Housing Doom

1:36:34 … This crisis was caused by massive government subsidies to purchase homes by people who couldn’t really afford them. So what does Congress do? They pass an $8,000 tax credit for people who can’t really afford to buy a home to buy one. I mean, how stupid can you get? - John Makin

Doom Transcripts: Index & Guide

Housing Doom is pleased to present a complete unauthorized annotated transcript for the American Enterprise Institute’s October 22, 2009 event "The Deflating Bubble, Part VI: The Lessons of the Bubble and Crisis".¹ The event site has a variety of resources including both an audio and a video of the proceedings. There is as yet no official transcript.

Table of Contents

[link navigation works best when full article displayed]

1. 0:00:00 - Alex Pollock intro (preview post)
2. 0:11:43 - Tom Zimmerman presentation (preview post)
3. 0:26:50 - Chris Whalen presentation (preview post)
4. 0:37:03 - Nouriel Roubini presentation (preview post)
5. 0:54:19 - John Makin presentation (preview post)
6. 1:08:20 - Desmond Lachman presentation (preview post)
7. 1:21:56 - Panel discussion (preview post)
   1. 1:22:08 - Roubini discussion
   2. 1:22:59 - Whalen discussion
   3. 1:23:57 - Lachman discussion
   4. 1:25:24 - Makin discussion
   5. 1:28:01 - Whalen question
      1. 1:28:18 - Makin response
      2. 1:29:19 - Pollock response
   6. 1:29:51 - Pollock (with Roubini) aside on Canada
8. 1:31:26 - Q&A (preview post)
   1. 1:32:00 - Bert Ely question
      1. 1:33:04 - Zimmerman (with Roubini) response
      2. 1:34:29 - Whalen response
   2. 1:34:58 - Brian Gardner question
      1. 1:35:43 - Makin response
      2. 1:36:59 - Whalen response
   3. 1:38:18 - Steve Votaw question
      1. 1:38:59 - Lachman response
      2. 1:40:38 - Roubini response
      3. 1:41:22 - Zimmerman response
      4. 1:41:49 - Pollock response
   4. 1:42:11 - Jack Phelps[ph] question
      1. 1:42:54 - Makin response
      2. 1:43:24 - Whalen response
   5. 1:44:40 - John Serrapere question
      1. 1:46:02 - Roubini response
   6. 1:46:27 - anonymous question
      1. 1:47:44 - Whalen (with Pollock) response
      2. 1:48:44 - Roubini response
      3. 1:49:52 - Makin response
   7. 1:50:42 - Barry Wood question
      1. 1:51:12 - Roubini response
      2. 1:54:36 - Whalen response
   8. 1:55:02 - Christine Eisner[ph] question
      1. 1:55:24 - Zimmerman response
   9. 1:57:22 - Dale Kinsella[ph] question
      1. 1:57:55 - Makin response
   10. 1:58:44 - Pollock brief wrap-up
9. 1:59:06 (end)
   • Notes and References

Alex Pollock: [0:00:00] Good afternoon ladies and gentlemen. [slide² 1]

When in the course of financial events we have a huge bubble and the inevitable succeeding huge bust, a decent respect for the the opinions of mankind requires that we try to learn something useful from the painful experience. That’s the point of these deflating bubble series of AEI conferences, which you all have so kindly supported with your participation. So welcome to Deflating Bubble Roman numeral VI, "The Lessons of the Bubble and Crisis."

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So, you know, there’s nothing for safety and soundness like a comfortable oligopoly. We might think about that and … we’re planning, for those of you who are interested, a conference, coming up in a few months, contrasting the Canadian house finance and financial system with the American system. So there’s a little advert — little preview.

Doom Transcripts: Index & Guide

Well, that certainly got my attention

Housing Doom is pleased to present a seventh selection from our under-construction transcript of the American Enterprise Institute’s October 22, 2009 event "The Deflating Bubble, Part VI: The Lessons of the Bubble and Crisis".¹

The event site has a number of resources, including an audio and video of the proceedings. There is as yet no official transcript.

Most of AEI’s "team bear" participated in a brief but lively discussion after the presentations.

Alex Pollock: [1:21:56] Thank-you, Desmond.  Having heard five really interesting presentations, let me give the panelists, if they want, a chance to add something, or react to the others.  Nouriel?

Nouriel Roubini: Just a comment on the last point that Desmond made. In this crisis, regulated banks got in trouble, but also a lot of non-regulated financial institutions — were broker/dealers like Bear and when bust. And so in some sense, suppose we go back to Glass-Steagall and not against it? What does it rule out? And then you’re going to have a bunch of broker/dealers or non-bank Shadow Banks that are going to become too big to fail. They’re going to do crazy things and eventually we’ll have to bail them out.

So do we need to really go back to Glass-Steagall? Or we need to break up every financial institution and make it so small that it can fail and who cares? And we don’t have to bail them out. What’s the appropriate policy choice on that? And I think that’s an open question for everybody else on the panel.

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… or in the Mothership’s own words: Welcome to the new World Report

When I hit "sleep" on the old clock radio for 7AM ADT I got what sounded like a blast of FOX as rendered by a gang of interns from Oral Roberts U.  It’s as if James K. Glassman and a commando unit consisting of old Bush public diplomacy types had invaded Toronto and taken anyone who’d been in the UK for more than 3 months (or could distinguish among more than 4 flavours of vowel) to the basement and shot them.

The theme music was different (CBC changes that, traditionally, on the eve of a fresh war) and the stories came in disconcerting little lumps.  Haven’t experienced anything like it since I sampled the CNN news update loop at my sister’s in NH some years ago.

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As Doomers can imagine, I’ve got extremely serious reservations about this story,¹ but for the purposes of the present project those are going to be laid aside.

Google Street View has just come online in Halifax, and I’m very pleased with having just discovered an improved walking route between our digs and the campus of St Mary’s.  As it happens, the Armoury Square condo project featured in the article lies just about halfway along the route, and can serve as one of the focal points as I build a picture of my world over the next several weeks.  When we hit the 2nd leg of the downturn (in about 3 weeks?) all this new stuff is likely to blow up …

but meanwhile, let’s just enjoy some untypical non-Doomish Realtor overoptimism

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Starbucks promises I won’t be able to tell the difference.  Yeah, from the stuff I was swilling the last time I was on The Ocean.

Our crack team of Doomish researchers has already solved the riddle of how these top-notch marketing geniuses managed to come up with a uniquely Doomed-in-Canada campaign.  Look carefully at what led them astray — the subliminal flash in this 2-decades-old TV spot.  In case you’re not fast enough to interpret it, we’ve reproduced the image under "Read More" below.

Doomers should carefully study the second link in my comment from yesterday.  That, folks, is a last call for the lemmings presently in the profitless safety of debt to transfer across to a whole other platform. (But the banks are going to need all the fresh common equity sucker-money they can get their hands on to survive Shiela’s looming shakedown, and the victims at least will have the comfort that it’s all in a good cause.  I figure the process will take about 4 more weeks.)

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The Apology Act, which comes into effect Oct. 1, broadly defines an apology and states that it can’t be used as evidence in legal proceedings to establish fault or liability. - CBC¹

As usual, there is rather more than meets the eye here, and it’s not a case of an eccentric rookie mistake by our newly elected NDP (that’s socialist, by the way, a Maritime first) provincial government, either.  The story and a commenter in the thread below note that the majority of Canadian and American jurisdictions, Australia and the UK all have similar laws.  So what gives with this?

"An Act Respecting the Effect of an Apology and to Prohibit its Use as Evidence of Fault or Liability"

• …
• 3 (1) An apology made by or on behalf of a person in connection with any matter
  1. does not constitute an express or implied admission of fault or liability by the person in connection with that matter;
  2. does not constitute a confirmation of a cause of action or acknowledgment of a claim in relation to that matter for the purpose of the Limitations of Actions Act;
  3. notwithstanding any wording to the contrary in any contract of insurance or any other enactment or law, does not void, impair or otherwise affect any insurance coverage that is or, but for the apology, would be available to the person in connection with that matter; and
  4. may not be taken into account in any determination of fault or liability in connection with that matter.
• (2) Notwithstanding any other enactment or law, evidence of an apology made by or on behalf of a person in connection with any matter is not admissible in any court as evidence of the fault or liability of the person in connection with that matter.
• …

The deal is that there’s getting to be intense pressure from moral leaders like this guy² for the perps to publicly admit blame.

The Archbishop of Canterbury has expressed his disappointment at the lack of repentance among bankers for their part in the financial crisis.

Speaking on the BBC’s Newsnight programme on Tuesday, Dr Rowan Williams said that bankers, politicians and even the Church needed to repent for their complicity in the culture of excess that triggered the crisis.

These Empty Apology laws would seem simply to guarantee that such public expressions will mean precisely nothing.  My guess is that the banksters have been thinking ahead.

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1:36:22 I think the idea was to facilitate industry consolidation. … Charlie’s not here, but an interesting factoid is, Chairman Bernanke’s 2nd most cited paper on the Great Depression is actually one that compares the business cycle in the United States and Canada in the 1930s. And the contraction activity was much more gradual [in Canada]. The reason? Canada didn’t have bank failures, because Canada had a consolidated banking system. - AEI¹ Resident Fellow Vincent Reinhart, Oct 2, 2008

So this is a bit of shameless self-promotion for Doom’s new transcript of 2 hours worth of battle chatter at the American Enterprise Institute a couple of weeks after Lehman’s collapse a year ago tomorrow.

Meanwhile the Mothership is patting itself on the back because Canada hasn’t lost any banks so far this time either, …

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He said he had never played an active role in the companies, "so it was hardly something that was top of mind." - CBC report¹ on Canada’s Minister of National Defence — "Ethics commissioner Mary Dawson called the issue a ’serious contravention’ of the Conflict of Interest Act."

Meanwhile, the other guy who destroyed the Progressive Conservative Party is confident² that his place in history is secure.

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The poll suggests the less education a person has, the more they toss and turn at night, fretting over their financial future. // About 33 per cent of those without a university degree report losing sleep this way. [1]

‘Tis the (silly) season.  The only ignoramuses are worried about the downturn meme was all over CBC 1’s World Report package at 8AM AT.  Never underestimate the propaganda value of some random statistical artifact on a slow news day.

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“Any comment in those files can be pursued by the gentleman’s attorney about what was intended, what it means,” said Allan Grody, president of the New York-based risk management consultancy Financial InterGroup and a former professor of risk management at NYU’s Stern School of Business. “Worlds not though to be damaging or of concern when one fills out a profile of an individual, in light of a prosecution for criminal behavior can take on new meaning.” [1]

So now you know

What I’ve been trying to do today is work through a psychological analysis of Molloy, Malone Dies and The Unnamable, but maybe I should just keep blogging.

If this isn’t first and foremost exploiting America’s law enforcement and criminal justice resources in aid of a business purpose then I’m the *&#^% Queen of England.

The final settlement is likely to include a fine, and a prohibition against working in this area in the future, Grody said.

“If the young gentleman is smart, he’ll work to avoid being banned from the securities industry,” he said. “But he will certainly be kept away from doing anything having to do with high speed electronic trading. I think that will be a good outcome.”

11 across: the State in the service of the Corporation (7 letters, begins "f")

… of course, if you’ve got a genuine complaint about someone taking your intellectual property,[2] the civil courts work just great

Microsoft was on Wednesday ordered to modify the main versions of its Word program for creating documents and pay $240m for infringing on a patent held by a small Toronto company called i4i.

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