Barry Ritholtz says “First, Blame the Lenders” in a good post today over at The Big Picture on the crisis in Greece:
There is a familiar odor to the “Blame the profligate Greeks” meme now circulating. It is little more than a brilliant marketing ploy. This distraction ignores the simple reality that lending to insolvent people, institutions and countries is first and foremost the fault of the lenders.
Let us start first with the Greeks, who lied their way into the EU (with the help Goldman Sach’s financial engineers). The ridiculous pay and vacation structure, the absurdly generous pension plan, the excessive spending by Athens. They are a nation that can honestly be described as tax scofflaws. Yes, Greece is a mess.
Which begs the question: WHO THE FUCK WOULD LEND A DIME TO THESE PEOPLE?
Ritholtz gets to the heart of why lenders ultimately bear the vast majority of the responsibility for bad loans (emphasis mine), even the ones that weren’t predatory:
Which brings us back to the lenders. What is their role, if not to exercise expert judgment? If they cannot independently determine who is credit worthy and who is not, than why do they even exist at all? We might as well leave piles of money around and ask borrowers to self-regulate their appropriate credit limits.
That shows very clearly why the argument of the blame-the-borrowers crowd, which has been heard far too often in our own mortgage crisis, is so off base.
— Bloomberg News reports that Treasury Secretary Tim Geithner is considering stepping down after the fake debt-ceiling debate is finished. That would offer the Obama administration perhaps its last chance to distance itself from the Wall Street-friendly policies Geithner has instituted or pushed for, and stake out a more American people-friendly policy for the 2012 campaign. Will it take it?
Unlikely, says a (justly) cynical Mike Konczal.
I imagine short-list for Treasury will be drawn up (with the) assumption Obama needs to raise ~$1B for 2012, much from Wall Street
Andy Kroll jokes on Twitter—or I should say: half-jokes:
so…Jamie Dimon? Bob Rubin redux? I bet Stan O’Neal needs a gig…
More seriously, American Banker Washington bureau chief Rob Blackwell reports on Twitter, contra my skepticism, that the Republicans would be open to confirming outgoing FDIC Chairwoman Sheila Bair. She’s a Republican, but she also fairly tough-minded on regulating the financial industry. She’d have to be an early favorite then.
— The New York Times’s Steven Greenhouse reports on a new study that says 88 percent of all the meager economic growth we’ve had in this recovery has gone to corporate profits, while just 1 percent has gone to workers.
“The lack of any net job growth in the current recovery combined with stagnant real hourly and weekly wages is responsible for this unique, devastating outcome,” wrote the report’s authors, Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin and Sheila Palma.
According to the Bureau of Labor Statistics, average real hourly earnings for all employees actually declined by 1.1 percent from June 2009, when the recovery began, to May 2011, the month for which the most recent earnings numbers are available.
The authors said another factor explaining the weak performance for aggregate wages and salaries was the slow growth in weekly hours during the recovery. At the same time, worker productivity has grown just under 6 percent since the recovery began, helping to keep employment down while lifting corporate profits, the study said.
And on and on.