I never thought the deal where Sam Zell bought Tribune was fair, because it relied on the savings of workers in their ESOP [employee stock ownership plan].? Here is what I wrote in the past:
- Your Money or Your Job! (Or Both!)
- Tribunes are to Promote Justice among Common Men
- Tribunes are to Promote Justice among Common Men, Redux
Well, now Mr. Zell is getting sued by Tribune employees, and he deserves it.? Zell could not have bought out Tribune without the support of the ESOP, but his actions harmed the economic interests of the ESOP, and thus the employees.? Many will agree to anything if their job is threatened.? The semi-coercion plus failure will not work out well for Mr. Zell.
-=-==–==–==–==-=–=-==-=-=-=-=–=-=-=
And, speaking of not working out well, we have the NYT Op-ed on AIG.? I say good, let AIG, the Fed and the Treasury disclose what they said during the bailout.? We already know that many areas of AIG would have gone under without the bailout.? Though the Treasury Secretary has changed his tune on why AIG was bailed out, originally it was only and ostensibly for AIGFP, the derivatives subsidiary.
Let AIG and the Government reveal what they said? regarding the bailout.? The American people deserve to know it.
The Science of Debt Dependent Saturation Macroeconomics
Terminal Quantum Fractal Progressions – Identifying the Wilshire’s 11 October 2007 Secondary High
The exact high for the Wilshire on October 11 2007 was prospectively predicted by the science of saturation macroeconomics. The science of saturation macroeconomics as defined by quantum fractal growth and decay of macroeconomic system’s countervailing debt, on the one hand, and commodity and equity, on the other ‘investment’ instruments has now retrospectively indicated the final secondary high for the Wilshire.
Speculative money rotating from equity and commodity speculative instrument that flowed into global debt instruments driving the US ten year note, as way of a sovereign debt proxy, to its 150 year low at 2.04 percent on 18 December 2008 well matched the Wilshire’s initial nodal low at 7400 on 21 December 2008. With the 150 year low long term interest, speculative money began flowing back into equities which had lateral growth and thereafter downward growth until 6 March 2009, completing a 7/16 week x/2-2.5x fractal sequence.
With the US central bank’s counterfeiting 350 billion dollars in the short term treasury market to incrementally absorb short term US roll over debt that had insufficient real economy buyers, the US equity market and the entire global equity markets achieved growth valuations beyond that which would have occurred if competing short term debt instruments were placed on the existing capital market table.
Since 6 March 2009 the Wilshire completed a fractal sequence formed by the earlier 7/16 week first and second fractal series. A 7/16/19 week fractal series completed the first of two final fractal growth periods.
The 19 weeks of the 7/16/19 first fractal series were composed of a daily fractal series of 17/38/35 days :: x/2-2.5x/2x with a nonlinear drop seen on the minute unit charts on the 38th day of the second fractal.
The second fractal series is composed currently of 6/12/7 weeks :: x/2x/1x or 27/55/33 days. The 27th day of the third fractal is nested in a cup 5 days from the likely secondary Wilshire high on 4 December and the secondary high on 16 December 2009.
Since 9 December 2009 the Wilshire has followed a 15/32/15 hour :: x/2-2.5x/x fractal growth series ending on Friday 18 December 2009 with the characteristic nonlinear drop on the 31st hour of the second fractal. The final 15 hour is composed of a 3/8/6 hour fractal x/2.5x/2x or a 12/24/20 :: x/2x/1.6x 15 minute fractal.
On Friday 18 December the Wilshire reached its second and (relatively) final lower high of a 27/55/27 day x/2x/x fractal followed by a 15/32/15 hour : x/2x/x
fractal. Incipient nonlinearity of a major degree is expected on Monday 21 December 2009.
Possible fractal decay progressions using the 6/12/7 week fractal sequence (decay is confluent with and begins in terminal apical growth) are: 6/12/12 weeks or 6/12/12/9 weeks with the third fractal (of the latter fractal series) 12th a final third much lower high.
Look, ya gotta speak English around here. If you can’t convey it so that I understand it, most people will be horribly lost.
I avoid jargon at my blog, hard as that is to do — and I know many types of jargon — actuarial, fixed income, economic, Christian, Calvinist, etc. Let average people understand what you say.
Can’t disagree with anything you said on Zell/Tribune– but your statement is incomplete. Tribune (and its employees) were going under before Zell got involved. It would be more accurate to call the whole deal a hail marry pass.
On AIG … disclosure is a fine idea, but don’t we pretty much know (but can’t prove) the real reason for bailing out AIG? It was to bail out Goldman Sachs. Henry Paulson’s motive is obvious. Tim Geithner no doubt wanted to follow Gerald Corrigan — who “retired” from the NY Fed and got a nice paying gig “working” for Goldman Sachs.
A University of Michigan study confirms the obvious with AIG: firms with lots of political connections got more bailout dollars than those who just focused on doing their business properly.
http://www.bus.umich.edu/NewsRoom/ArticleDisplay.asp?news_id=18270
Also, firms who’s executives had previously served at the Federal Reserve got more TARP money than those who played fair.
My post was in English, and so is the paper from UMichigan
But you chose to reply only to the “quantum fractal decay” comment?
Greg, I had you tagged for later response, my apologies. My e-mail box overflows. I was responding to the fractalist only in my earlier comment.
It is likely that AIG was bailed out not only to protect Goldman, but many other investment banks. A lesser reason in hindsight, but was not mentioned at the time was that all of AIG’s domestic life and mortgage insurance companies would have failed. There may have been cross-guarantees with some of the domestic P&C companies.
But at the time, all the government cared about was the derivative markets and investment banks.
Yes, connections help — I’ve argued for a while that the Treasury has been captured by those that they regulate.
Finally, on Zell/Tribune — this is what stinks about ESOPs. When you lose, you lose everything. Zell can’t be faulted for that, but I think the employees ended up losing more as a result.
Again, apologies for any misunderstanding created through my earlier comment.
David, thank you for the reply and apologies for the confusion. You have no obligation to reply to anyone unless you choose to, I thought it was strange that (I thought) you replied to the fractal thing only.
As for AIG, I have to defer to your superior knowledge on whether AIG’s insurance groups would have failed — but for this issue it doesn’t matter. Assuming there was 100% certainty that they would fail — they were not and are not under the Fed’s direction. They are not in the Treasuries domain either — unless and until the state authorities cry uncle first and request help. Henry Paulson was completely out of his jurisdiction
As for who benefited from the illegal bailout, you are right that a number of banks benefited. But Goldman was the biggest beneficiary — and at least according to Goldman itself, they were in no danger of failure. The 2nd, 3rd and 5th largest beneficiaries were non US banks … again not the Fed’s problem or domain unless/until the foreign governments requested help. While many foreign banks had trouble getting USD financing for their mortgage portfolios, not one asked for help related to AIG (and even in hindsight, none of the banks claim to have been “saved” by Paulson/Geithner’s illegal action).
The prime beneficiary of Fed bailout of a **non bank / insurance company** was Goldman Sachs, and they supposedly didn’t even need saving (according to Goldman itself).
Either Goldman Sach’s CEO has violated Sarbanes Oxley laws multiple times, or else the Treasury / Fed had no reason to intervene in something that was clearly out of their jurisdiction.
The only “bank” CEO present at the Fed for the AIG negotiations was Lloyd Blankfein — the other banks didn’t have enough exposure to require their presence. If other banks actually had lots of exposure (as Paulson/Geithner claimed later after they got caught), then why weren’t they present?
I don’t think the Treasury / Fed should have bailed out Lehman or Bear (probably should have orchestrated a more “controlled collapse” for Lehman). But those firms were directly entangled with the banking industry, cleared trades through/with the Fed, and were both primary dealers.
You can’t credibly argue the Treasury/Fed should intervene in a state regulated insurance company and then say it shouldn’t intervene in a primary dealer collapse. The Treasury/Fed really has no business “saving” any of the above — only in limiting systemic damage from such a collapse
AIG was nothing but a vehicle Paulson used to bail out his old buddies, without Goldman having to admit they are just as insolvent as all the other banks. No doubt the remaining bankers at Goldman knew lots of dirt on Paulson’s AIG involvement while he was still CEO at Goldman. Paulson was probably saving his own rear end too.
Was Geithner promised (informally of course) a lucrative job at Goldman once he leaves “public” office? Many many former NY Fed employees now work at Goldman for many times their Fed pay — so it is hardly a leap to think Geithner hoped for the same treatment if he acted in Goldman’s interests.
Before Paulson, lots of firms could and did fail – both banks and primary dealers. Continental Illinois failed (formally), while lots of other banks had exposure to Penn Square — but the then Treasury Secretary managed to “save” the banking system without playing favorites and without saving poorly managed banks.
And why did Paulson essentially blackmail Ken Lewis into bailing out Goldman buddy John Thain (oh sorry, I guess he was bailing out Merril Lynch)? Since when does the Treasury Secretary decide who is CEO of a private bank? There is even a clause in the US Constitution prohibiting the seizure of private property — no way anyone can argue Paulson was within the law there either.
I don’t care if Paulson is ever held legally accountable for his actions (which were probably not legal and definitely not ethical) — but for the sake of the banking system having any future, all of Paulson (and Geithner’s) dirty laundry needs to come out, and in all probability Goldman Sachs needs to return ill gotten gains to the US taxpayer.
After Richard Nixon, the country learned the President is not above the law. Treasury Secretaries shouldn’t be above the law either.
Greg, I backed none of the bailouts — read what I wrote at the time. I did suggest better ways of doing them if they had to, but the Treasury has been captured by the investment banks and money managers.