IMF Chief involved in Sex Scandal reigns

After being busted and led through a perp walk into a Manhattan court (not to mention spending a few nights at Rikers), Dominique Strauss-Kahn officially resigned as head of the International Monetary Fund. By doing so, he set off a furious debate over who should be his successor, which will have worldwide financial implications.

Strauss-Kahn said in a statement: “I want to protect this institution which I have served with honor and devotion, and especially – especially – I want to devote all my strength, all my time, and all my energy to proving my innocence”. Strauss-Kahn has been accused of sexually assaulting a maid while he was in New York on Saturday and was apprehending while on an Air France flight heading home.

The scandal has set off a big headache for the IMF. The organization, which disperses loans to nations in financial distress, traditionally has a European as its head, while an American is the IMF’s deputy and runs the World Bank, respectively. However, as developing nations such as Brazil, China, South Africa, and India are become bigger players on the global stage, in a financial sense, there will be some debate over the next IMF chief, as these nations would probably want someone from a different region to take over.

Many people are being linked to the job, but a potential consensus could center around French Finance Minister Christine Lagarde, a popular and well respected figure in financial circles. The only complication could be that since Lagarde is a member of French President Nicolas Sarkozy’s cabinet, it could fuel rumors of a set-up orchestrated against Strauss-Kahn, who was expected to run for President of France next year.

All in all, the scandal could further hamper the beleaguered IMF, which is attempting to create substantial bailouts via austerity demands for Euro-zone nations such as Ireland,Greece, Portugal, and Spain, all of which are experiencing enormous debt crises.

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Vikram Pandit’s Big Pay Day, Courtesy of Citi

 Despite nearly being ousted over his much maligned handling of the bank during the financial crisis, Citi CEO Vikram Pandit was rewarding by his company in receiving a multi-million dollar package over a four-year period. This is obviously a vote of confidence for Pandit, after he was heavily criticized for Citi’s 87% dip in stock value and its near collapse when regulators openly questioned his ability to run the bank. However, Pandit worked a miracle, restoring the bank back to profitability and repaying the government’s loan back, with interest.

The question about this, though, is should Wall Street resume rewarding its executives less than 3 years after the whole kit and caboodle came crashing down? In capitalism rewarded for their profits and success, and should be. And when you mismanage, you should fail. The whole “too big to fail” mantra has protected those who made risky and dangerous choices, and left others (the taxpayers) holding the bag.

In Pandit’s defense, he became Citi’s CEO in 2007, and inherited the mess his predecessors instigated. Yet, does it really make good PR sense to be taking a multi-million dollar benefits package only a few years after the crisis? One must ask.

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“The worst curse is a lie”

This is a response to Ramone’s post about the lottery winner receiving foodstamps.

Below is a segment from MTV News from 1995 that features Ol’ Dirty Bastard of the Wu Tang Clan picking up food stamps.  This took place during heated welfare debates of the Clinton administration, and shows a clip of President Clinton.

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Government Jackpot: Michigan Man Wants Food Stamps Despite Winning Lotto

Here’s an interesting one from The Detroit News:

 A Michigan man who won $2 million in a state lottery game continues to collect food stamps 11 months after striking it rich. And there’s nothing the state can do about it, at least for now.

Leroy Fick, 59, of Auburn won $2 million in the state lottery TV show “Make Me Rich!” last June. But the state’s Department of Human Services determined he was still eligible for food stamps, Fick’s attorney, John Wilson of Midland, said Tuesday.

Eligibility for food stamps is based on gross income and follows federal guidelines; lottery winnings are considered liquid assets and don’t count as income. As long as Fick’s gross income stays below the eligibility requirement for food stamps, he can receive them, even if he has a million dollars in the bank.

Food stamps are paid for through tax dollars and are meant to help support low-income families.

‘If you’re going to try to make me feel bad, you’re not going to do it,’ Fick told WNEM-TV in Saginaw on Monday.”

Talk about boldness. This man has the temerity to still collect benefits, despite the fact that he’s now a millionaire, and is not only bilking taxpayers, but keeping necessary assistance from someone who may actually need it.

You decide. Should Fick stop receiving benefits?

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“Too Big to Fail”: The Movie Everyone Should See

 Based on the critically acclaimed book by Andrew Ross Sorkin, Too Big to Fail brings to your television screen the true, in-depth story of how the United States teetered on the brink of an unmitigated financial disaster, and how Washington and Wall Street sought to save the system, and themselves, from the unfathomable collapse.

It is something you couldn’t make up even if you tried. Nearly a year before the collapse, major investment firms were experiencing declining stock returns, but their executives vowed to stay the course. As the crisis was on full swing, Fed Chairman Ben Bernanke and then-Treasury Secretary Hank Paulson constructed the $700 billion TARP bailout, citing some of these institutions were “too big to fail”. After Congress rejected the plan and the Dow fell hundreds of points in a single day, the men were reduced to practically begging Congressional leaders to approve of the funds.

Although this makes for riveting drama, this story is true. These events happened. They will infuriate you, make you see the officials trying to shepherd this bill through in a new life, and make you dumbfounded at the sheer arrogance and sense of entitlement some Wall Street executives portrayed during a crisis that was basically their fault.

Just as Inside Job was an extraordinary as it attempted to try and make sense of the crisis, Too Big to Fail needs to be seen by every American.  It must lead to the people of this nation to demand of their leaders to fundamentally take steps to ensure something like this could never happen again.

The movie premieres May 23 at 9 p.m. on HBO.

More reading: “‘Too Big to Fail’: Does the Movie Match Reality?”

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I’ll Scratch Your Back, if you Scratch Mine….No Seriously Can I have your Number?

                                                                                Follow up

In my original blog, I talked about the Galleon insider trading case. I even went as far as to defend traders, saying the SEC has vague guidelines, which makes it easy for them to prosecute. Boy was I wrong! Consequently, what I didn’t anticipate was that maybe traders don’t just enjoy the extra money, maybe there is a sort of fame, and satisfaction that they got away with it. Well that’s exactly what I encountered on a typical night at work. I happen to cocktail at an upscale mid town bar that caters to bankers. One particular night, I was waiting on these bankers that wanted to know a little about me. Long story short, I mentioned that I was blogging about the Galleon case for a school project. I like to play young, dumb waitress with my customers and replied, “Oh my god, you guys don’t happen to work in, like, finance or anything?” Well, it just so happens that they were responsible for making Galleon millions. Intrigued, I spent a little more time with them than at my other tables, brought some shots of tequila over, and continued the ole’ dumb blonde act. As they became more intoxicated, their true colors started to show. One of the men started whispering into my ear full names of more associates involved in the illegal activity. They were quite proud of themselves that they had “madeoff” with the money! And told me they’ll tell me everything they know about it if I promise not to blog about it. Perhaps I should go work at the SEC, I could save them a lot of time in court. Before I knew it, they were intensively hitting on me and asking me out and for my number. Not an unusual thing to happen to me at work, however, I don’t believe I’ve ever heard the line, “hey you know that big insider trading trial on TV, I’m responsible for it. Wanna go out sometime?”

Galleon was found guilty on all accounts. The men at the table, however, were never brought in for the trial.

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The Economics of Fear

The news of the death of Al Qaeda leader Osama Bin Laden at the hands of US Navy SEALS brought a torrent of emotions over the last few weeks: overwhelming joy is some quarters, somber reflection in remembrance of those families who lost a loved one on that horrific September day, and a quiet optimism that those engaged in jihad and extremism would be in their last throes. However, a key aspect of Bin Laden’s plan wasn’t just to cause the United States, and by extension the Western world, to abandon their values and way of life for a 9th century myopic dystopia; Bin Laden’s plan was to ultimately destroy us through economics. Keep the nation and its allies in a perpetual state of fear so they wouldn’t be able to function; destroy our markets and system of economics; foment continuous instability in the Middle East as a way to create high oil prices and disrupt economic prosperity in the West as nations have become interconnected in an increasingly globalized world; and the odious assumption that 9/11 would have permanently hampered America’s spirit, that we would never be able to rebound financially or emotionally.

He was wrong.

The US came back, and for good measure brought him to justice for the murder of nearly 3,000 innocent souls in coordinated attacks on the World Trade Center in New York, the Pentagon in Washington D.C., and the heroic passengers of United 93, who brought the plane down in a field in Shanksville, PA. The Financial Crisis of 2008 notwithstanding, only the American people, through our decisions and our choices, can determine and fate of our economy and destiny.

Bin Laden is dead now. With him, the followers of his discredited ideology will follow him to history’s unmarked graves, joining the ranks of those who similarly tried, and failed, to destroy humanity.

More reading: “Now kill his dream: Osama bin Laden’s brand of brutal jihad is losing its appeal in the Arab world” The Economist.

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