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Financial crisis. What exactly is it? Subprime crisis (also known as the mortgage or housing crisis) Bail outs Recovery – why is it not happening Systematic disconnection between profits and jobs http://www.youtube.com/watch?v=w2kihFVXW-w. Gekko in “Money never sleeps”.

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financial crisis
Financial crisis
  • What exactly is it?
  • Subprime crisis (also known as the mortgage or housing crisis)
  • Bail outs
  • Recovery – why is it not happening
  • Systematic disconnection between profits and jobs

http://www.youtube.com/watch?v=w2kihFVXW-w

gekko in money never sleeps
Gekko in “Money never sleeps”
  • They got all these fancy names for trillions of dollars for credit, CMO, CDO, SIV, ABS. You know I honestly think there are only 75 people in the world that knows what they are.
  • But I will tell you what they are, they are WMDs. Weapons of mass destruction.
slide45
“Hedge fund managers came home with 50 to 100 million bucks a year.
  • So Mr. Banker, he looks around and says.My life looks pretty boring.
  • So he starts leveraging his interest up to 40%, 50% to 100%. With your money not his.Yours. Because he could.You are supposed to be borrowing not them.
  • And the beauty of the deal is no one is responsible.”
slide46
Last year, 40% of all corporate profits came from the financial services industry.Not production, not anything remotely to do with the needs of the American public.
  • The truth is we are all part of it now.
  • Banks, consumers they are moving the money around in circles It is clear as a bell to those who pay attention. The mother of all evil is speculation. It will not work. It is septicemic, malignant and its global. Like cancer, it is a disease
bailout
Bailout
  • Who exactly is being bailed out and why?
  • How much
  • To whom?
  • From who?
  • What was it supposed to achieve?
the bailout barons
“The Bailout Barons”
  • The Bounty for Bailout Barons: From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation. One hundred average U.S. workers would have to labor over 1,000 years to make as much as these 100 executives made in three.
  • Layoff Leaders: Since January 1, 2008, the top 20 financial industry recipients of bailout aid have together laid off more than 160,000 employees. In 2008, the 20 CEOs at these firms each averaged $13.8 million, for a collective total of over a quarter-billion dollars in compensation.
jobs and profits
Jobs and profits
  • How were the bailouts expected to generate jobs?
reich
Reich

“Second-quarter earnings reports are coming in, and they’re making Wall Street smile. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter.  Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.

So with all this money and profit, they’ll start hiring again, right? Wrong”

profits and jobs
Profits and jobs

lots of their profits are coming from their overseas operations

big U.S. businesses are investing their cash in labor-saving technologies. This boosts their productivity, but not their payrolls

corporations are using their pile of money to pay dividends to their shareholders and buy back their own stock – thereby pushing up share prices.

bottomline
Bottomline

“The reality is this: Big American companies may never rehire large numbers of workers. And they won’t even begin to think about hiring until they know American consumers will buy their products. The problem is, American consumers won’t start buying against until they know they have reliable paychecks”.