This is a list of the posts in my blog. You will find captions and the begin of the body text. Besides an introduction, a post on women and one on life, the universe and everything, there are two larger sections, finance and Marxism.
This blog is more or less finished. I am still tinkering around a bit, mostly just cosmetic enhancements.
To me, making this blog has been a pretty big undertaking. I hope you like it but no matter how, I'll be glad to hear what you think. You can reach me on afloderus@gmail.com.
I think people should be nice to each other
I never had a difficult life. Second of six brothers and sisters, I grew up in Luleå, Sweden, 70 miles south of the Arctic Circle where my father was consultant physician at the town hospital. After school I worked with computers until retirement.
They don't appreciate me as much as I think they should
Women are not like men. Women are more beautiful. I prefer women because I was born that way. I was born a physical man with a man's gender identity and a man's customary sexual orientation. As long as I have known about male and female, I have known I am male. As long as I have cared about male and female, I have cared about females.
On Life, the Universe and everything
More than 1500 years ago, St. Augustine made an observation, as valid now as it was then: If you don't ask me what time is, I know. If you ask me, I don't know.
Don't make me angry. You won't like me when I'm angry.
I write about the financial crisis because the banks and their behavior make me angry and I want people to know. About bank behavior and about me being angry. For the banks it is just Help yourself to what you want. Which is not difficult when they have the support of the government.
Savings and Loans - The subprime crisis light
The subprime crisis is about accounting control fraud, about senior executives engaging in extensive fraud for personal gain. It is about creating fictitious profits through grotesquely overvalued assets; it is about looting your firm through exorbitant salaries, fees, bonuses and other perks; it is about leaving the losses to clients and taxpayers.
A short story of federal housing support
Promoting financial development is one of the duties of the government. In 1913, the Federal Reserve System (the Fed) was created. It is a central bank independent of the government, meant to counteract financial panics by helping banks with temporary liquidity problems. It is also controlling the supply of money, selling Treasury securities and supervising the bank system. And it is massively on the side of the banks.
Hiding the risk
Banks used to keep the mortgage until it was paid. With securitizing this changed. Securitizing, putting mortgages together in packages, is often advantageous compared to dealing in individual mortgages. Risks are spread and there is less paperwork.
Not for purchasing, selling or holding securities
When you invest your money, you don't want junk; you want some sort of assurance that your investment has a certain quality. That's what Credit Rating Agencies (CRAs) are for. A CRA is a firm that assigns credit ratings, giving securities a rating according to how likely they are deemed to fail. The ratings are labeled AAA or Aaa at the top over B and C-something to D at the bottom.
Everybody joins
Fees from investors were a profit machine for firms selling securitized mortgages. Looking for more profit, more and more firms set up own departments to take over the whole process. On the safest home mortgages, they could not compete with government supported Fannie and Freddie so they choose other targets: loans too big for F&F and subprime loans. As long as they got their astronomical fees, not many doing business on Wall Street cared about fraud; be it by CRAs, by banks or by others.
Letting others take the loss
At first, most trading in Mortgage Backed Securities (MBSs) was done behind closed doors, between two parts. As bonuses were depending on fees and fees were depending on sales volume, the banks were more interested in big volumes then in making good deals for their customers.
The big bail-out
The subprime problems became so big, the Congress thought it had to do something. It approved the Troubled Asset Relief Program (TARP). Henry "Hank" Paulson, Secretary of the Treasury and former Goldman Sachs CEO, got $700 billion of "necessary" taxpayer dollars to bail out those he found worthy. "Troubled Assets" was very widely defined so Paulson could use "his" money for almost any purpose. From some places, there was a strong opposition. The position taken was strongly depending on personal commitments, those who profited personally where almost 60% more willing to support TARP.
There are rules. You just don't have to follow them
The subprime crisis did not end with fraudulent valuations. It is still going strong, with forged documents and assorted accommodating agencies. To understand what happened, you have to know how to handle and how not to handle different types of documents.
The Times They Are A-Changin'
Until 1971, New York Stock Exchange firms had to be partnerships. If a partnership firm went bankrupt the partners were personally responsible, the creditors could seize their personal wealth. In the 1980s, things began to change. Now Wall Street is hooked on other people's money. Short time profit and direct reward became the norm. It used to be big profit, big reward or big deficit, big loss. Now it is big profit, big reward or big deficit, big reward.
With a little help from my friends
To facilitate securities handling, banks use specialized companies; for registration, for default and foreclosure handling, even for robo-signing documents.
To default or not to default
Default is when the borrower does not pay his mortgage. Sometimes he's sick, sometimes he lost his job. Sometimes the bank is actively driving him into both default and foreclosure. Sometimes a borrower stops paying although he has the money; if the house value has fallen so much it is worth less than the remaining debt, it can be financially advantageous just to leave the house.
There are many ways to skin a cat
The banks have many ways, legal and illegal, to hurt borrowers. Adding fees, unnecessary insurances, unwarranted or protracted foreclosures and much more.
They don't deserve to stay in the house
The banks claim they didn't do anything wrong, still four million people were reportedly wrongfully foreclosed.
The deadly game
People die. Maybe the death of Larry Delassus was one of those things that happen. The death of Sunny Sheu has to be unique. Or? You can easily find more on the net.
It was the best of times, it was the worst of times
Early in 2007, the financial sector saw all that it had made and it saw that it was good. Due to the liberation of markets, the economy had reached a level of stability so far unprecedented; the economies that took the most aggressive measures reaped the biggest rewards. Secretary of the Treasury Hank Paulson told President Bush: "This is far and away the strongest global economy I've seen in my business lifetime". One year later he said "This is the most serious thing that we faced".
It takes a lot of knowledge to really fail
There always have been harbingers of higher wisdom. Like those initiated in the Eleusinian Mysteries, a long time ago. Former Federal Reserve Chief Alan Greenspan talks about things that "only we fully understand".
More help from my friends
As a rule, courts take the part of the banks. Still, few are so outspoken as the judge who said that if the bank was foreclosing, he wasn't going to consider any evidence that the foreclosure was in error.
Trust them, they won't do it again
In spite of what President Obama says, there are cases where you can prosecute; even if we disregard the Sarbanes-Oxley Act, there is a lot to do. Document fabrications and forgeries. Overstating how much the borrower is in arrears. False claims in court that the bank had offered borrowers mortgage modifications. Persistent and "outrageous" misstatement of material facts by foreclosure mills.
Nothing but bad judgment
As a result of the Enron Scandal, in 2002 the Sarbanes-Oxley Act (Sarbox) was enacted. It was meant to make it easier to prosecute fraudulent behavior. Without Sarbox, the administration managed to put away at least some of the top men behind the Enron scam. Several senior executives were sentenced, with up to 24 years in prison.
When your friends turn against you
Often the courts are the banks best friends, no matter how strong the evidence. When banks cheat and go on cheating, it's because the courts let them; should they sometimes lose, it is just a minor inconvenience, just costs for doing business. But some judges do take offense at the banks.
Lots of squealing, little wool said the devil, sheared the pig
There are several organizations to control the finance market. Like the Securities and Exchange Commission, SEC. The Department of Justice, DoJ. The Office of the Comptroller of the Currency, OCC. What they have in common is a next to complete unwillingness to prosecute for even the most blatant crime. Most of the Fed top executives come from Wall Street, most of the lower executives want to go to Wall Street; it's no wonder most federal investigations find little or nothing to report.
The administration is the problem
SEC, the Securities and Exchange Commission, is there to regulate the securities industry. It does not succeed and that's no wonder. SEC and Wall Street intermingle; at a conference, the entire staff of the SEC was thanked for "the really amazing things they have done ... to the country, to the financial community, and not to mention a lot of [Wall Street] law practices." SEC's director of enforcement answered with an offer to Wall Street; presumptive wrongdoers could use the SEC as a negotiator, should they need to talk with the Department of Justice.
How not to search for damages done
According to former Fed Chairman Alan Greenspan, bank examiners are good at promoting sound banking practices but bad at discovering fraud. They are not even supposed to look for fraud. So, according to Greenspan, fraud is explicitly not against sound banking practices.
There are so many borrowers. What does it matter if some are defrauded?
There were many banking reviews, many inquests in banking behavior. They did not work out. Criticism and costs grew and the situation became untenable. So the reviews were ended, officially to save money for distressed homeowners. The reviews gave a lot of money to the reviewers; maybe the banks were ripped off but they didn't seem to mind very much. To put a limit to how much the banks had to pay, there was a foreclosure fraud $8.5 billion settlement. This also meant that those responsible did not have to fear any personal consequences.
Instead of production
Investing in production did not give the profit that the bankers wanted. So they found alternatives. Like lobbying, buying back own stock, commodities, "innovations".
Going for the big kill
Not only homebuyers are tricked by the banks. When a municipality needs to finance a common project, it can go through a bank and issue a fixed rate municipal bond. This does not generate much money for the banks so they can suggest what they claim are better alternatives. For example Variable Rate Demand Bonds (VRDBs), letters of credit, Interest Rate Swaps. The result can be disastrous.
Getting gifts from taxpayers, attacking pension funds, more
There are many shady ways for the banks and private equity firms to make money. Like forbidden dealings with criminal organizations. Like gifts from the government. They can target pension funds, public and private. They can bankrupt perfectly sound companies.
Competence or incompetence
In the olden times, people got rich by producing and by investing in production. Nowadays, competence has changed. If you want to get rich, production is seen as an unnecessary step.
To regulate or not to regulate
At least since Carter, American presidents have supported federal deregulation. The result? The Savings and Loans crisis. As a result of this, further deregulations were effected and we got the subprime crisis. Many banks made big profits, until they needed bailouts. With deregulation, the American economy was good, more or less. Until it collapsed.
In theory, theory and praxis are the same
There is a difference between theory and praxis. In physics, you have Newton's law of gravitation. It is a fundamental theory but it is not enough to construct an airplane; no matter how much you know about gravitation, in praxis you also need the laws of aerodynamics. If you miss the effect of metal fatigue, you can get a crash no matter how well you understand gravitation and aerodynamics. And if somebody puts a bomb in the luggage department, no physical laws will help.
To get real bad performance, you got to pay well
A common meme on Wall Street is that to get good performance, the pay has to be good. Unfortunately for them, in 2005 an analysis of the 100 largest technology companies found that those with the highest-paid CEOs had the worst returns.
All you need to know
The US has come a long way. From personal freedom and personal responsibility to personal freedom and no responsibility. From the productive sector to the financial sector. From steel and cars to subprime loans. From Carnegie and Ford to Blankfein and Dimon.
Why do I write about Marx?
I dislike Marxism A: because its praxis is atrocious, and B: because its theory is nonsense. Marxism is used to divert people's discontent, to justify people's suffering. Marxism is belief in mystical powers known only by the initiated. Marxism is religion.
If you can't tell idealism and materialism apart, the difference can't be important.
Marxism puts materialism that is right, against idealism that is wrong. Materialism is believing consciousness is a result of an outer world, while idealism is believing an outer world is a result of consciousness. How do I know that you exist, that I am not dreaming you? How do you know that I exist, that you are not dreaming me? The Marxist answer is practice.
With a little dialectic, Marx can always get out of it.
To Marx and Engels, the difference between dialectics and metaphysics is very important. Dialectics is better. You can prove more things. You can use it to prove that the soul is immortal.
Marxism: All the dialectical laws are right. They are all tautologies.
Marx's and Engels' dialectics is taken from Hegel, with some modifications. An important part of the dialectics is the dialectical laws. What's so great about them is that they are always right because if they are not right it doesn't count.
Marx's 'real' value. Who needs it?
Marx's "real" value is a most wondrous thing. It is a great discovery but still it is impossible to know, it is impossible to use, it is totally meaningless.
Marxism as religion. A surreal experience.
Why do people like Marxism? Because somebody told them it is good. It has been called the religious instinct, the need many people have to blindly follow somebody or something they perceive as greater than themselves. Where Marx stands, he shows with his famous words that the philosophers have only interpreted the world, when the point is to change it. He is a man with a vision and a mission. He is not a philosopher, he is a prophet.
On making predictions. Marx and others.
As I have already demonstrated, Marx's materialism, dialectics, dialectical laws and value are nonsense. So is Marx's great discovery, the revelation of the secret of capitalistic production through surplus value. His science is not any better.
Concluding remarks. On Marx and democracy, on social beings and on the importance of being Marx.
Marx does not like the bourgeois democracy where the people can select which member of the ruling class is to misrepresent the people in Parliament. He prefers the Paris Commune, an attempt to establish a proletarian regime in Paris, a presumptive forerunner of a spreading net of communes. He assumes the people will vote for the Commune. What if they don't? That is the problem. The Communists have solved it with the same method as the American automobile maker Henry Ford. All the cars he manufactured were black. When people complained they could not get their T-Ford cars in the colors they wanted, Ford answer was that they could get their car in the color they wanted if they wanted black. This is the Communist sort of democracy: the people can get the regime they want if they want the Communists.
First post on Marx's Capital. Why he should have chosen supply and demand instead of labor.
This is the first part of two of my examination of Karl Marx's Capital Book 1, comprising the chapters 1 - 3. It is an inquest into his thinking and especially into his exchange value. Parts I do not find interesting will be summarily dealt with or excluded.
Second post on Marx's Capital. Why the merchant can't sell for more than his purchase price.
This is the second part of my examination of Karl Marx's Capital Book 1, comprising the chapters 4 - 25. The chapter numbering can vary between different editions, one chapter being split in several or vice versa.
Third and last post on Marx's Capital. You put a book on a table. Why it can't be gravitation that keeps it there.
This is the third part of my examination of Karl Marx's book Capital, comprising Book 2 and Book 3. In Book 1 I treated all chapters, although some were dismissed in just one or a few sentences. Now I omit those I don't find interesting. I do not intend to write about Book 4.
I never understood why people were treating Nazis and Communists differently. After reading this, you will wonder too.
What are the differences between Nazism and Communism? There are some. Still, there is a list much more impressive, that of similarities.