And you are here why?

From M.Wuerker @ Politico (hat-tip Barry Ritholz ) That is all...

Performed by the Austerity Allstars...

Holy F**k! Seriously. 7.5+%!!! Commentary is pretty redundant at this point, suffice to say that this is not the picture of a country able to borrow in the markets at reasonable rates. I guess this can can't really be kicked much further down the road...

From The Big Picture , more evidence that the financial crisis was entirely, and completely, foreseeable . We’ve known for   4,000 years   that debts need to be periodically written down, or the entire economy will collapse. And see   this . We’ve known for   2,500 years   that prolonged war bankrupts an economy. We’ve known for   1,900 years   that rampant inequality destroys societies. We’ve known for   thousands of years   that debasing currencies leads to economic collapse. We’ve known for   hundreds of years   that the failure to punish financial fraud destroys economies, as it destroys all trust in the financial system. We’ve known for   hundreds of years   that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets. We’ve known for   centuries   that companies will try to pawn their debts off on governments, and that it is ...

The Economist (!!!!!!!!) is calling you a Bankster.

Michael Belkin, via Barry Ritholz, on how to resolve the Crisis in Europe : The Uncollateralized Trillion Euro Perpetual Zero Coupon . Read it, and pay attention to the fine print. (click to embiggen wildly)

Dan McCrum of FT Alphaville looks at the history of a Countrywide mortgage - read " looks at the sordid history of a crap mortgage bundled by Countrywide into a CDS, and then flushed through the sewer pipes of the collaterization industry ). Its pretty short, but fairly horrific anyhow, replete with fun stuff like Countrywide spends 2007 struggling to raise funding, and ends up in the hands of Bank of America for $4bn in stock. Two weeks before Lehman Bothers files for bankruptcy in September 2008, Mr & Mrs Nadeau miss their first mortgage payment. On October 9, 2008, with due sense of timing, Moody’s downgrades 717 securities related to 71 bundles of subprime mortgages issued by Countrywide. Among them is CWABS 06-6 2-A-3, which drops a notch. A month later the Fed creates Maiden Lane II, which buys a portfolio of mortgage backed securities as part of the bail out of failing insurer AIG for $19.5bn, a little over half of their notional...

Ashwin Parameswaran (of macroresilience fame) gets into the unholy intersection of financial actors and the Greenspan/Bernanke Put.  To quote But as I have noted on   many occasions , the moral hazard problem from tail-risk hungry TBTF financial institutions is simply the tip of the iceberg. It was not only the banks with access to cheap leverage that were heavily invested in “safe” assets, but also asset managers, money market mutual funds and even ordinary investors.   The Greenspan/Bernanke Put incentivises a large proportion of real and financial actors in the economy into taking on more and more tail risk with the expectation that the Fed will avoid any outcomes where these risks will be realised. Too many commentators fail to recognise that so much of what has made the neo-liberal era a thinly disguised corporate welfare state can be traced to the impact of a supposedly “neutral” macroeconomic policy instrument that in reality has grossly regressive conseque...

Mobility Historically, when life got too difficult in a given part of the country, us Americans were perfectly willing to pack our bags and move (to California, as it were).  From a labor mobility perspective, this is brilliant - labor shortages in North Dakota are solved by surpluses in Nevada, Pennsylvania by Florida, etc.  There is a bit of a downside to this - we need to be willing to tolerate massive de-population in some states (and, as it turns out, we are willing.). Admittedly, the housing crisis has put a bit of a dip in this mobility - people can't Just Move when they have an underwater mortgage to deal with - but lets ignore that for the nonce. Borders The thing is, in the end, us Americans tend to move around only within America .  Its pretty difficult to go further East or West - not too much happening in the Caribbean, and Siberia sucks.  North and South, well, Canada and Mexico.  Seriously, its not that there is anything wrong with ei...

I'm still trying to figure out the gory details of Crash 6.0 (otherwise known as The Crash Of 2008).  Its been a bunch-a years since those inglorious days, and there still isn't all that much clarity around why  it happened. I, on the other hand, have had a minor ephipany, to wit,   too many people were playing Poker, but acted like they were making Chocolate Croissants . Huh? Work with me here, as I walk you through this The Poker Game Ten of you oh-so-smart types get together to play poker. Each of you comes to the table with $1000. Lets just say that, due to either skill, luck, stacked decks - or a combination thereof - Jane walks off with $10,000. This is a classic - and highly facetious - example of what is called a zero sum game . Jane may have made a proft of $9K, but each of the rest of you not-so-smart (or no-so-lucky) types posted a loss of $1K. In short, the total amount of money that the ten of you have remains at $10K - admittedly all with J...

At some point in the past, you might have said to yourself - " What is this pesky Free Market thing that everybody keeps talking about? " If you are too lazy to actually spend the time and use the Inter-tubes, and books are way too verbose for you to bother with, you will do what pretty much everybody else does in these situations, which is a) ask someone, or b) go get a drink and forget the question. Odds are that you'll do (b), but on the off-chance that you actually do ask someone, and that someone is a wee bit smarter than your average turnip, you'll find out that  Free Markets just don't work in isolation. Huh? Whut? Look at it this way - if Bob offers to mow your lawn for $20, and John offers to do it for $200, and promises to not break your legs , you pretty much know who gets to mow the lawn. The whole point of government, law enforcement, regualation, etc. is to ensure that the Johns of the world don't get a chance to exercise their Leg-Br...