World Cup Final: Green Shoots vs. Yellow Weeds

The match was on when President Obama spoke of "green shoots" as signs of economic recovery. Nouriel Roubini quickly countered by pointing to "yellow weeds" signaling possible continued recession. In recent days the ball has been more on the Green Shoot's half of the field, with the Yellow Weeds getting somewhat the better of the play in a midfield game. No big scoring opportunities for either team over the past week.

Notably (at least for this observer) the Weeds have been unable to get their game-changing player onto the field: he's Dollar Crisis, the story of the dollar's beleagured status as the world's global reserve currency. In London he appeared for a moment with the May 12 FT story on "America's Triple A rating is at risk". But not in the U.S., where American financial media ignored (suppressed?) his brief appearance. CNBC Europe mentioned him here - but not CNBC U.S., so far as could find at the CNBC site. We've been tracking the fate of the dollar here since March 23. I'm amazed at paucity of coverage of this story in the U.S. Mainstream financial media reject it as mere chatter of the Goldbugs who yearn for a dollar bust and a gold boom. Goldbug are always talking up the immanent collapse of the dollar, yet goldbugs like Jim Willie are well worth following - just take a look at what he said in January of 2008:

The year 2008 will be the year that THINGS JUST PLAIN BREAK. It will be a truly deadly year, unavoidably lethal to the US Economy and especially to the banking sector. Nothing has been repaired. Some tangible solutions will be offered in the next section [of his post], all legitimate in a real world. However, we do NOT live in a real world, but rather in a Fairy Tale world of US Hegemony and Wall Street with a choke hold around the entire system.

Willie is a libertarian investor with a strong populist streak. He is not alone in his thinking and I suspect central bankers keep a close eye on folks like him. If and when the Weeds finally get their man Dollar Crisis onto the field - watch out. Meanwhile, or failing that, here are some notable Shoots vs. Weeds takes on the topic of economic recovery.

• Nouriel Roubini and his team dig deep and offer a region-by-region global survey in "Green Shoots or Yellow Weeds?" (Forbes 5/14)
• Maria Bartiromo interviews Nouriel Roubini and Harvard Economist Ken Rogoff in this CNBC video. Roubini sees more Weeds than Shoots; Rogoff too. At 5 min 20 sec note their responses to Maria's question about the possibility of the Obama administration's growth forecast of 4% in 2011. (5/15)
  
• The Economist's Special Report on the fat green shoots for international banking looks like yellow weeds in reader comments. (5/14)
• 
  
• Samuel Brittan at FT weighs "Green Shoots and Dud Forecasts." (5/15)
• David Brooks discusses neither Shoots or Weeds but the health care dilemma confronting President Obama: "If you . . . talk to enough experts, you come away with a stark conclusion: There are deep structural forces, both in Medicare and the private insurance market, that have driven the explosion in health costs. It is nearly impossible to put together a majority coalition for a bill that challenges those essential structures. ("Fiscal Suicide Ahead", NYT 5/14)
• In this entertaining 7-minute video, New York financial consultant Howard Davidowitz demolishes the Shoots story (rhetorically at least - and at least somewhat substantially - listen to his comments on commercial real estate). (Yahoo Finance Tech Ticker 5/15) (Thanks, Yves)
• Big one for the Green Shoots? Donald Luskin writes that Northwestern University economist Robert J. Gordon, pointing to reduced numbers of "jobless claims" - claims from the unemployed for jobless benefits - says the recession is over. (Smart Money 5/15)
• Alan Blinder, Princeton economist and former Federal Reserve chairman, likes the Green Shoots but warns against premature tightening of the economy like that of Roosevelt in 1936 that plunged a recovering America back into recession. (NYT 5/16)
• Martin Wolf of FT casts an influential if cautious vote for Green Shoots and for the future of capitalism (5/19)
  

World Cup Final? Let's go it one better. Imagine a global civic media contest with an audience of billions participating in a contest of contests to find best solutions to the world's economic plight. This contest could happen today except for resistance from the world's governments and financial elite, who seem to want it not to happen. The technology for it exists: the contest would integrate the resources of American Idol, telephony, a TV channel like Discovery or CNBC and social networks like Facebook, MySpace and Twitter.

America's Big Banks: STILL Crazy to Get College Students into Debt After All These Years?

In 1985, American college students graduated with a credit card balance of zero. They didn't have credit cards then. Today, college seniors are graduating with an "average credit card debt of more than $4,100, up from $2,900 almost four years ago," according to Sallie Mae. The origins of this growing mountain of debt go back to the early 1990's and to a single bank, Citibank, which then was on the verge of bankruptcy. As Robert Manning writes, CEO Sandy Weill saved CITI by flooding American college campuses with free frisbees and credit card applications. Given the disastrous outcomes of fast money schemes like this and given also the present life-support status of dinosaur banks like Citi, you'd think they'd no longer be getting people into debt while they're too young to know any better and keeping them there.

Not so. Although the government has forced big banks to give up most of their failed "debt peonage" home mortgage models, as Mike Hudson intriguingly calls them, the government has done nothing to stop these banks from getting college students into debt and keeping them there. Last week I saw for myself that Bank of America CEO Ken Lewis, for one, is playing Weil's "enthrall the students" game aggressively.

It hit me as I entered the lobby of the north suburban Chicago community college where I teach. There it was: two gaily festooned tables chock full of free goodies - frisbees, coffee mugs, key chains - all decked out in banners and streamers in bright Bank-of-America red and white. Two non-white salesmen (matching the non-white majority of the college student body) manned the tables. Me being me, I walked up and jovially asked if I could get a credit card. One of the BofA guys sidled up and in a sugary voice whispered in my ear, "And how would you like a mortgage?"

I laughed and asked if BofA prepares students to be financially responsible. Soon my hands were full of booklets and brochures, one quite helpful on this point. Yet in my very next class, a student turned in an eye-opening paper on student credit card use. It drew from a Chicago Tribune article based on a recent Sallie Mae study of student credit card use. Key findings of the study? Here they are, verbatim. Read 'em and weep. Sallie Mae says that

In this time of credit crunch and economic downturn, college students are relying on credit cards more than ever before. Nearly every indicator measured in spring 2008 showed an increase in credit card usage since the last study was conducted in fall 2004. Eighty-four percent of undergraduates had at least one credit card, up from 76 percent in 2004, the last time the study was conducted. The average number of cards has grown to 4.6, and half of college students had four or more cards.

• Undergraduates are carrying record-high credit card balances. The average (mean) balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004’s $946 to $1,645. Twenty-one percent of undergraduates had balances of between $3,000 and $7,000, also up from the last study.

By year in college, credit card usage and debt also is increasing across all categories—credit card ownership, average balance, median balance, those carrying any balance, and those carrying high balances.

• Since 2004, students who arrived on campus as freshmen with a credit card already in-hand have increased from 23 percent to 39 percent.
• In spring of 2008, only 15 percent of freshmen had a zero balance, down dramatically from 69 percent in the fall of 2004. The median debt freshmen carried was $939, nearly triple the $373 in 2004.
• Seniors graduated with an average credit card debt of more than $4,100, up from $2,900 almost four years ago. Close to one-fifth of seniors carried balances greater than $7,000.
  

Nine in 10 undergraduates reported paying for direct education expenses with credit cards—and the average amount they charged more than doubled since the last study.

• Ninety-two percent of undergraduate credit cardholders charged textbooks, school supplies, or other direct education expenses, up from 85 percent when the study was last conducted, in 2004.
• Nearly one-third (30%) put tuition on their credit card, an increase from 24 percent in the previous study.
• Students who used credit cards to pay for direct education expenses estimated charging $2,200, more than double 2004’s average of $942.
• The most common education expenses charged were textbooks (76%), school supplies (75%), and commuter costs (54%).
• Food (84%), clothing (70%), and cosmetics (69%) ranked at the top of other expenses charged.
  

Many college students seem to use credit cards to live beyond their means—not just for convenience—and more than three-quarters incurred finance charges by carrying a monthly balance.

• Sixty percent experienced surprise at how high their balance had reached, and 40 percent said they have charged items knowing they didn’t have the money to pay the bill.
• Only 17 percent said they regularly paid off all cards each month, and another 1 percent had parents, a spouse, or other family members paying the bill. The remaining 82 percent carried balances and thus incurred finance charges each month.
  

One-third of students rarely or never discussed credit card use with parents, and nearly all undergraduates would like more information on financial management topics.

• Two-thirds of survey respondents said they had frequently or sometimes discussed credit card use with their parents. The remaining one-third who had never or only rarely discussed credit cards with parents were more likely to pay for tuition with a credit card and were more likely to be surprised at their credit card balancewhen they received the invoice.
• Eighty-four percent of undergraduates indicated they needed more education on financial management topics. In fact, 64 percent would have liked to receive information in high school and 40 percent as college freshmen.
  

Question for President Obama: in light of these findings, what is your administration doing to keep American college students from being further exploited by the very banks whose business models crippled the global economy and whose non-exploitative conduct your administration insists is critical to recovery? And more important, what is your administration doing to make college more affordable for all qualified American students? (Here's how civic media can empower college students and others to address and help solve the problem.)

This morning I see that BofA stock is rising in early trading"amid reports that it needs $34 billion in new capital." Who's got the barf bag? For students, the Tribune article has these tips:

Several student credit cards have interest rates of 14.99 percent for those with good credit, according to the Web site Bankrate.com. Federal Stafford loans have interest rates of 6.8 percent. Private-school loan rates average about 8 percent, according to Bankrate.com.

May 4: Could the Storm Be Winding Down? Is Obama's "Glimmer of Hope" More than Just a Glimmer?

Let's look at the upside for a change. Lot's people are saying the worst may be over. The chorus is growing. Even my trader buddy Big Bill is thinking that the market rally could extend past summer and through the December holiday season.

• Warren Buffet on the topic of government actions to save the economy says "Overall I commend the actions that were taken. To expect perfection from people working 20 hour days and getting hit by new and sometimes bad information - when you’re getting punched from all sides - you’re not gonna do everything perfectly. I think overall they did a very good job…" (5/2)
• Albert Bozzo at CNBC says a small but growing number of economists is saying that the "US Economy Could Recover Much Sooner Than Expected" (5/4)
• Even Nouriel Roubini seems to be moderating his gloomy views somewhat (4/27)
• Global Markets are hitting seven month highs (Reuters 5/4)
• This John Authers video shows that markets are rising globally due to faith in China's economic upturn (FT 5/4).
• Ben Bernanke testifies that the U.S. "may be stabilizing" (FT 5/5)
• Libor rates fall to historic lows (FT 5/5).
• Martin Wolf endorses Obama's (and FDR'S) pragmatic conservatism and the stress tests - with reservations (FT 5/12)
  

This list is just underway. SEND LINKS! (Good ones are not easy to find.)

You call this civic media? Yeah, I do . . . sort of.

In a one-man-talking-to-himself sort of way. So far at least. Where a true civic media is dialogic, this site, so far, is pretty monologic. Too bad. I talk, but people aren't talking back - not yet. And where civic media sites are non-partisan and non-ideological, this one, maintained by a political independent who is relieved and often glad that Obama is our president, is marked by a deepening concern that his financial team of Bernanke, Summers and Geithner are so beholden to Wall Street that Obama is being shielded from the information he needs in order to help the U.S. and the world emerge from the global financial crisis. In the April 29 Press Conference held to mark his first 100 days in office, the President unblushingly conceded his ignorance of the coming crisis:

You know, when I first started this race [in December, 2007], Iraq was a central issue. But the economy appeared on the surface to still be relatively strong. There were underlying problems that I was seeing with health care for families and our education system and college affordability and so forth, but obviously, I didn't anticipate the worst economic crisis since the Great Depression.

I find this admission galling. It's hard to accept from an editor of the Harvard Law Review and a U.S Senator, surrounded by brilliant people, who reads a lot and can actually think straight. It's as if the Ivy League, Wall Street and the D.C. beltway suddenly sealed themselves off what by December 2007 was obvious to a lot of people. In late 2007 I myself knew fellow Realtors and loan officers here in Glenview, north of Chicago - who knew something terrible was bound to hapen - we just couldn't tell when it would hit. We saw it coming in our business and in alarm signals that were being sounded loud and clear in the financial media: Yves Smith, Felix Salmon, goldbugs like Jim Willie and Martin Wolf and John Authers of the Financial Times, for Pete's sake!How on earth could Obama and advisors like Austin Goolsbie have missed what was staring us in the face?

Yves Smith is one of many finance bloggers who could have saved America and the world endless grief had the Obama team read her posts in 2007. So are Obama's people reading her today? They sure should - her website has 25,000 hits a day. Here she dissects the flaws of Obama's finance team in a painstaking analysis of the New York Times' surprisingly harsh April 26 story about Tim Geithner. Her analysis prompted one commenter to say

I cried when Obama made these appointments. Summers, Geithner and keeping Bernanke. I knew all was lost. And now I watch as the whole thing falls apart.

Larry Summers, the ringleader of the Obama economic team, strikes me as a brilliant careerist in the mold of Henry Kissinger: a first rate self-promoter and a second-rate "realpolitik" thinker. To me, he's in denial about what first-rate thinkers like Steve Waldman are saying about the need for economic models grounded in a new understanding of sustainable wealth and wealth creation - a topic I discuss here. Summers and Co. are all the kings men trying to put Humpty Dumpty (American hegemony) back together again. It just won't work. (The Times article suggests that Summers, a big man at the White House, may be lobbying to replace the unpopular Geithner with a loyal fresh face. In other words, nothing will change.)

In his recent "100 days" press conference, President Obama named the economists he follows (scroll to "Where the economists are coming from"). The central debate in his mind, he said, is between Wall Streeter Robert Rubin and realative main streeter Robert Reich, with attention to corporate globalism critic Joseph Stiglitz and inflation-breaking Paul Volcker. And he sums up his philosophy nicely: "The truth is," Obama says, "that what I’ve been constantly searching for is a ruthless pragmatism when it comes to economic policy." And: "The touchstone for economic policy is, does it allow the average American to find good employment and see their incomes rise." Sounds OK, but can Obama's "ruthless pragmatism" put America's financial system on a sound and durable footing? Pragmatists lack vision. Their ideas work short term, not long. The President needs pragmatisim and vision. Is he listening to people like these:

• Charles R. Morris, author of The Trillion Dollar Meltdown, argues in a brief but prescient column that "Merrill Makes the Case for Nationalization" (1/29).
  
• Henry Kaufman, for decades a leading Wall Street insider, argues here that "We should, therefore, fundamentally re-examine the role of the Fed and the supervision of our financial institutions." He discusses the rise of a "social milieu [of policy makers that] encouraged financial decision makers to cherry-pick the theories that supported excessive risk taking. It discouraged whistle-blowing, not just by risk-management officers in large financial institutions, but also by the economists whose scholarship provided intellectual justification for the financial institutions’ decisions. The consequence was that scholarship that warned of potential disaster was ignored. And the result was global economic calamity on a scale not seen for four generations. (Financial Times 4/28)
• Steve Waldman: "If you believe, as I do, that we need a root-and-branch reorganization of the financial system, which must necessarily involve the dismemberment and intrusive restraint of deeply entrenched institutions . . ." (4/27)
• Barry Eichengren of the U.C. Berkeley Dept. of Economics argues that "The Great Credit Crisis has cast into doubt much of what we thought we knew about economics". (National Interest 4/30)
• Charlie Munger of Berkshire Hathaway says banks will use their “enormous political power” to prevent changes to the industry that would benefit society. (Bloomberg, 5/2)Univ. of Chicago Economist Anna Schwartz, a Friedman/Volcker pure monetarist, says the Bernanke Fed has misjudged the financial crisis (City Journal, Spring '09)
• Martin Wolf of the Financial Times says "The world economy cannot go back to where it was before the crisis, because that was demonstrably unsustainable. It is at the early stages of a long and painful deleveraging and restructuring. Fortunately, policymakers have eliminated the worst possible outcomes. But there is much more yet to be done before fragile shoots become healthy plants (4/21)
• Martin Wolf says that "Those who hope for a swift return to what they thought normal two years ago are deluded" (FT 4/28).
• Joseph Stiglitz (whom Obama follows) here calls for something Wall Street does NOT want: a new global reserve currency (3/26). The findings of the UN panel that Stiglitz chaired are described here (3/26). In this article in the South China Morning Post James Dorn (Cato Institute) challenges Stiglitz. Here the Wall Street Journal is defensively on China's call for a new global reserve currency. (American financial media largely overlooked or suppressed the Stiglitz story and are covering this issue poorly if at all. Shame on us.)
• Matthew Richardson and Nouriel Roubini punch holes in the Obama administration's case for progress towards restoring banks to solvency (WSJ 5/5).
• In her post on "The Banks and Orwell," finance blogger Yves Smith isolates some of the doublespeak that Wall Street chieftains are using to resist real regulation. She says that "M. Rodgin Cohen [managing partner of Sullivan & Cromwell] is already leading the fightback [against hostile public opinion]. Yesterday, he even had the gall to say that the system as currently constituted was fundamentally sound. Yes, for him and a handful of Goldman partners, I'm sure that's true, but on planet earth, it's a bit of a different picture." (5/9)
  

Misjudging Motives: Why Bernanke (and Geithner and Summers) Are the Wrong People for Their Jobs

I wonder what President Obama would say to this post. Reading and re-reading the first two quoted passages below, I find myself thinking that America will never - not ever - recover from its financial crisis until its President has in place a financial team that carefully assesses the motives of the Wall Street elite whose "risk-free" financial innovations ran the world's economies into the ground. Of course Wall Street never intended for its innovations to backfire as they did - clearly it intended to do something else. But what? And more to the point of motive, why? Answers given in the two revealing passages below, both from mid-2006, could hardly be more disparate. Which comes closer to unearthing the truth? Here's my take. Judge for yourself .

In June of 2006, Ben Bernanke concluded his speech on "Modern Risk Management and Banking Supervision" by voicing confidence in the ability of banking organizations and banking agencies - Fedspeak for private banks and government regulators - working in tandem, to eliminate the possibility of systemic risk:

We expect that risk management and banking supervision will continue to develop along parallel tracks. The Basel II framework [the latest recommendations on banking laws and regulations issued by the senior representatives of the ten Western central banks who form the Basel Committee on Banking Supervision] represents an important effort by supervisors to integrate leading-edge risk management practices with the calculation of regulatory capital requirements. The ongoing work on this framework has already led large, complex banking organizations to improve their systems for identifying, measuring, and managing their risks. Indeed, banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks. The banking agencies will continue to promote supervisory approaches that complement and support banks' own efforts to enhance their risk-management capabilities.

Ben Bernanke strikes me as a decent man. Yet his blind faith in the status quo - his assertion that "substantial strides" had been made towards managing risks - tells me not just that he was oblivious to immanent disaster but that he was so because he had fallen in the wrong crowd. As we now know, this crowd was doing more to abet than to curb the excesses of America's financial elite.

The right crowd? It was a group of economists, finance writers and businessmen - a fairly large group - that was willing to examine and discuss, with due scepticism, the likely effects of the innovations of this elite and the wellspring of their motives as well. (Their findings were by no means identical.) The paragraphs below, written by one of this group, appeared in May, 2006, a month before Bernanke's speech:

Free markets are based on choice. But more and more homeowners are discovering that what they got for their money is fewer and fewer choices. A real estate boom that began with the promise of “economic freedom” almost certainly will end with a growing number of workers locked in to a lifetime of debt service that absorbs every spare penny. Indeed, a study by The Conference Board found that the proportion of households with any discretionary income whatsoever had already declined between 1997 and 2002, from 53 percent to 52 percent. Rising interest rates, rising fuel costs,
and declining wages will only tighten the squeeze on debtors.

But homeowners are not the only ones who will pay. The overall economy likely will shrink as well. That $200 billion that flowed into the “real”economy in 2004 is already spent, with no future capital gains in the works to fuel more such easy money. Rising debt-service payments will further divert income from new consumer spending. Taken together, these factors will further shrink the “real” economy, drive down those already declining real wages, and push our debt-ridden economy into Japan-style stagnation or worse. Then only the debt itself will remain, a bitter monument to our love of easy freedom.

So said University of Missouri/St. Louis economist Michael Hudson, whose "Illustrated Guide to the Coming Housing Collapse" is a core text for me. Now what's the difference between Bernanke and Hudson? How could one professional economist be so blind to immanent disaster and the other so prescient? President Obama is a smart man. Has he ever asked himself this question? If he's going to serve America well as president, shouldn't he?

If he does, the answer is plain to see. The difference is partly one of perspective: of the economy as seen from the contrasting vantage points of the Wall Street lender and the American borrower. But the main difference is one of motive. Bernanke, on one hand, presumably sees Wall Street's "leading-edge risk management practices" as motivated by a benign desire to realize a fair profit while helping borrowers realize the American dream. Hudson, on the other, sees these same practices darkly, as intended to subjugate borrowers to lenders in a manner more appropriate to a feudalistic society than a democracy. And he sees them as motivated by a desire for absolute control and power.

This, granted, is an extreme assertion. Many will question it. But from what we know today about the effects of sub-prime lending and the motives of Wall Street and the Federal Government - far less pure than pure, at a minimum - Hudson's account has to be much closer to the truth than Bernanke's.

I therefore find myself, on balance, asking how Ben Bernanke can serve effectively at the Fed. Removing him, Larry Summers and Tim Geithner is impracticable at the moment, even unthinkable. But sometimes it's important to think the unthinkable. Simon Johnson does so. He's an M.I.T. economist and past chief economist for the International Monetary Fund. In "The Quiet Coup," appearing in the latest Atlantic Monthly, he argues that Wall Street's wildly innovative financial practices were nothing short of oligarchical. Here's a summary:

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.

How would recovery occur once America's financial oligarchy was broken? Who would replace President Obama's current financial team? I'll be looking for answers at The Baseline Scenario, Simon Johnson's problem-solving site. I wonder if the White House is following it. Here Terry Gross of NPE interviews Simon Johnson - for 44 minutes!

Let's take another break

A musical one this time that Georgi, a student in my writing class at Oakton Community College, just posted at our class Ning site. And here's another if you like musical underdogs. And here's one more to see how the underdog compares with the top dog.

Let's Take a Break for a Sec

Two students in a class I'm teaching are writing papers on the financial crisis. After doing some research on their own, they asked me for some articles. I gave them two:

• Michael Hudson's May, 2006 Harper's Magazine prediction of the housing crisis
  
• "Quants Gone Wild," a little-known piece by William Bodine and Christopher Nagel of the business faculty at Concordia C0llege-New York. It deserves a wide readership for three reasons. It traces the origins of today's credit crisis back to new valuation methods developed on Wall Street in the 1970's, with J. P. Morgan leading the way. It faults hopelessly complex computer-driven risk models that were simply beyond human understanding, including that of the Wall Street CEO'S who profited most from their use. Finally, it ends magnificently, with a touch of zen (or whatever):

• A couple closing thoughts: don’t run with the lemmings; don’t be overly impressed with things you don’t understand; drink some green tea and take time to write a Haiku as we witness a staggering capital meltdown from the consequences of uncontrolled financial engineering in derivatives currently estimated at US $500 trillion globally.

Wells Fargo Quarterly Results Boost the Dow 247 points to 8038!

The Obama Spring rally found a second wind today thanks to a Wells Fargo earnings report that benefited the big financial stocks. With the spring rally is now in its fifth straight week, even the Financial Times front-paged President Obama talking about "glimmers of hope." Yet I wondered: how could Wells Fargo, in this terrible economy, announce a record high quarterly profit of $3 billion? By borrowing at zero per cent and doling out refi's at five? That's a ton of refi's. I didn't get it. Then I stumbled on this post by a guy I don't know - well, he's a goldbug - who knows more about finance than I do and puts questions I'd like to see put to Fargo's Howard Atkins (minus the vitriol):

DaveInDenver said:
This is beyond belief. Wells Fargo's 1st quarter profit forecast goes way beyond any fairy tale ever written in history. Here's what they say: Chief Financial Officer Howard Atkins says the results "reflected strength in our traditional banking businesses, strong capital markets activities, and exceptionally strong mortgage banking results." Mr. Atkins, you are an outright liar and fraud.

Hmmm..."strength in traditional banking?" Who is borrowing that money and making their interest and principal payments on time? Has there been a bunch of businesses started no one is aware of yet? Are existing businesses expanding? You've got to be kidding me.

"strong capital markets activities." Where is this revenue coming from? Any big equity IPO's during Q1 that we missed? Corporate debt issuance was occurring, but at a very low rate and Wells Fargo is not a real player in that business. Mortgage securitizaton? I'm not aware of any. Please explain to me, Mr. Atkins, the source of your "strong capital markets acitivities."

"exceptionally strong mortgage banking results." This one is the most puzzling and troubling to me. We know, with hard data and facts, that home sales and mortgage issuance is plummeting every day. Where are the revenues coming from in this area? Mr. Marks goes on to cite that WFC's acquisition of Wachovia boosted their results. How on Earth can this be? Wachovia's balance sheet is mostly the kinds of subprime mortgage assets that are melting down to zero.

The only possible source of extraordinary revenues I can think of for WFC during Q1 would have been WFC's use of the massive amount of Treasury and Fed money extended to banks at little or no cost and being put to work in Treasury bonds and WFC earning the positive interest carry.

In fact, we know from hard data released every week that the very business activities that Wells says are creating massive profits are, in fact, melting down quickly in every corner of the U.S. and global economy.

For WFC to come out and make those claims is beyond fairy tale - it's outright fraud. And lest we forget, the beloved Warren Buffet owns over 10% of WFC, and thus de facto is standing behind this massive fraud. George Orwell is laughing uncontrollably in his grave now.

Thanks, Dave. Is anyone asking these questions? Is Fargo answering them? Here's one answer:

Wells Fargo’s revenue was boosted by its mortgage banking operations, as the company received about $190 billion in mortgage applications, a 64 percent jump from the fourth quarter. Roughly $83 billion of that volume came in March, when announced governmental programming sent interest rates tumbling. The majority of that was refinance applications with roughly 25 percent coming from home purchases.

And here's another:

Wells Fargo attributed the strong results to healthy lending margins driven by lower interest rates, fewer additional costs related to its purchase of Wachovia and a boom in mortgage activity.

Do these accounts satisfy anyone?

BTW, George Orwell's essay on Politics and the English Language is as timely today as when he wrote it in 1946. Dave may be thinking of Orwell's warning against the "invasion of one's mind by ready-made phrases (lay the foundations, achieve a radical transformation)" that "anaesthetize a portion of one's brain."

DaveInDenver was responding to Henry Blodget's article about why Dylan Ratigan left CNBC. Ratigan, the able host of CNBC's hot "Fast Money" show, says he left because

When you're dealing with systemic policy failures that have rendered a catastrophe the likes of which we've really never seen, the role of journalism is to ask questions of money and power from the broadest possible platform.

Ratigan has anti-fans who doubt his credentials as a journalist - see the other responses to Blodget's article - but for months he has been targeting bailouts that seemingly pick the pockets of taxpayers to benefit big bankers. This alone doesn't make him golden in my book, but I look forward to seeing what he does next.