Brad Miller on fire

John Kenneth Galbraith wrote that embezzlement is "the most interesting of crimes" for an economist. Embezzlement is almost always eventually discovered, but for a time results in "a net increase in psychic wealth," when the embezzler "has his gain" and the victim doesn’t miss it. Galbraith called the undiscovered and therefore unfelt loss "the bezzle."

According to Krugman, the stock in banks that are solvent only by virtue of an "optimistic" valuation of their assets "isn’t totally worthless," but the stock’s value is "entirely based on the hope that shareholders will be rescued by a government bailout." The "huge gift to banks shareholders at taxpayer expense," Krugman said, was likely to be "disguised as ‘fair value’ purchases of toxic assets."

So maybe insolvent banks are stalling for time, hoping that the economy turns around, that home prices will go back up, or that sick borrowers will get well and unemployed borrowers will find jobs. Maybe they want to enjoy the "psychic wealth" of paper solvency for as long as possible.

And maybe they’re hoping we’ll buy their bezzle.

Read all about it at Daily Kos. Sure wish the good Congressman would remember to cross-post.

Comments

Another pertinent part of the post

The savings and loan’s decision not to settle the lawsuit made no economic sense for a solvent institution, but it made perfect sense if their principle objective was to maintain the false appearance of solvency for as long as possible. The savings and loan was undoubtedly inflating all of their assets, including my homely little lawsuit, to postpone the inevitable.

Rep. Miller cites this example from the days of the Resolution Trust Corporation. The example apparently must be relearned - and retaught - to monster companies like Citigroup and other "zombie banks" today.

If your bank isn't taking short sells when they have the chance now, they're insolvent.

Obama needs to dump Geithner - not just for the unpaid tax nonsense - but also because he has failed to act on what everyone even loosely associated with banking knows.

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If Obama waits much longer to act, and act decisively with the mandate he was given instead of negotiating with McConnell/Cantor/Wall Street, we won't have a chance to count to three again in this generation.

 

Hagan, Miller, and Price

This is your call to action to save the economy from a lost decade, a la Japan, or even a lost generation.

Use your new majority and get Obama on the job!

 

Hi! I am Jesse James and would like to make a fast withdrawal!

Use your new majority and get Obama on the job!*Obama Dude

Let's face it! It appears that "John Kenneth Galbraith wrote that embezzlement is "the most interesting of crimes" for an economist"* James

No Doubt Mr Galbraith got his economic training from Jesse James and family on the art of direct embezzlement without govenrment force and Obama Dude believes in the Robin Hood economic theory of superior firepower of a flaming Arrow to start a act of Stimulus.

Close, but not quite

I wouldn't categorize myself as an Obama Dude (nor would others), but I have been called flaming before.

Now, who has that Green Arrow avatar on this blog?

But seriously folks, time is not on our side. What we've seen coming from the administration so far - and being watered down in Congress - is a dismal failure that will prolong our agony.

Senator Hagan, when the President calls again for your vote or another amendment, tell him to dump Geithner and get Volcker back on the job. For all of our sakes!

 

Bring Volker out of retirement with his Printing Money Machine?

I wouldn't categorize myself as an Obama Dude (nor would others), but I have been called flaming before.

Now, who has that Green Arrow avatar on this blog?* Obama Dud?

Check with the environment friendly Green Hornet and his trusted sidekick Kato about the crime busters 1913 Green Arrow Hummer. I understand it is for sale since it got 2 miles per gallon. In fact things are so bad for the Green Hornet since his Socisl Security Check keeps arriving later and later after the 3 rd of the Month that he has decided to put Kato on the Dubia Slave Market as a discounted sale.

Senator Hagan, when the President calls again for your vote or another amendment, tell him to dump Geithner and get Volcker back on the job. For all of our sakes!*Obama Voice

No doubt you are a great believer in Factional Reserve Banking where wealth is created out of nothing with paper promisionary notes like Volker did in the late 70's and the early 80's giving this country the highest interest rates [17% to 23%] along with the highest inflation rates [ 26%] in it's history.

Oh, Max - give Greenspan his credit too; his ego needs it

Creating wealth out of nothing is exactly what happened with credit default swaps and is why we're in this mess.

I'd prefer a quick, though painful recession to a deflationary spiral into depression.

How much have we "loaned" AIG now?

 

Car 59! Food riots reported at Krogers!

Oh, Max - give Greenspan his credit too; his ego needs it

Creating wealth out of nothing is exactly what happened with credit default swaps and is why we're in this mess.

I'd prefer a quick, though painful recession to a deflationary spiral into depression.*Obama Fund Adviser

Greenspan does not know what planet he is on at 82! Strike that! He never read the final chapter of the Jelkell Island 1909 Federal Reserve orginal prepose meeting and what happen to the Robber Barons when the economic collape. I'd prefer a fast revolution with food riots, treason trials, Gernic Establishment types hung from Street Lights, and finally a banishment of both political establishment parties to Southern Pakistan. And stop quoting me about Ponzi wealth........AIG has got 300 Billion so far which means State Farm will not raise your auto insurance rates for least another 6 months, unless you run a Taxie Service in Cuba......You do understand that AIG was founded by former CIA insiders in Swissland after WW2...