Month: November 2007

Remember When I Said That Bear Stearns Would Be Gone in a Year?

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We have a little story about the relative success of Goldman Sachs as compared to the other investment banks. What interests me is this quote:

Money soothes a lot of concerns, of course, and Goldman has had plenty to spread around. Through the third quarter, Goldman’s $16.9 billion compensation pool — the money it sets aside to pay its employees — was significantly bigger than the entire $11.4 billion market capitalization of Bear Stearns.

So Bear Stearns’ market cap is less than Goldman’s payroll for just 3 months.

If they don’t go down, they will be bought out. It’s just a matter of time before the big fish eat the little fish, and as I predicted at the beginning of August, Bear Stearns will be one of the small fishes.

Barack Obama Is Pushing Yet Another Republican Meme, This One From the Wrongest of Right Wingers

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He is referring to the claim that Jeff Gerth and Don Van Natta have made that both Clintons have a 20 year long plan for both of them to be president.

“I’m not in this race to fulfill some long-held plan or because it was owed to me,” Obama said the other day.

Asked if that were a reference to the Gerth allegation, an Obama spokesperson left virtually no doubt that it was, telling Newsday: “Barack Obama has not been mapping out his run for president from Washington for the last 20 years like some of his opponents.”

But the source that Gerth and Van Natta cited with supposed first-hand knowledge of this plan — historian Taylor Branch — has since vehemently denied that any such pact existed. “The story is preposterous,” Branch told The Washington Post, adding: “I never heard either Clinton talk about a ‘plan’ for them both to become president.”

I have no clue as to why this is going on, but it will destroy him in Iowa. While the most recent poll shows him in the lead there, his support is disproportionately young all around the country, and this has the potential to kill his campaign in Iowa. In addition to first timers to the caucuses being vulnerable to the tactics of the old party hacks (see Howard Dean’s problems in 2004), they also don’t show up to the caucuses reliably.

He is acting in a way calculated to make the Democratic stalwarts who know, and to a large degree run, the caucuses pissed off at him.

Mindlessly echoing Republican talking points is not being a uniter. It’s being a chump, and this time around even worse being a chump than being a DLC squish.

A chump can’t undo the dcamage the George W. Bush has done.

Senate Looks Ready to Cave on Iraq

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CQ is reporting that Carl Levin, Daniel Inouye are floating a spending bill without restrictions.

This is wrong, and worse, it is a mistake.

Voting against the war is the right thing to do morally and politically, and these morons can’t seem to get it through their heads that caving to Bush hurts the country and the Democratic party.

Don’t back down, make it harder on the Republicans. Make them really filibuster. Declare on every talk show that the Republicans are filibustering money for the troops.

Not one step back.

Possible Resolutions to the Conflict Involving Israel

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Here is another posting, cleaned up a bit, of mine from a Yahoo group that I’m on called JOINint*
Someone asked a question, and her is my rather pessimistic answer:

Please, someone, anyone, show me how we can save Israel AND make a true and lasting peace with our cousins, the Arabs?

There are two solutions that would currently work work:

  • The liquidation of the state of Israel.
  • The ethnic cleansing of the Palestinians in areas under Israeli control.

To my mind, neither are acceptable, so the question is how one finds a solution that does not involve either,

Given the current state of affairs, I do not see any positive developments.

However, the primary driver on this issue is oil, and this will be changing. Current predictions see Iran no longer exporting oil in less than 30 years, and Saudi Arabia production may very well have already peaked.

If the center of oil production moves elsewhere, and/or the world economy transitions from an oil economy, which I see as happening sooner rather than later, the interest in appeasing Arab sensibilities vanishes.

Much of this conflict is driven by the perception in the Palestinian community that time is on their side by virtue of both demographics and by what they see as significant unequivocal international support for their rights, look at your average vote in the General Assembly of the UN, and when their perception changes, a settlement will come.

Basically, when the Arabs run out of oil, no one will care about them, most of their support in the international arena has been bought in some form or another, and when the House of Saud in particular, and the Arab world in general runs out of this currency, the interest in their concerns will vanish.

Hopefully, in this transition/decline, a settlement can be reached, because if not, I see the ethnic cleansing of the disputed territories as a distinct possibility only a bit after that.

One thing that goes unremarked on is that the views of Israeli society are changing.

In 1980, if one had been at a party, and suggested ethnic cleansing Arabs, people would have looked at you like you had taken a dump in the punch bowl, and you would never have been invited back.

Today, there would doubtless be a ferocious discussion/argument, but the discussion of this tactic has become socially acceptable. This is a change in attitude that is profoundly troubling.

Note that any prediction of the future is at best imprecise. I do not see the House of Saud surviving, and in its fall there are any number of outcomes, both bad and good, that are beyond anyone’s power to predict.

Certainly, this will result in a movement of the center of Arab thought, probably back to Egypt. In the early 1900s, Cairo was the center of Arab and Islamic intellectual discourse, before Saudi basically prostituted the Cairo academics and intellectuals.

*Jewish Opinions, Ideas, and News, International It spun off from another group when it descended into right wing agitprop.

The Economic Gods Must Be Cramming in Preparation of the Thanksgiving Holiday

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So here are some economic updates.

First, it appears that the first major bank casualty of the housing bust is upon, Northern Rock, a bank which is responsible for about one in five mortgages in the UK. They have apparently been done in by a 1930s style run on the bank. They got some temporary liquidity through a £24 Billion (about $US 50 Billion) loan from the land of England, but it still appears that they are headed for liquidation, with the Tory shadow of the chancellor of the exchequer* George Osborne asking that, “The chancellor had not explained how taxpayers would get their money back.” The testimony of the CEO of Northern Rock, is more concerning though:

He told the Treasury Select Committee that the bank had planned how it would cope with a 40% fall in house prices.

But it had not planned how to respond if its ability to borrow dried up.

“What wasn’t stress-tested was the event deemed implausible – of the global markets freezing up overnight,” he said.

“The rapid and long-lasting closure of the global markets was not stress-tested,” he added.

Basically, we have a world capital market that resembles juggling, and if you lose one ball, others follow.

On top of this, we have a new home builders survey that is positively grim. The current outlook remains at a record low, but the 6 month outlook looks grim.

On the more macro level, we have Countrywide shares plunging as the insurance rates it must pay on its loans jumped by 30 % (!), both Fannie Mae and Freddie Mac taking major hits because about the security of their mortgages (here and here), and Citigroup faces $15 billion write down in addition to having the good fortune of Goldman Sacks downgrading them to “sell” from “neutral”.

In consumer spending, auto sales could hit 15-year low.

*It’s an artifact of the parliamentary system that the minority party has a shadow cabinet, which is there to keep the various minister’s feet to the fire.

Outsourcing Terrorism, Yet AGAIN

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We lost bin Laden when we outsourced combat to Afghan tribes, and now we are proposing outsourcing to Pakistani Tribes.

A new and classified American military proposal outlines an intensified effort to enlist tribal leaders in the frontier areas of Pakistan in the fight against Al Qaeda and the Taliban, as part of a broader effort to bolster Pakistani forces against an expanding militancy, American military officials said.

If adopted, the proposal would join elements of a shift in strategy that would also be likely to expand the presence of American military trainers in Pakistan, directly finance a separate tribal paramilitary force that until now has proved largely ineffective and pay militias that agreed to fight Al Qaeda and foreign extremists, officials said. The United States now has only about 50 troops in Pakistan, a Pentagon spokesman said, a force that could grow by dozens under the new approach.

Let me get this straight. In a nuclear armed nation that is teetering on the brink of anarchy or revolution, somehow it’s a good idea to arm and train yet another group of people who will be usurping the most essential monopoly of the state, organized violence.

Impeach Dick Cheney today. Impeach George W. Bush tomorrow.

William Jefferson Charges Mount

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Just to be clear, corruption is not a uniquely Republican activity, as is shown by way of Congressman William Jerfferson, who has two more allegations against him:

The allegations, detailed in a seven-page document filed in U.S. District Court in Alexandria, will not result in new charges, prosecutors said, but they plan to present them during Jefferson’s federal bribery trial as evidence of a pattern of intentional wrongdoing.

In 2002, the government alleges, Jefferson asked a lobbyist of a U.S. oil service company for $10,000 a month for a family member in exchange for Jefferson’s assisting the company in promoting business in Africa. The lobbyist turned down Jefferson’s request, the document said.

Three years later, according to the filing, Jefferson allegedly agreed to urge NASA in a letter to consider doing business with a U.S. rocket technology and rocket launch services company. In exchange, the company allegedly agreed to pay Jefferson’s family business and a relative.

Of course, when one looks at Cunningham, Ted Stevens, etc. this one guy does not seem to be all that much.

There are two reasons for the disparity:

  • From 1994-2006, the Democrats were in the minority.
  • Republicans believe that government is unmitigated evil, and as such, the path to bribery is easier, since they believe that they are already doing evil, so it’s about power and wealth to begin with.

Jefferson was found with thousands of dollars in his freezer.

My Heart Bleeds Borscht* for These Gonniffs†

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Oh Dear!!! Some Wall Street pukes at the center of the mortgage debacle may find their bonuses cut in half.

The hardest hit will be the salespeople dealing with mortgage-backed securities, according to Options Group director Eric Moskowitz. Their average bonus will be about $1 million compared with $2 million last year.

Only a million dollar bonus???? Cry me a river.

*This is sarcastic. I feel no sympathy.
†This means “thief” in Yiddish, which is largely archaic German. It is from the Hebrew ganov, and you find the term “gnof” in Chaucer, meaning “churl” or “peasant” generally, which probably has the same Hebrew roots.

Brazil Looking at Nuclear Sub Force

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Brazil hasallocated $540 million in R&D on the submarine and on enrichment.

They believe that they can build a submarine for $1.2 billion.

They already have the enrichment technology down.

The justification is the newly discovered offshore Tupi field and its 5 billion to 8 billion barrels of oil reserves.

Truth be told, if all they want is an air-independent coastal defense boat, there are options out there, both with stored LOX, and the idea of using a smaller nuke plant, to provide underwater endurance, but not the higher underwater transit speeds of the US fleet submarines.

Clarence Thomas: Too Stupid to Cut His Own Meat

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Dana Milbank had this gem in his account of a Federalist Society meeting:

But there were signs that Thomas is not a regular on the speaking circuit. “You know, it’s really hard to talk up here when this guy in front of me keeps moving,” Thomas announced early in his speech. He was referring to a television screen on the floor in front of him that was showing his own image — but because nobody but Thomas could see the TV, nobody knew what he was talking about.

“It’s me! I see myself moving around!” Thomas explained, then let out a resonant laugh: “Ha-ha-ha-ha-ha-ha-ha!” He continued: “This guy keeps moving around in front of me. Jeez! At any rate, stop looking at this guy in front of me! Ha-ha-ha-ha-ha-ha! You look at it and think, it’s too much of a good thing!”

A technician covered up the offending screen with a black cloth.

So Clarance Thomas, much like your average parrot, is capable of being fascinated and distracted by an image of himself.

What a maroon, to quote Bugs Bunny.

Race Bank Opens for Business

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This is an interesting activity. Basically, they have created a giant deep freeze in a cave deep below the Svalbard Islands off the coast of Norway, and they are placing samples of agricultural species in order to preserve them.

While the stated purpose is to account for disaster, I think that it’s more important in the context of preserving old genes in various staple crops as they increasingly become mono-cultural world wide.

IPCC is Warning of Abrupt Climate Change

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Basically, the question is whether climate is stable, like a ball in a bowl, or metastable, like a ball on a flat spot on a hill, which, with a sufficient nudge will careen down the hill accelerating.

The Intergovernmental Panel on Climate Change is now warning that once that ball is pushed too hard, it will start accelerating on its own.

I tend to agree, particularly when one considers things like hydrates on the ocean floor, and the massive amount of organic material that would start to decompose and emit gasses in the tundra areas of the world.

Bank of America Purchases $2 Billion in Preferred Countrywide Stock

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This is a bailout. Bank of America will purchase $2 billion worth of preferred Countrywide stock yielding 7.3%, and that can be converted into common stock at $18 per share. It should be noted that Countrywide is currently selling at $26.19, up 20% from before the infusion purchase.

This is a juxtaposition of desperation on the part of Countrywide and vulture opportunism on the part of BoA.

Honestly, I think that they will end up losing money on this.