Top Diaries

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html

"First, the notion that restructuring the banks would have been "more expensive" is, well, simply false."

In practice, costs of FDIC takeovers have averaged 25% of asset base.
Here is what happened in the Swedish program Krugman cites as a model

Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt's conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation's 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

So a bank restructuring does not increase sovereign liabilities at all, if you do it by the book.

But in practice, that is hard to do - and Krugman specifically suggests he leans towards paying off all bonds. Imagine the USA telling China, singapore and Gulf oil sovereign investors that their bonds are worthless. Interesting theory. In any case defaulting on bank debt is not what Krugman proposed

Second, failing to restructure the banks kept the upper management in place that created the panic in the first place

BOA and Citi management were forced out.

Third, restructuring is not at all practically or technically difficult. It is a completely routine operation that every financial regulator in the OECD had experience with within living memory at the start of the crash.

Size makes a difference. The RTC restructuring of a much smaller set of smaller US banks cost a fortune and took years. Krugman's error was assuming restructuring of $100M banks was the same as $1T banks.
Citibank with 1.2trillion is assets is not the same as the East River Bend Community bank - or even Wachovia.

Fourth, taking banks into receivership is precisely what Ireland did not do
I don;t think that's accurate - they did so in a chaotic manner. But I note again that the US at the time of the crisis had no legal framework for closing down large non-bank financial institutions like citigroup. The FDIC was designed for domestic banks and had not been updated to post Citibank realities.

http://curiouscapitalist.blogs.time.com/2009/03/09/how-much-of-citigroup-could-the-fdic-actually-tak e-over/

This is not really rocket science and Krugman's willful refusal to take it into account is sad.

by rootless2 on Mon May 23rd, 2011 at 10:08:38 PM EST
[ Parent ]

Re: Geithner was correct (4.00 / 3)

Size makes a difference.

No, the part of the operation that depends on size is not time-critical.

I don;t think that's accurate - they did so in a chaotic manner.

Now, this is an empirically testable claim. I cannot find any indication anywhere that Ireland has taken any bank other than Anglo-Irish into receivership. If you are better informed than I, please have the kindness to divulge your sources.

But I note again that the US at the time of the crisis had no legal framework for closing down large non-bank financial institutions like citigroup.

Ch. 7 bankruptcy works fine for everything that's not a bank and that you don't need to save. Ch. 11 works fine for anything that's not a bank and that you need to save. Unlike the automakers, none of these institutions had large corporate pension plans that you needed to save from haircuts. (They may have had generous pension plans, but not of the sort you want to save.)

Bondholders to an insolvent institution have no right to expect anything from the state. Depositors do. But if you have depositors you're under FDIC jurisdiction, unless there have been some even more appalling cock-ups in the US legislature than I was aware of. Though after thirty years of uninterrupted right-wing rule, that's certainly not a possibility I am prepared to discount...

The FDIC was designed for domestic banks and had not been updated to post Citibank realities.

Non-domestic operations are - what is the word - ah, yes "not your problem."

As a citizen of the recipient continent I appreciate your generosity on behalf of your fellow citizens. But as an economist I really must question the wisdom of bailing out British and German banks with the full faith and credit of the American dollar.

I can see why you may have wanted to honour debts to China and OPEC (Singapore, not so much). But (1) China holds mostly sovereign bonds and (2) as you yourself point out, the assets were not so shitty that those debt could not be paid after wiping out the European creditors. Who are, well, not your problem, and whom there is no compelling geopolitical reason - other than class solidarity - for an American financial regulator to keep alive.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 04:47:02 AM EST
[ Parent ]

No, the part of the operation that depends on size is not time-critical.

I can't imagine how you argue this in such a context - with many billions of CDS's floating around, a vast pile of unstable counterparty wacky contracts all falling all over the world and you think that winding down Citigroup+BOA+WellFargo could have been done in a deliberative manner?

Now, this is an empirically testable claim. I cannot find any indication anywhere that Ireland has taken any bank other than Anglo-Irish into receivership. If you are better informed than I, please have the kindness to divulge your sources.

"Four of the six banks are already fully, or mostly, nationalized."
http://online.wsj.com/article/SB10001424052748703806304576234180828120692.html

In the other thread you claim this is not receivership, but I think you are splitting hairs. The banks have been effectively nationalized - as Krugman suggested. The terms may have sucked, but Krugman didn't discuss terms. And as noted, the Swedish rescue that Krugman cites as a model involved full payment of bank debts - something Krugman specifically mentions. "Receivership" implies nothing about the consequences to bondholders although in FDIC practice bondholders are getting paid. If Krugman had proposed a massive writedown of senior bondholders, that would have been an interestingly radical proposal - but it's not the proposal he made and it would have been dismissed.

As for C7 bankruptcy, you are mixing moral concerns with practical ones - as if the banking system were based on some coherent moral system in the first place. It is not. And your proposals are grossly impractical ones that the civil servants running the central bank would have been irresponsible to consider. Among the FRB concerns was that AIG bankruptcy would trigger forced liquidation of hundreds of billions of dollars of pension assets insured by AIG. It's all very well to talk tough, but the consequences of allowing the finance sector to become both too large and too centralized cannot be evaded by just pretending it didn't happen.

From my point of view, the international banking system starts as a morally indefensible and economically damaging system of capital misallocation. One could and probably should argue for a radical change in the system, but to pretend that there is an "ordinary" moral and legal code governing this system that could have been applied with justice and without catastrophic consequences seems to me to be a very peculiar analysis indeed.

Non-domestic operations are - what is the word - ah, yes "not your problem."

Maybe in some theory, but not in the actual world. The idea that US regulators could or should have acted in blithe disregard of the effects of their actions on other countries makes no sense and certainly is not without enormous legal repercussions. Given the sheer irresponsibility of the ECB, the FRB was the beacon of sanity.

by rootless2 on Tue May 24th, 2011 at 09:29:25 AM EST
[ Parent ]

Re: Geithner was correct (4.00 / 2)

I can't imagine how you argue this in such a context - with many billions of CDS's floating around,

Resolving them is not an urgent matter. Relieving the insolvent institutions of their commercial banking functions is the urgent matter in a bank resolution. Once you've done that, you can let the structured products division rot in a bankruptcy court somewhere for however long it takes the lawyers to go through it.

"Four of the six banks are already fully, or mostly, nationalized."
http://online.wsj.com/article/SB10001424052748703806304576234180828120692.html

"Nationalisation" and "bankruptcy" are not the same thing.

Also, when did the Wall Street Journal become a paper of record?

In the other thread you claim this is not receivership, but I think you are splitting hairs.

No, I'm splitting haircuts. That is the difference between a bankruptcy and a bailout.

And as noted, the Swedish rescue that Krugman cites as a model involved full payment of bank debts - something Krugman specifically mentions.

I cannot speak to Krugman's position - I find that he has taken several different ones over the course of the crisis. But Stiglitz has never been in favour of guaranteeing the liabilities of insolvent institutions. In point of fact, his single most concrete policy recommendation for countries facing financial crises is to decapitate bank bondholders sooner rather than later (this is the sort of stuff he learned watching Summers and Rubin fuck over most of Asia, so he knows what he's talking about...).

As for C7 bankruptcy, you are mixing moral concerns with practical ones

No, I am not.

The practical imperatives are

Ensure the continued operation of the clearing system.
Restore commercial banking functions as soon as practical. This is most easily done by splitting clearing and commercial functions off into Good Banks, and capitalising them if that is required.
Ensure that any resulting exchange rate adjustments happen on your own time table, rather than the money markets'. This was not an issue for the US this time around, though.
Ring-fence and proceed to write off the bad debt, so it does not create an unnecessary drag on the productive economy.
Decapitate the management of insolvent institutions, because they have proven themselves incompetent. It is simply not possible for a bank to become insolvent unless someone, somewhere in the organisation has been criminally negligent.

All of this is completely standard due regulatory diligence. There is nothing mysterious or difficult about any of it.

And your proposals are grossly impractical ones

They are completely standard, run-of-the-mill bank resolutions, such as are undertaken every year somewhere in the OECD. The size of the total organisation does not matter to the difficulty of doing this, only the size of the clearing and commercial functions (which were and remain comparatively small in the relevant banks).

Among the FRB concerns was that AIG bankruptcy would trigger forced liquidation of hundreds of billions of dollars of pension assets insured by AIG.

There is nothing wrong with insolvent private pension funds that cannot be solved with better public pensions.

Now, you may argue that the administration had better things to spend its political capital on than pension reform. But that is not self-evident, and so should not be taken as read.

Less radically, redefine the rules for when pension funds have to liquidate AIG-insured assets, in order to prevent distress selling. While not precisely routine it would not have been unprecedented, and it would not have put the federal government on the hook for Morgan's toxic waste.

It's all very well to talk tough, but the consequences of allowing the finance sector to become both too large and too centralized cannot be evaded by just pretending it didn't happen.

No, it actually can.

It may be politically unpalatable to do so, but then you need to be making a case based on subjective political priorities rather than attempt to make a case based on economic realities. Because there was no economic reality that prevented anybody from putting AIG through ordinary bankruptcy proceedings.

The idea that US regulators could or should have acted in blithe disregard of the effects of their actions on other countries makes no sense and certainly is not without enormous legal repercussions.

Of course they shouldn't act with disregard for the consequences in other countries. But fucking over Deutche Bank would not be a disservice to the European Union. Quite the contrary, actually.

And while internationalism is a commendable attitude, the fact remains that the US government has a responsibility to look out for the interests of its own citizens before and beyond the interests of its foreign creditors. Failing to live up to that responsibility is not commendable.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 10:57:22 AM EST
[ Parent ]

Resolving them is not an urgent matter. Relieving the insolvent institutions of their commercial banking functions is the urgent matter in a bank resolution. Once you've done that, you can let the structured products division rot in a bankruptcy court somewhere for however long it takes the lawyers to go through it.

Nice theory but there were actually laws involving failure to promptly pay on those obligations. In practice, those divisions belong to the same legal entity.

I cannot speak to Krugman's position - I find that he has taken several different ones over the course of the crisis.

Krugman NEVER called for defaulting on bondholder debt.

But Stiglitz has never been in favour of guaranteeing the liabilities of insolvent institutions.

So how was his "temporary nationalization" going to work?

In point of fact, his single most concrete policy recommendation for countries facing financial crises is to decapitate bank bondholders sooner rather than later (this is the sort of stuff he learned watching Summers and Rubin fuck over most of Asia, so he knows what he's talking about...).

First, he would not have had to learn that watching Summers and Rubin, he could have seen what his own institution, the IMF was doing to third world nations. It's kind of appalling how easily those buried in the sewer are able to sell the story that they smell sweet and it's only someone else at fault for the odor. It's remarkable that Stiglitz who won a nobel prize for pretending that Kenyan sharecroppers are exploited only due to information asymmetry has been able to get away with his handwaving approach for so long - or it would be remarkable if the field had any intellectual integrity at all.

Second, Stiglitz did not explain how he expected "temporary nationalization" to work, but since the US was able to avoid nationalization without assuming bondholders debt and by making shareholders take the hit, it's kind of beside the point.

No, it actually can.
It may be politically unpalatable to do so, but then you need to be making a case based on subjective political priorities rather than attempt to make a case based on economic realities. Because there was no economic reality that prevented anybody from putting AIG through ordinary bankruptcy proceedings.

What is it that distinguishes "economic reality" from "political priority"? Economics takes place in a political context. Certainly the US financial crisis could have been resolved in a different way if Obama had declared the Supreme Soviet in session and sent in the army, but within the political system of the US, what you propose would have caused catastrophe.

Of course they shouldn't act with disregard for the consequences in other countries. But fucking over Deutche Bank would not be a disservice to the European Union. Quite the contrary, actually.

Well, the US regulators and officials did assume that Germany would not reboot under the Bavarian Soviet Republic anytime soon, but you correctly point out that if the US had been willing create financial collapse in the EU and engage is open hostility with the German government, they could have chosen to do so.

And while internationalism is a commendable attitude, the fact remains that the US government has a responsibility to look out for the interests of its own citizens before and beyond the interests of its foreign creditors. Failing to live up to that responsibility is not commendable.

And so they chose not to take the entire world economy down at once or take the risk of such an event.

Look, one can make a consistent argument for world revolution or one can make a consistent argument for reform within the existing system. But if you are going to champion such institutions as bankruptcy courts, you cannot do so, call for massive abrogation of international agreements and conventions as well as domestic laws and political realities while remaining coherent.

by rootless2 on Tue May 24th, 2011 at 11:30:13 AM EST
[ Parent ]

Re: Geithner was correct (4.00 / 2)

Nice theory but there were actually laws involving failure to promptly pay on those obligations.

Not Uncle Sam's problem. The Bad Bank retains an equity stake in the Good Bank, minus any sovereign capitalisation. If the creditors want prompt payment, then they are welcome to accept firesale liquidation of the Bad Bank, rather than hold out for the best possible price. I frankly don't give a shit - those creditors are unimportant.

In practice, those divisions belong to the same legal entity.

Unless the rules for FDIC-insured deposits have been rewritten by some Republican who was high on acid while I wasn't looking (which I cannot, of course, rule out), there are special rules for everything important.

I just have a somewhat narrower definition than you seem to have of what bank activities are important.

So how was his "temporary nationalization" going to work?

Like this.

First, he would not have had to learn that watching Summers and Rubin, he could have seen what his own institution, the IMF was doing to third world nations.

Well, he was at the World Bank. But let's not let little details like facts and historical events get in the way of a good rant...

It's remarkable that Stiglitz who won a nobel prize for pretending that Kenyan sharecroppers are exploited only due to information asymmetry has been able to get away with his handwaving approach for so long - or it would be remarkable if the field had any intellectual integrity at all.

Eh, beats Rubin's, Summers, Geithner's and Greenspan's performance. Stiglitz is a centre-left-ish economist, as orthodox economists go. That's more than can be said for any of the above.

What is it that distinguishes "economic reality" from "political priority"?

You can't print hard currency, and you cannot conjure up steel by congressional fiat. To name two real economic constraints.

but within the political system of the US, what you propose would have caused catastrophe.

Yes, if you assume as a matter of course that J.P. Morgan and AIG are above the law, then it is impossible to put J.P. Morgan and AIG through bankruptcy like you would any other insolvent bunch of chronic fuck-ups and corrupt criminals.

Making that sort of assumptions without justifying them is called "begging the question."

but you correctly point out that if the US had been willing create financial collapse in the EU and engage is open hostility with the German government, they could have chosen to do so.

What hostility to the German government? "German banks" and "German government" are not, quite, coterminous, whatever the situation may be on your side of the Pond.

And so they chose not to take the entire world economy down at once or take the risk of such an event.

There was no such risk. AIG had no creditors of any importance to the global clearing system, which is what can take out the global economy. German and British stupidity and incompetence might have taken out the German and British economies, but there was no material contagion risk beyond that.

But if you are going to champion such institutions as bankruptcy courts, you cannot do so, call for massive abrogation of international agreements

And those would be what agreements, precisely? I do not recall any international treaty specifying that a country is liable for the bad bonds of insolvent private firms within that country.

But perhaps you are better informed than I?

conventions as well as domestic laws and political realities while remaining coherent.

Then you need to make a case based on domestic law and political reality, instead of begging that question. Simply saying "bondholders can't be touched. Morgan can't be touched. Goldman can't be touched," and pretending that these are self-evident facts of life is uncompelling.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 11:54:23 AM EST
[ Parent ]

Unless the rules for FDIC-insured deposits have been rewritten by some Republican who was high on acid while I wasn't looking (which I cannot, of course, rule out), there are special rules for everything important.

Until the passage of the Financial Reform bill there was no legal authority to unwind non-banks like Citigroup and AIG and selectively abrogate their obligations.

And you may not give a shit about the repercussions of blowing off e.g. China on senior bonds or the interesting legal question of deciding how pay some senior bondholders and not others, but that doesn't mean such questions go away. Clearly, even Krugman understood that what he proposed involved making the US government assume responsibility for a large chunk of bank debt. My argument is that Geithner's policy, which avoided such a route was faster/cheaper/better. You appear to be arguing that at least Stiglitz was really proposing a radical wipe out of much of the banking system - but I certainly Krugman was not and Stiglitz's claim that nationalization would be temporary and no big deal indicates he was not either.

What hostility to the German government? "German banks" and "German government" are not, quite, coterminous, whatever the situation may be on your side of the Pond

The willingness of the German government to allow major German banks to suffer the consequences of their stupid lending is something I had not learned about until just this moment. Can you point me to a fuller explanation?

I'm not at all arguing Morgan is untouchable - I'm arguing that Geithner's approach which avoided the US taking responsibility for bank debt was a lot smarter and cheaper than the nationalization schemes proposed by the supposed leftists.

There was no such risk. AIG had no creditors of any importance to the global clearing system, which is what can take out the global economy. German and British stupidity and incompetence might have taken out the German and British economies, but there was no material contagion risk beyond that.

If I'm reading this correctly, you are asserting that collapse of the 3rd and 5th biggest economies in the world in the midst of a global bank panic and economic collapse would not have created risk of material contagion. Is that really what you want to assert?

SG and the French banking regulator informed FRBNY that any delay in clearing AIG CDS would trigger default triggering bankruptcy. That would have triggered legal requirement for pension funds to liquidate holdings - in the middle of a panic - which would have put a large number of US pension funds into bankruptcy. This is what "systematically important" means - not that one cares deeply about Goldman-Sachs, but that the pensions of millions of ordinary people would be destroyed by financial bullshit.

by rootless2 on Tue May 24th, 2011 at 12:17:56 PM EST
[ Parent ]

Until the passage of the Financial Reform bill there was no legal authority to unwind non-banks like Citigroup and AIG and selectively abrogate their obligations.

There is no selective abrogation involved in a Good Bank/Bad Bank resolution. The Bad Bank retains full equity stake (minus any sovereign buyout to capitalise the Good Bank), so there is no confiscation involved.

And you may not give a shit about the repercussions of blowing off e.g. China on senior bonds

You have made that claim several times. I have yet to see you actually provide a reference. OPEC, I can believe, but China's exposure to US toxic waste is not common knowledge.

or the interesting legal question of deciding how pay some senior bondholders and not others,

Uh, some bondholders get a free handout, because they are important. That's not a basis for complaint by those who do not get a free handout. The unimportant ones (which is the vast, vast majority) are paid in the perfectly ordinary order of seniority.

and Stiglitz's claim that nationalization would be temporary and no big deal indicates he was not either.

Or that he does not regard bondholders as important to the American political economy.

That may be false as a matter of political tactics, but it is certainly correct as a matter of securing the material provisioning of American society.

The willingness of the German government to allow major German banks to suffer the consequences of their stupid lending is something I had not learned about until just this moment. Can you point me to a fuller explanation?

Again, why is that the American taxpayer's problem? How much is Angela Merkel's approval worth?

If I'm reading this correctly, you are asserting that collapse of the 3rd and 5th biggest economies in the world in the midst of a global bank panic and economic collapse would not have created risk of material contagion. Is that really what you want to assert?

The British economy did not collapse? In what alternate version of history?

The German economy didn't only because they've exported the collapse to the PIGS. I have yet to see any evidence that this is preferable in terms of minimising and alleviating real hardship.

[Bankruptcy] would have triggered legal requirement for pension funds to liquidate holdings

Why?

Inasmuch as those holdings were AIG securities, yes, I can see why that would be a problem. But my understanding is that AIG was simply insuring those securities the pension funds held. In that case, it would be a purely domestic US political decision to force the pension funds to sell.

(Incidentally, the pension funds could have been bailed out instead of AIG. Unless this was Unpossible for some reason?)

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 12:35:23 PM EST
[ Parent ]

http://www.sigtarp.gov/reports/audit/2009/Factors_Affecting_Efforts_to_Limit_Payments_to_AIG_Counter parties.pdf

See page 10 for an introduction - and recall that the author of this report was deeply hostile to Treasury and FRB management.

and for example
http://china-wire.org/?p=3300

and
http://www.sinocast.com/readbeatarticle.do?id=54000

by rootless2 on Tue May 24th, 2011 at 12:53:37 PM EST
[ Parent ]

The first does not speak of AIG exposure in any country that the US had any material reason to bail out (the only foreign country named at all is France, and given the French stance it would have been perfectly reasonable to tell them to go whistle for their money altogether).

The second talks about China purchasing common stock. I was not aware that you believed it the US Treasury's job to place a floor under the price of any common stock owned by a foreign sovereign?

The third is about quasi-sovereign Fannie and Freddie bonds.

What, precisely, is this supposed to prove, again?

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 01:03:23 PM EST
[ Parent ]

i'm short on time, but let's go over the AIG

AIG owed SG
SG threatened and the French government backed them up that any attempt at delay or haircut would trigger default
FRB noted that AIG in bankruptcy would trigger automatic requirements to dump "wrapped" pension funds at many US companies plus additional problems in money market.

(1) -> (2) -> (3)

by rootless2 on Tue May 24th, 2011 at 01:14:33 PM EST
[ Parent ]

So bail out the pension funds instead of bailing out AIG.

That has to be cheaper: You'll effectively be guaranteeing only a fraction of the AIG portfolio.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 04:11:41 PM EST
[ Parent ]

http://www.gbophb.org/sri_funds/articles/WhatIsaStableValueFund.asp

No you don't get it: AIG offered insurance

and your solution has to be something that the Fed could have done - quickly.

by rootless2 on Tue May 24th, 2011 at 04:40:31 PM EST
[ Parent ]

They called it insurance, it wasn't.

And AIG was undercapitalised for it.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue May 24th, 2011 at 04:57:40 PM EST
[ Parent ]

This is not the CDS but a secondary effect. AIG offered insurance, real insurance, to so-called "stable funds" which are long term investors like pension funds. The insurance covers things like long term interest rate changes. This is old style and regulated insurance. FRB lawyers said that if AIG defaulted on CDS and was forced into bankruptcy, the regulation on the pension funds would trigger because they funds would be relying on insurance from a bankrupt firm event though, in theory, AIGFP was separate from AIG's regulated insurance subsidiaries. Thus, companies like vanguard which managed pensions for IBM etc. would have to liquidate pension holdings in a hurry - which, of course, would have further panicked the markets.

by rootless2 on Tue May 24th, 2011 at 05:18:00 PM EST
[ Parent ]

So offer the funds to transfer all their honest, above-board, regulated insurance to the Fed, at the same terms.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 05:32:21 PM EST
[ Parent ]

So simple (none / 0)

They could have rewritten all the state pension regulations at the same time.

Not only would that have been simple on its own, but consider that they had the assistance of the superbly competent Bush administration.

What you seem to be stuck on is a belief that the financial system and laws (a) made sense (b) were just and (c) gave regulators infinite span. However, it appears actually that the banking system is an organized system of repression in which the powerful elements of society exercise social control and expropriate wealth from the rest of society and what limited justice and sense that has been imposed over time and via bitter social struggles on that system is far far from perfect.

by rootless2 on Tue May 24th, 2011 at 06:01:17 PM EST
[ Parent ]

Re: So simple (none / 0)

What you seem to be stuck on is a belief that the financial system and laws (a) made sense (b) were just and (c) gave regulators infinite span.

No, I just want to force you to make a clear and above-board distinction between the best policy available to a monetary production economy and the best policy available to a third-wayer with shaky parliamentary support. You keep hop-skipping between the two - whenever you're pressured you retreat to "but that's politically difficult," and whenever you feel emboldened you return to "so what happened is the best that could possibly have been done."

You framed the discussion in terms of the former, so I responded in terms of the former. If you want to have a discussion of the latter nature, then I will have to bow out, since that involves a number of trade-offs that touch upon policy areas that I have neither experience nor expertise in.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 06:29:35 PM EST
[ Parent ]

World bank (none / 0)

"Well, he was at the World Bank. But let's not let little details like facts and historical events get in the way of a good rant.."

My mistake. It was the world bank, which we know has cherished the humanity, dignity, and prosperity, of all people, no matter where they were and which world bank project robbed them of their living, stole their land, saddled their nation with absurd debt for projects that destroyed the environment and enriched off shore banks and arms dealers. Mea culpa.

by rootless2 on Tue May 24th, 2011 at 12:21:18 PM EST
[ Parent ]

Re: World bank (none / 1)

If you want to play "six degrees of separation from the World Bank," we can do that.

Summers, zero. Geithner, one. Rubin and Bubbles, a half.

And I'll note that whatever the World Bank's crimes during Stiglitz' tenure, they pale in comparison to the way Summers, Rubin and Greenspan fucked over Russia. The only things left standing when they were done were Gazprom and the secret police.

Now let's play six degrees of separation from the Koch Brothers (because Goldman and Morgan would be too easy).

Your serve.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 05:51:38 PM EST
[ Parent ]

Oh please. Which part of the Russia policy under Clinton don't you like? The part during the period when Stiglitz was head of Clinton's council of economic advisors or the part when Stiglitz was head of the World Bank?

Oh, the policy was probably designed by a 3rd rank employee within Treasury!?? Come on.

If you want to blame Russia or East asia crisis on someone, how about the Scienes Po graduate who imposed what remains ECB orthodoxy during his tenure as IMF managing director?

by rootless2 on Tue May 24th, 2011 at 06:19:55 PM EST
[ Parent ]

Oh please. Which part of the Russia policy under Clinton don't you like?

The part where they sent incompetent fuckwit ideologues to Moskva who advised Yeltsin to privatise and deregulate.

Those incompetent fuckwit ideologues have names, and their recommendations are part of the public record. Go look it up.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 06:32:54 PM EST
[ Parent ]

Jeff Sachs? Not a Treasury employee.

by rootless2 on Tue May 24th, 2011 at 09:28:39 PM EST
[ Parent ]

and found described in detail here:

(Google books) Wedel, Shadow Elite, chapter five,

The Privatizers:

"The city was Moscow, the year 1994, and the plans grand: to transform the new Russia." ...

Interested readers may follow the link, then, click on 'Table of contents' and 'chapter five' The Privatizers:

http://books.google.com/books?id=uKYFX3ap-CQC&printsec=frontcover&dq=Shadow+Elite&hl=fr& amp;ei=zCDdTbiFEYaw8gP1wpX8Dw&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCoQ6A EwAA#v=onepage&q&f=false

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed May 25th, 2011 at 11:40:26 AM EST
[ Parent ]

Chubais -Harvard Group Players ... (none / 0)

From the diagram of interrelationships in described in chapter five, (page 115)

CHUBAIS - HARVARD PLAYERS
Interconnections of key actors through organizations (early 1990s)

(key members)

Harvard Institute for International Development:

Andrei Schleifer
Jonathan Hay
Anatoly Chubais
Dmitry Vasiliev
Maxim Boycko

Gore - Chernomyrdin Commission :

Andrei Schleifer
Jonathan Hay
Anatoly Chubais
Dmitry Vasiliev

(Russian) State ¨Property Committee (in Russia the `GKI'):

Andrei Schleifer
Jonathan Hay
Anatoly Chubais
Dmitry Vasiliev
Maxim Boycko

(Russian) Federal Securities Commission (supposed analog to the U.S. S.E.C.) :

Andrei Schleifer
Jonathan Hay
Anatoly Chubais
Dmitry Vasiliev

Russian Privatization Center :

Andrei Schleifer
Jonathan Hay
Anatoly Chubais
Dmitry Vasiliev
Maxim Boycko

First Russian Specialized Depository :
(depository maintains the records of mutual fund investors' holdings)

Andrei Schleifer
Jonathan Hay
Dmitry Vasiliev

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed May 25th, 2011 at 12:05:33 PM EST
[ Parent ]

(from page 117-118) The Shadow Elite
...
Enter Larry Summers
It is highly unlikely that the Chubais-Harvard Partners could have pulled off what they did on the American side without their friend Lawrence (Larry) Summers being highly placed in the U.S. government. Earlier a Harvard faculty member, later president of Harvard, (and still later head of president Obama's National Economic Council), Summers became perfectly positioned to be the partners' patron and protector when Bill Clinton took office in 1993. Having served as chief economist of the World Bank from 1991 to 1993, Summers held the posts of undersecretary, deputy secretary and finally secretary of the Treasury through much of the 1990s. At Treasury, Summers played the principal role in designing U.S. and international economic policies. Even as undersecretary for international affairs, Summers was responsible for designing Treasury's country-assistance strategies and for formulating and implementing international economic policies (7)
Andrei Shleifer was a protogé of Summers and on intimate terms with him. Their relationship began in the 1970s with Summers as Schleifer's mentor and professor (Schleifer credits Summers with inspiring him to study economics) , and continued in walks on the beach at Truro on Cape Cod, where their families vacationed together. In addition to being close friends, the two were co-authors, joint grant recipients, and faculty colleagues and allies at Hravard. Schleifer's wife, Nancy Zimmerman, a specialist in the high-finance area of global, fixed-income securities markets, was frequently consulted by Summers and David Lipton. (Lipton had been Summers's deputy at Treasury responsible for eastern Europe and the former Soviet Union, and earlier Sach's side-kick and vice president of Jeffrey D. Sachs and Associates.) Summers reportedly dubbed the quartet "our little word". (8)
In 1992 Schleifer became project director of the Harvard Institute's Russia project. When a rivalry between Sachs and Schleifer ended their working relationship, to hear observers tell it, the Harvard project became Schleifer's baby, while Sachs continued his relationship with Gaidar. Meanwhile, in 1991 Hay had been named a senior legal advisor to Russia's new privatization agency, the State Property Committee, and the following year he became the Harvard Institute's on-site director in Moscow and the institute's public face there. From here on, Schleifer and Hay were the key drivers of the project. (9)
(by Janine R. Wedel; Basic Books, 2009)

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Wed May 25th, 2011 at 12:40:21 PM EST
[ Parent ]

The FDIC was designed for domestic banks and had not been updated to post Citibank realities.

The EU and its member states individually are not even up to the task of imitating the FDIC, let alone handling "internationally active" banks.

It might be possible to blame the Basel Accords for applying market fundamentalism and quantitative fetishism to "harmonization of capital requirements for internationally active banks". We now have a generation of bank regulators and supervisors who really do believe that "transparency, disclosure and market discipline" is all the supervision you need. "Market failure" and "control fraud" are not part of their language.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue May 24th, 2011 at 05:02:00 AM EST
[ Parent ]

Finanskrisen 1990-1994 i Sverige - Wikipedia

The worldwide effect of the EU banking industry is something that has not really been explored. The US deregulation had bad effects, but DB was the largest issuer of US CDOs during the peak year - and issued many of the worst ones, SG was the biggest owner of AIG credit default swaps as part of its irresponsible "regulatory arbitrage" and so on. The interesting question is what failures of policy and regulation lead to DB investing in businesses selling fraudulent loans in Kansas instead of e.g. wind power plants in Europe.

by rootless2 on Tue May 24th, 2011 at 09:41:48 AM EST
[ Parent ]

Re: Geithner was correct (4.00 / 2)

rootless2:

Here is what happened in the Swedish program Krugman cites as a model
Standing shoulder-to-shoulder with the opposition center-left, Mr. Bildt's conservative government announced that the Swedish state would guarantee all bank deposits and creditors of the nation's 114 banks. Sweden formed a new agency to supervise institutions that needed recapitalization, and another that sold off the assets, mainly real estate, that the banks held as collateral.

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html

Well, the press conference part is correct, and the institutional part too. But it was quite different form the Irish solution.

This is largely form memory, so details might be revised. But there was a program called kapitaltäckningsgarantin that banks had to apply for participating in. During the applicaiton assets and debts were checked and if found to not be long term viable, the bank was bought according to the valuation. Not all banks applied.

In the end among the big banks only Nordbanken (partially governmentally owned before the crisis) and Gota bank was taken over. The good parts were merged to a new Nordbanken, which meant that there was a governmentally owned, guaranteed fresh bank that could start lending.

Checking wikipedia for costs.

Bankernas kreditförluster mellan 1990 och 1993 var, enligt professor Johan Lybeck, 179 miljarder kronor, varav skattebetalarna stod för 65 miljarder - främst till Nordbanken och Götabanken. 50 miljarder kronor fick bankernas ägare stå för genom lägre avkastningar medan bankernas kunder genom sämre sparräntor och högre låneräntor antas fått stå för det resterande.

179 billion SEK in total costs, 65 from taxes to banks, 50 from owners and 64 from the customers of the banks in lower deposit interest and higher loan interests. I think it is important to note here that the cost to the economy is not the same as the cost for the state. A larger cost for the customers would have hit even harder among businesses balancing on the brink during the recession.

The crisis was ended in 1994 and from then on the Swedish government has sold off the stocks in Nordbanken (today after a number of fusions, Nordea).

When it comes to the blanket guarantee (if applied for) I think one should note that the banking of 1990 was probably simpler and better understood by the central bank then todays. Swedens banks had lsot on real estate speculation within the country and the central bank would have known that. Meaning that in the worst case the government ended up with a lot of real estate.

But looking at the costs of the banking crisis misses a big point, the blanket guarantee was not to save banking, it was to save Swedish exports like wood and paper products, metall and electronics from being hurt by their payment system being suspected of going broke. Or so the the central bank says in its post-crisis evaluation, where they also note that Sweden as an export-driven economy in highly competetive areas were in a worse position then for example Norway.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 08:41:49 AM EST
[ Parent ]

The key point is that the Swedish model pushed by Krugman involved paying bondholders.

by rootless2 on Tue May 24th, 2011 at 08:54:41 AM EST
[ Parent ]

The Swedish model as practised by the Swedes involved going through bank balance sheets, sorting out the bits that the government's auditors thought were viable, splitting them off and guaranteeing those. that is substantially different from the Irish model, whatever official noises are made for the benefit of the crack ferrets on the money markets.

Whether that was also the Krugman model is a different question, on which I reserve judgement.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 11:02:04 AM EST
[ Parent ]

Not according to the NYTimes. The government guaranteed first - and there was little risk because bank assets were Swedish real-estate.

by rootless2 on Tue May 24th, 2011 at 11:38:45 AM EST
[ Parent ]

And Izvestia is, of course, a wholly reliable paper of record that always gets such niceties right, and never fall for propaganda...

I'll have to go with askod's expertise over Izvestia's here.

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 11:56:37 AM EST
[ Parent ]

then it should be easy for you to point to a report on senior Swedish bank bondholders who got hammered.

Interestingly enough, bondholders have paid serious penalties in only a few high profile cases during this crisis: Bear-Stearns, Lehman, GM, Chrysler. For CIT (not the same as Citi).

by rootless2 on Tue May 24th, 2011 at 12:37:19 PM EST
[ Parent ]

Banken grundlurade storföretag - Göteborgs Posten

In the end, two big banks were taken over.

Nordbanken was undercapitalised but still had capital. A difference that the stockholders were largely forced to accept (by selling to the government at the governments price). Gota bank on the other hand was broke, so it becomes more interesting. Gota bank was sold for one SEK to Nordbanken so that the government could consolidate its ownership.

Apparently Gota issued bonds to the tune of one billion SEK shortly before they went belly up. As far as I can find out, those investors (including Volvo) tried to sue to retrieve some (on the basis of false information), which clearly implies that they were not compensated.

När bankerna var på obestånd var det inte bara småföretagen och låntagarna som blev lidande. Även Sveriges största placerare, där bland annat Volvo ingår, blev grundlurade av Gota-gruppens moderbolag, Gota AB. Vad som finns kvar av Gota-gruppen ingår numera i Nordbanken.
I ett sista desperat försök att rädda Gota-gruppen undan konkurs, sålde moderbolaget Gota AB 1991 ut företagscertifikat för över en miljard kronor till utvalda placerare. Men denna "konstgjorda andning" räckte inte för att rädda Gota AB. Redan den 30 september 1992 försattes Gota AB i konkurs och mer än 150 placerare fick se sina "säkra" placeringar i Gotacertifikat gå upp i rök!

Unfortunately this is the pre-webb era so this claim from a one-sided 90's style webbpage is all I can find.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 04:59:05 PM EST
[ Parent ]

http://gregip.wordpress.com/2009/01/28/lessons-from-swedens-bad-bank/

Well, for purposes of this discussion, what Krugman believed happened is probably more important than what actually happened - and his description like most others I have seen including the NYT involves a blanket guarantee.

Such a move by the US government would have been foolhardy in the extreme - given the much larger scale and much murkier finances of US banks than the Swedish ones. It would have been nearly as stupid as the Irish move - not quite, because the US like Sweden had the ability to print money.

What amuses me is that the world-wide "progressive" left is so wedded to a narrative in which the "centrist" US government caved in to banking interests, that we can find people even now defending such a foolish approach and insisting that it had some hidden escape clause.

Sweden's first major step to alleviate its crisis was a blanket guarantee of all bank liabilities. This immediately restored depositor and creditor confidence, preventing runs which would have made it impossible for banks to restructure. Under emergency legislation passed by the parliament, the financial authorities could then take over and nationalise any bank on the verge of failing. In the end, Sweden only nationalised two banks--Nordbanken (which had been majority government-owned anyway and was in the process of privatisation) and Gota Bank, which was on the verge of failure with some 37% of its loans non-performing. It also provided substantial aid to the leading savings bank.

And here was Krugman

As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there's a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.
That's what Sweden did in the early 1990s. It's also what we ourselves did after the savings and loan debacle of the Reagan years. And there's no reason we can't do the same thing now.
But the Obama administration, like the Bush administration, apparently wants an easier way out.

http://www.nytimes.com/2009/03/23/opinion/23krugman.html
Note the bogus "many but not all" - there's a way to stop a bank panic - "We're guaranteeing most bank debt". Jesus.

And note the "savings and loan" reference to the Reagan era Resolution Trust Company - a massively expensive transfer of public funds to wall street that Krugman and other "progressive" heroes like Bill Black have tirelessly flogged as a shining moment of public policy.

by rootless2 on Tue May 24th, 2011 at 05:47:11 PM EST
[ Parent ]

Note the bogus "many but not all" - there's a way to stop a bank panic - "We're guaranteeing most bank debt".

No, that's not how you stop the panic.

You stop the panic by taking the bank off the exchange (that's the point of having the SEC), until you have figured out which liabilities you want to guarantee. That should not be difficult or take long (mainly because any liability that is difficult to understand should not be guaranteed).

- Jake

If you only spend 20 minutes of the rest of your life on economics, go spend them here.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue May 24th, 2011 at 05:56:19 PM EST
[ Parent ]

we seem to be talking in circles (none / 0)

but I will note that taking the bank off the exchange does nothing at all about debt crisis and that for all his faults, even Paulson didn't try to protect the shareholders of AIG or Fannie/Freddie or Lehman or BS - or, for that matter, Citi or BOA. Bank equity holders in 2007 lost most of their investment.

by rootless2 on Tue May 24th, 2011 at 06:40:05 PM EST
[ Parent ]

http://www.uni-konstanz.de/FuF/wiwi/franke/frankehome/09%20ifmmfoe%20seminar/The%20Swedish%20banking %20crisis%20Anja%20Kohlbacher.pdf

The government rescued the banking system by different measures such
as that it provided an unlimited guarantee of bank deposits and liabilities. The crisis
management was quite successful, so that the total costs for the taxpayer were only 2.1
per cent of the GDP in 1997.

It looks as if your source is confusing equity and debt and I note that stockholders in US banks did see a major drop in equity.

by rootless2 on Tue May 24th, 2011 at 05:54:50 PM EST
[ Parent ]

rootless2:

It looks as if your source is confusing equity and debt and I note that stockholders in US banks did see a major drop in equity.

You mean the source I quoted?

I do not see how that follows, Gota issued bonds and the holders of those bonds got nothing (and later sued).

In tandem to that, Gota stockholders also got nothing because the government evaluated the company as having more liabilities then assets.

Nordbanken stockholders got some for their shares as Nordbanken needed more capital to function as a bank, but was not broke as a company. Thus the company never went broke and debts were honored.

What you should have quoted from your pdf was this:

Nevertheless on 9 September 1992, Gota AB, the parent company of Gota Bank, went bankrupt. The government became full owner of Gota Bank for one Krona, as pointed out in Drees et al. (1998). So the help for Gota Bank came from the government by an announcement, which guaranteed Gota's Bank obligation, except equity, with the setting to save the bank and not the owner of the bank.
Two weeks later the guarantee was extended to all other banks. This was the first formal deposit insurance at that time which included all forms of bank debt and not only deposits.

Which means we have differing statements from secondary sources and brings us back to trying to find primary sources. Like the text of the actual decisions in parliament or Volvo's credit losses.

Or figure that it might not really matter, annoying as it is not being able to find out.

I think a more important part was the swift evaluation of the banks on a mark-to-market basis and the good bank/bad bank split of troubled banks. After all governments can (unless they are in monetary union with a hostile central bank that threathens to kill their banking sector) later change its mind and not pay debts that it has decided should not have been shouldered.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 06:25:48 PM EST
[ Parent ]

well perhaps google translate (none / 0)

is not all that reliable.

by rootless2 on Tue May 24th, 2011 at 06:36:06 PM EST
[ Parent ]

And thanks for the advice, that was way easier then finding the actual regulations.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 05:19:25 PM EST
[ Parent ]

I have spent some time hunting the exact terms of bankstödsgarantin without luck. The decision was taken by the parliament in 1992 but I do not appear to get closer than that.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 04:12:19 PM EST
[ Parent ]

Proposition 1992/93:100 med förslag till statsbudget för budgetåret 1993/94

Should have mentioned that if I undestand the comments in the proposition for budget that apparently has been mangled through a picture to text editor, the guarantee was in practical terms limited because they demanded new decisions. At least that is my interpretation of this:

5.7 Finanskrisen och statsbudgeten
Budgetkonsekvenser av tidigare beslutade åtgärder
Rikscfegen beslutede hösten 1991 att steten skulle garantera en nyemission av aktier i Nordbanken på ca 5,2 miljarder kronor och teckna sin andel av emissionen. Som en följd av beslutet har 4 191 milj kronor betelats ut över stetsbudgeten under 1991/92 för nyteckning av aktier i Nordbanken.
Riksdagens beslut i juni 1992 om rekonstraktion av Nordbanken (prop. 1991/92:153, bet. 1991/92:NU36, rskr. 1991/92:352) innebär att regeringen har bemyndigats att bilda Förvaltningsaktiebolaget Venantius med uppgift att inneha aktier i Nordbanken och svara för finansieringen av uppköp av utestående aktier i Nordbanken intill ett belopp om 2 050 miljoner kronor. Dette belopp belaster stetsbudgeten under budgetåret 1992/93.
I nämnda beslut bemyndigades regeringen att inom en ram om 20 miljarder kronor beslute om garantier, lån och kapiteltillskott eller vidte andra åtgärder i syfte att förstärka den fmansiella basen i Nordbanken och Securam. Den 29 oktober 1992 beslutede regeringen att tillskjute sammanlagt 10 miljarder kronor fill Nordbanken, viUcet har belastet innevarande års stetsbudget. Dessutom har en garanti på 9,85 miljarder kronor, syftande till att stärka den fmansiella basen i Securam, utfärdats. Vid denna garantis infriande kommer de principer som riksdagen beslutet på förslag av regeringen i prop. 1992/93:135 om åtgärder för att stärka det finansiella systemet att tillämpas.
Dessutom kommer stetsbudgeten att belästes av räntekostnader i samband med lån till den stiftelse som äger Sparbanken Förste.
Budgetbelastningen av nämncfe åtgärder uppgår under innevarande budgetår till 22,6 miljarder kronor. Däratöver uppkommer en svårbedömbar ytterligare budgetbelastning i den mån det generella bankstödet utnyttjas.

But that is a matter of interpretation and the actual decision would help.

A vote for PES is a vote for EPP! A vote for EPP is a vote for PES! Support the coalition, vote EPP-PES in 2009!

by A swedish kind of death on Tue May 24th, 2011 at 04:37:50 PM EST
[ Parent ]

When it comes to the blanket guarantee (if applied for) I think one should note that the banking of 1990 was probably simpler and better understood by the central bank then todays. Swedens banks had lsot on real estate speculation within the country and the central bank would have known that. Meaning that in the worst case the government ended up with a lot of real estate.

As with the US savings and loan crisis. Which is why the Swedish model was a dubious model for resolving e.g. 2009 Citigroup - an enterprise whose assets included Japanese brokerages, unknown quantities of complex financial instruments with ugly counterparty agreements, and God knows what else. Krugman's proposal was (a) overly simplistic and (b) involved a massive government assumption of debts that were unknown at the time - exactly the sort of reckless stupidity that the Irish government exhibited.

by rootless2 on Tue May 24th, 2011 at 09:47:05 AM EST
[ Parent ]

"With socialism either discredited or absorbed into the mixed systems"...

You continue to repeat this as though it's actually a fact; that reminds me very much of the typical bludgeoning-techniques used over and over by proponents of causes which have no demonstrable empirical grounds to support their claims.

"absorbed into mixed systems" is a euphemism for what looks to me like ersatz "socialism"---the sort of "democracy" we have, too, by the way.

So, I'd point for "socialism" out what an astute observer in a different forum once opined about democracy:

Before you can blame democracy for failing, you have to have had a democracy in the first place.

Basta!!!!!!!!!!!!!!!!

"In such an environment it is not surprising that the ills of technology should seem curable only through the application of more technology..." John W Aldridge

by proximity1 on Tue May 24th, 2011 at 08:15:57 AM EST
[ Parent ]