From the NYT, Business, Page B1, January 23, 2010:

"Only a year after the government stepped in to aid Goldman Sachs and Morgan Stanley by granting them access to the federal safety net, policy makers are developing an exit path that would allow them and others to escape limits on banks being proposed by the Obama administration.

President Obama wants to limit the scope of risk-taking by barring banks with federally insured deposits from trading securities for their own accounts and from owning hedge funds and private equity funds. The plan, policy makers said on Friday, would effectively require bank holding companies — which Goldman and Morgan became at the height of the financial crisis — to divest themselves of these lucrative operations.

But Treasury Department officials are also seeking to give banks that do not like the proposed rules the option of dropping their status as holding companies to keep their trading and other investment businesses.

The move is likely to turn the spotlight on Goldman, which could be one of the biggest potential beneficiaries..."

http://www.nytimes.com/2010/01/23/business...

Obama proposes regulations on Thursday, Geithner creates loophole for Goldman on Friday.

In 1960, the minimum wage was $1.00 an hour.

Here's what some basics cost in 1960:

New house; $11,700
Average monthly rent: $88
Gas: 22c a gallon
New car: $2,050
Health insurance for family: $75 a month

In 2008, the minimum wage was $6.55 an hour.

Here are the costs today:

New house: $212,000
Average monthly rent: $1,200
Gas: $2.25 a gallon
New car: $28,400
Health insurance for family: $840 a month

The costs have increased, on these basics, by a factor of 13 since 1960.

To have the same standard of living as Americans enjoyed in 1960, the minimum wage today should be $13 an hour.

HIGHER WAGES FOR THE AMERICAN WORKER NOW!

This chart shows the latest CDS spreads for several leading American banks:

http://baselinescenario.files.wordpress.co...

What it means:

The price of a credit default swap is referred to as its “spread,” and is denominated in basis points (bp), or one-hundredths of a percentage point. For example, right now** a Citigroup CDS has a spread of 255.5* bp, or 2.555%. That means that, to insure $100 of Citigroup debt, you have to pay $2.555 per year.

**November 2008

Today the Citi spread is 580 bp, Amex is 652 and Capital One is 526. All up from around 100 last summer.

Interpretation by economist Simon Johnson:

The credit default swap market is a modern Delphic Oracle. And after major statements such as yesterday, it’s worth pausing to reflect on, and argue about, what it really means.

Thursday’s statement, to me, was about US banks.

The risk of default for US banks, according to this market, is rising back towards levels not seen since mid-October. That is striking enough - but remember what has changed since then: (1) the G7 promised not to let any more systemic banks fail, (2) Treasury has provided repeated recapitalization funds on generous terms, and (3) the Fed offers massive, nontransparent funding to anyone in distress. How can it be that the credit market still or again feels the risk of default rising so sharply and to such high levels?

The most plausible interpretation is that people expect the government will force the conversion of junior bank debt into equity. The treatment of private preferred shareholders at Citigroup, last week, is seen as the harbinger of further losses for investors.

In a comprehensive systemic clean-up approach and complete recapitalization approach, debt-equity swaps** could potentially play a sensible role, particularly in countries without the fiscal capacity to sustain guarantees of all bank liabilities. But if they are done in chaotic crisis mode - as the government appears to be signalling - the additional damage to confidence around the world will be huge.

The events of mid-September 2008 were traumatic and awful to behold. I saw that trailer and I don’t want to see the movie. But it is exactly into that scary future that we now head.

It’s never too late to change policy, to make a difference, and to turn things around. But it is already very late.

http://baselinescenario.com/2009/03/06/wha...

** debt/equity swap: a refinancing deal in which a debt holder gets an equity position in exchange for cancellation of the debt

Looks like March is going to be an interesting (and perhaps historic) month on Wall Street...

Gov. Sarah Palin added a massive windfall profits tax on oil companies in Alaska.
The $6 billion in new tax revenue was redistributed to every man, woman and child in Alaska.
$2,000 from the oil wealth fund and an additional $1,200 from the Palin tax increase was redistributed, giving every Alaskan a check for $3,200.
Palin's tax increase and wealth redistribution program was so extreme that BP Alaska and Conoco Phillips have delayed or scrapped new projects.

And yet, according to McCain, returning to the Clinton era tax structure is "socialism"?

Details (edit):

"Over the opposition of oil companies, Republican Gov. Sarah Palin last year approved a major increase in taxes on the oil industry — a step that has generated stunning new wealth for the state as oil prices soared. Alaska collected an estimated $6 billion from the new tax during the fiscal year that ended June 30. Palin's administration last week gained legislative approval for a special $1,200 payment to every Alaskan. That check will come on top of the annual dividend of about $2,000 that each resident could receive this year from an oil-wealth savings account.
The industry warns new taxes are already discouraging future exploration and development. "Clearly, from the investor standpoint, Alaska has become a less attractive place to invest exploration and production dollars," said Marilyn Crockett, executive director of the Alaska Oil and Gas Association."

http://seattletimes.nwsource.com/html/loca...

Key to understanding the code:
Taking money from BP and handing it out to the barflies in the Mug Shot Saloon in Wasilla is "sharing the wealth"
Returning to the tax code as it existed under Bill Clinton is "spreading the wealth".
One is good, the other is "Marxism".