Under-reported – and non-performing – assets at US banks,’ Financial Times, ‘Alphaville’ blog, June 17, 2011. If you want more bad news, you might want to explore PWC’s June 2011 study, summarized online under the title ‘Non-performing loans balloon for European banks as coverage slips’ (via www.pwc.co.uk/eng/publications/european-outlook-for-non-core-and-non-performing-loans.html, but you need to register before you can download the report).
13 ‘Major Japanese banks’ asset quality and capital levels remain a concern,’ Fitch, Dec. 3, 2009.
Chapter 23: The end of days
1 ‘Strife of Brian,’ The Economist, Sept. 17, 2011.
Chapter 24: What is to be done?
1 You can get the full text of the document online, from – why not? – www.marxists.org.
2 Kara Scannell, ‘SEC pushes Citi toward $200m settlement,’ Financial Times, Sept. 15, 2011.
Chapter 25: Gold, wheat, and shotgun shells — And if you happen to run a large firm or a middling-sized government, give me a call. I’ll buy you lunch. We’ve got plenty to talk about.
1 Data sourced from RBS website (www.rbs.co.uk) and checked against data supplied by the three agencies in question.
2 Google sources its data from Thomson Reuters, which is one reason I recommend it. Thomson Reuters is a highly trustworthy source, as is Bloomberg. If the data you’re looking at comes from anyone else, just make sure you can rely on it.
3 Patrick Jenkins, ‘UK government fears new RBS bail-out,’ Financial Times, Oct. 7, 2011.
Afterword
1 ‘A downgrade for Congress’, Economist, Nov. 26, 2011.
2 Nicoletta Batini, Giovanni Callegari, and Julia Guerreiro, ‘An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?’, IMF Working Paper, April 2011
3 Bloomberg. Data sourced Nov. 28, 2011.
4 ‘Euro-Govt-Italian yields ease after sale; Bunds dip’, Reuters, Nov. 29, 2011.
5 Mark Gongloff, ‘Germany’s Bond Auction Fail: Here’s what it
means’, Wall Street Journal blog, Nov. 23, 2011.
6 Bloomberg. Data sourced Nov. 28, 2011.
7 ‘Beware of falling masonry,’ Economist, Nov. 26, 2011.
8 Peter Griffiths, ‘UK to return to recession, more QE needed – OECD’, Reuters, Nov. 28, 2011.
9 ‘Germany seems to have slipped into mild recession: OECD’, Reuters, Nov. 28, 2011.
10 Peter Griffiths, op cit.
11 Bob Ivry, Bradley Keoun and Phil Kuntz, ‘Secret Fed Loans Gave Banks $13 Billion Undisclosed to Congress,’ Bloomberg, Nov. 28, 2011.
12 Roger Lowenstein, ‘Corzine forgot lessons of Long-Term Capital’, Bloomberg, Nov. 2, 2011
13 Jonathan Weil, MF’s Missing Money Makes You Wonder About Goldman’, Bloomberg, Nov. 25, 2011
14 Barak Ravid, Amos Harel, Zvi Zrahiya and Jonathan Lis, ‘Netanyahu trying to persuade cabinet to support attack on Iran,’ Haaretz.com, Nov.2, 2011
15 Robert Worth, Rick Gladstone and Alan Cowell, ‘Britain evacuates diplomats after Tehran embassy attack’, New York Times, Nov. 30, 2011
16 Jack Shenker, ‘’Tahrir Square stands united after week of bloodshed and betrayal’, Guardian, Nov. 25, 2011.
17 Neil MacFarquhar and Nada Bakri, ‘Syria Calls Arab League Sanctions “Economic War”’, New York Times, Nov. 28, 2011.
18 ‘Russia PM Vladimir Putin booed at martial arts fight, ‘BBC News,’ Nov. 21, 2011.
19 ‘German President questions legality of ECB bond purchases’, Spiegel Online International, August 24, 2011.
20 Matthew Brockett, ‘ECB stepped up bond purchases last week as crisis worsened’, Bloomberg, Nov. 28, 2011
21 Ziobrowski, Alan J.; Boyd, James W.; Cheng, Ping; and Ziobrowski, Brigitte J. (2011) "Abnormal Returns From the Common Stock Investments of Members of the U.S. House of Representatives," Business and Politics: Vol. 13: Iss. 1, Article 4. I should be clear that I am using ‘insider trading’ in an informal sense, not a legal one. Because of the way that insider trading legislation is drafted, those Representatives and Senators aren’t committing an offense by trading on the basis of their legislative knowledge. Funny that.
Table of Contents
Acknowledgments
1 — The scheme
Part One: Washington
2 — The price of liberty
3 — Future-money in happy-land
4 — A hole as big as the world
5 — How to win friends and influence people
6 — The $50,000,000,000 egg
7 — After Beachy Head
Part Two: Wall Street
8 — A statistical anomaly
9 — A house for Joe Schmoe
10 — How to hide a neutron bomb in ten easy steps
11 — Collecting nickels in front of steamrollers
12 — I’m short your house
13 — A brief flash of reality
14 — Planet Ponzi comes to London
Part Three: The Wider World
15 — The rise and rise of Planet Ponzi
16 — Giants unicycling on clifftops
17 — The aureus and the as
18 — Choosing second
19 — A van for Fukushima
20 — The man who ate a supermarket
21 — Doing a Caporetto
22 — Crunching the numbers
Part Four: Solutions
23 — The end of days
24 — What is to be done?
25 — Gold, wheat, and shotgun shells
26 — Mr Smith goes to Planet Ponzi
Afterword
Notes
Footnotes
Planet Ponzi Page 37