Goodbye to my major claim to fame: Carl Kassell’s voice on my answering machine

 

The man, the myth and the message

Time and progress have come to the CollateralDamage household and we are getting rid of the land-line telephone. So we no longer have a group phone. That phone line is where, for the past 12 years, Carl Kassell‘s voice has resided. Unfortunately when I wrote that script for Carl (I should really put that on my resume) I made it specific and included our soon-to-be-gone phone number. Click here to listen to Carl as he answered our calls for so long.

I won this cherished item by correctly answering 4 (count ’em FOUR) questions about the news on NPR’s quiz show Wait, Wait … Don’t Tell Me. (It was their first year-end show and they upped the ante on the questions. They’ve never done it again and so I remain the only person ever to have gone 4 for 4.)

Having Carl’s voice is, in fact, every bit as cool as you think it is. More than once I have received messages about how cool a thing it is from people who have called the wrong number. And once a wrong number even called back to hear it again. Carl Kassell has also helped to encourage a certain sense of humility in me. Several times I have received a phone call from friends who said, in disappointed tones, “Oh … you’re home. I wanted to hear the message. If I call back, do you mind not answering?”

People frequently asked me how I got to be on the show. It’s a question I find confusing because the answer is so obvious: I called the number they repeat dozen times each week. No secret to it. I wonder if Wait, Wait … has a policy against two-time winners? I’m going to use the same tricky maneuver I used the last time — the telephone — and try to go for the gold again.

Until that happens I will cherish the cassette tape with the Wait, Wait logo on it and all that greatness within it.

Despite the meltdown too many still think money = brains

bank-zombie-3 Turn a profit and you must be a genius, despite two successive bubbles that is still the essential view of too many.

Yesterday Goldman Sachs reported record earnings mostly because they are profiting from a government system they (or their former-for-now employees) helped create.

In the wake of Countrywide, Madoff, Bear Stearns, Enron, AIG, etc., etc., it would be nice to think a we had acquired even a slight sense of skepticism. But even many of our supposedly cynical reporters rushed to gush over Goldman winning a rigged game.

Here’s NPR’s Yuki Noguchi on All Things Considered: “Dick Bove is senior vice president of research at Rochdale Securities. He says Goldman suffered during the crisis. It shed 16 percent of its workforce in the last year. But what revived Goldman, Bove said, is the diversity of its business and its superior internal systems. So while some aspects of its business falter, the rest goes gangbusters.”

“Superior internal systems”? Is that a euphemism for no competition left standing? Nor is she alone in using effusive praise in the place of actual facts. Reuters quotes Michael Holland as saying:

What they have continued to do during the worst financial crisis in 25 years shows that they are the smartest guys in the room and, therefore, it doesn’t necessarily translate to the other people who are in the room.

“The smartest guys in the room.” Mr. Holland uses the old Enron catchphrase without a trace of irony. Here is a view from Australia:

The fact Goldman Sachs made as much money in the second quarter as it did for all of 2008 is undeniably good news. It shows markets are open for business, and given that many of its peers are dead or recovering the investment bank demonstrates the benefits of well judged risks.

The markets are open for business? Doesn’t the second half of that sentence beg a few questions of the first half?

No surprise that our elected officials are only too happy to jump on board the bandwagon. Richard Shelby, the top Republican on the Senate Banking Committee: "I’m not surprised. Goldman Sachs has a history of being well run and sometimes ahead of the others."

All this happy talk leads to a rise in the markets which is used as further evidence of the brilliance of Goldman, et al. It was only two and half years ago when Countrywide was considered one of the most esteemed companies in the US.

Anyone remember that?

Anyone?

Bueller?

Thankfully not everyone is falling for it. Over at the Washington Post, Binyamin Appelbaum even put some skepticism in the lead: “… as the decimation of its Wall Street rivals allowed the investment bank to romp across the financial landscape, buying low and selling high.” While Goldman has repaid its $10 billion government loan, Applebaum (and a few others) had the temerity to point out that the company “has not disclosed to what extent it continues to rely on other federal rescue programs, such as borrowing from the Federal Reserve.”

Easy way to tell truth from spin on fixing the banks

Originally ran at BlownMortgage

There’s way more chaff than wheat in the air when it comes to understanding what’s wrong with the bank. Because of this it can be easy to get caught up in jargon and sound-bites and lose track of what the issues really are.

Two National Public Radio entities are doing a superb job at managing the noise-to-signal ratio. One is the show This American Life and the other is the blog/podcast Planet Money (the Planet’s pieces are also heard on regular NPR news shows). The two shows frequently team up and their latest look at the the big picture – entitled Bad Bank — is particularly worth listening to.

In the episode, Adam Davidson and Alex Blumberg explain in an easy-to-understand-without-being-stupid way exactly what went wrong. They also make a strong case for some very simple solutions. Not fun. Not easy. Just simple. These solutions are simple enough that it is also easy to see exactly why no one in power is yet willing to initiate them.

Alex Blumberg: If you want to understand this crisis right now, this banking crisis, you need to understand this one thing. And it’s one thing, Adam, that the mainstream media is afraid to touch.
Adam Davidson: They’re afraid because they think it’s really boring.
Alex Blumberg: Right because, what this central thing is, this thing that we need to discuss right is a bank balance sheet.
Adam Davidson: But please, do not despair, because we think we’ve come up with a way to explain this to you, and we actually think it will be pretty enjoyable. So, to begin, let’s imagine the simplest bank in the world. I would like to call it Adam’s Bank.

The pair then go on to explain the basics of mortgages and how banks work and make a profit in an amusing and interesting way. They do this by using an imaginary mortgage on an imaginary dollhouse and with the help of various experts like Columbia Business School professor David Beim.

Alex Blumberg: David Beim is saying, you don’t want to mark it to market. Mark to market, that’s another phrase you might have heard. And it applies to exactly the situation Adam is in right now. He’s got a dollhouse on his books for 100, but if he had to sell it now, he could only get 50 – that’s the market price, what he could get right now. Marking it to market means Adam would have to enter the market price – 50 dollars – or 20 dollars – or whatever it really is – into his books.
BEIM: And the bankers have all been saying ‘please don’t make me do that,’ because if you do, I’ll be declaring bankruptcy. If I show all those, the reduction from 100 all the way down to 20, you’ve just wiped out my entire capital and more, I’m going to have to go to the government and say, close me down, I’m broke. And bankers find that hard to do. and furthermore, regulators don’t want it to happen to all the banks at once. Certainly not all the big ones.
Alex Blumberg: Now obviously, in the real world, the assets that the banks have on their books are more complicated than dollhouses. But, if the banks had to sell them now, in today’s market, they’d almost certainly take a huge loss. A loss big enough to wipe out their capital and shut them down.

Also helping out is a former IMF economist named Simon Johnson and it is Johnson who lays it all out in language so clear even a politician, CEO or journalist can understand it.

JOHNSON: You know, what would the U.S. tell the IMF to do if this were any country other than the U.S.? If you covered up the name of the country, and just showed me the numbers, just show me the problems, talk to me a little about the politics in a generic way. With the financial system, you have a boom, and then the crash, what would the U.S. tell the IMF to do, I know what we would do, I know what the advice would be, and that would be, take over the banking system. Clean it up, re-privatize it as soon as you can.

Account for the bad debts, throw out the bad management, take the hit and move on. That really is the only way out of this mess. Until that happens – and it doesn’t matter if you call it nationalization or some other euphemism – nothing will change. Keep that in mind when listening to the chattering classes and it becomes quite easy to know when you are being lied to.