William K. Black suspects that it was more than greed and incompetence that brought down the U.S. financial sector and plunged the economy in recession — it was fraud. And he would know. When it comes to financial shenanigans, William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s, has seen pretty much everything.

Now an Associate Professor of Economics and Law at the University of Missouri, William K. Black tells Bill Moyers on the JOURNAL that the tool at the very center of mortgage collapse, creating triple-A rated bonds out of "liars' loans" — loans issued without verifying income, assets or employment — was a fraud, and the banks knew it.
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Watch online...

William K. Black: CSI Bailout

Imagine this scenario: You've gone out of town for whatever reason, driving your Lamborghini Gallardo Spyder. (If we had a Gallardo, you'd bet that taking road trips would be high on the agenda). Anyway, you get to your hotel, surrender your supercar's keys to the valet, and go on with your business. When it's time to leave, they go to retrieve your car and ... it's gone. That nightmare is just what happened to Eric Vargosko when he took his droptop lambo to Atlanta's Intercontinental Hotel. The swank hotel in the upscale Buckhead neighborhood was the last place Vargosko saw his car until it turned up a month later, damaged.

Just as disturbingly, the hotel has refused to talk to Vargosko, and the media isn't having any better luck with them or the Atlanta police. With WWSB TV's consumer reporter on the case, a police report was unearthed which stated that a hotel security camera recorded a valet handing the Lamborghini's keys to two men in the wee hours of the morning. Whether the two men, part of a larger group of seven that had been recorded by the camera while exiting an SUV at 3:30 AM, were thieves or acquaintances of the valet is unknown. Denied satisfaction on the issue thus far, Vargosko's hired an attorney, and will be avoiding the Intercontinental during future travels.

PSA: Be careful who you give your Lamborghini Gallardo Spyder keys to

Great article from Jim Jubak from MSN Money comments on US inflation and Chinese Yuan.:
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It's too soon to bury the U.S. dollar as the global reserve currency, but it is time to start thinking about writing its obituary.
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In the long run, however, make no mistake: The dollar's days as the world's reserve currency are numbered. And we have no one to blame for the dollar's demise but ourselves.

US debt sets stage for inflation

What's more intriguing is why the surplus countries bought into this -- well, let's call it what it was -- global Ponzi scheme. It wasn't because the financial experts in these countries were stupid. Many of them clearly saw the scam for what it was. Gao Xiqing, an adviser to then-Chinese Premier Zhu Rongji, said in 2000 "that if you look at every one of these (derivative) products, they make sense. But in aggregate, they are bull----. They are crap. They serve to cheat people."

But the surplus countries had as much incentive to believe in the short-term solution as the deficit countries did. Once you hold $500 billion in Treasurys, you aren't inclined to say, "Hey, these are not as safe as I thought." When you need higher yields to feed an underfunded state pension plan, you're not inclined to say, "You know these aren't really suitable for a pension fund."

And so, as the risks grew, more-extravagant instruments were needed to keep the money circulating around the globe. And then, one day, the bust in the U.S. housing market, what could have been a relatively small event in a universe with less leverage and less riding on unsustainable guarantees, showed that the system was built on smoke and mirrors.

And the money stopped circulating. And the global economy ground slower and slower in a devastating credit crunch.

How to fix the global economy

As a side note, the Fed has also, given the size of its bid (which will likely be increased), enabled the Chinese to sell their Treasury holdings if they want. Then the question is, what will the Chinese buy with those "liberated" dollars? My guess: the hard assets that China needs.

To sum up: Quantitative easing, unfortunately, is an outcome that I always knew would occur, though it still shocked me when Fed Chairman Ben Bernanke finally pulled the trigger. The masthead of my Web site reads, "In a social democracy with a fiat currency, all roads lead to inflation." Many people have been confused because they thought that it meant every negative outcome would lead to inflation directly, but that isn't the case. It's the response to the problems that leads to the inflation (and currency debasement).

We are attempting to print our way to prosperity (see "The Fed embraces inflation," my June 2, 2008, column). That can't be done, any more than we could speculate our way to prosperity during the stock bubble or borrow our way to prosperity in the real-estate/credit bubble. Got gold?

Got Gold?

March 9 (Bloomberg) -- The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report.

Asia excluding Japan probably lost about $9.6 trillion, while the Latin American region saw the value of financial assets drop by about $2.1 trillion, said Claudio Loser, a former International Monetary Fund director and the author of the report that was commissioned by the ADB. The report didn’t give a breakdown of asset declines in other regions.

Global Financial Assets Lost $50 Trillion Last Year, ADB Says

PDF of the memo's are linked in the article...

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The Bush administration secretly concluded after the September 11, 2001, terrorist attacks that it had the authority to wiretap the Internet and telephone calls with virtually no limitations, restrict free speech, and use the U.S. military domestically against suspected terrorists.

Those legal opinions came in a series of memorandums written by U.S. Department of Justice lawyers, including deputy assistant attorney general John Yoo, which were disclosed by the Obama administration on Monday.

Although the broad outlines of the Bush administration's claims to sweeping executive powers were previously known, the newly released memorandums provide a glimpse at both the legal arguments used and the scope of the claims.

Obama unseals Bush-era wiretap memos

Short video Jim Jubak detailing CEO pay in multiple countries compared to the US and impacts to the US.

CEO: Quit whining over pay cap

The world's once-largest insurer expects $60 billion fourth-quarter loss.

NEW YORK (Reuters) -- American International Group Inc. is in talks with the U.S. government for further help, as the troubled insurer expects to post a $60 billion fourth-quarter loss, a source familiar with the matter said Monday.

The talks with the government include the possibility of additional funds for the insurer and trading debt for equity, another source said.

AIG in talks with U.S. for more funds:

Click on the link to listen to the mp3.

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"We declare declaratives and deny the official. Based in the landmark of the G-spot, we have overtaken ourselves and overthrown our forefathers. Let there be light within the light and let it answer to the name of Darkness. We are forever risen from the deadly: the anti-virus and the All Stars. Granted power by forces unbeknownst to us. Made in the likeness of kindness. We offer anger to the angry and fear to the fearful. We dance at our own funerals to forsake the mourners…

…This is no time to cry! This is no time at all! Here is the moment of the overlooked and the unforeseeable. We are the elected officials of the people: poets and artists. We are the declarative statement of the inarticulate, the irreparably damaged goods of the bad meaning good. We are the government! We are the government! We are the government!”

Saul Williams: The Government