Year: 2007

China’s central bank raises interest rates

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China’s central bank has raised interest rates by 27 basis points.

As I have mentioned earlier, food prices are skyrocketing there, but the higher interest rates available in china is one more factor in making the dollar less attractive.

The dollar may float downward for a bit, but given the nature of currency markets, eventually, it will crash, and probably overshoot it’s normal equilibrium price, and rising Chinese interest rates, and falling US interest rates within a few days of each other is a double whammy that the dollar can ill afford.

Good Proposal by Chris Dodd on the Subprime Mess

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Chris Dodd, chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, has put forth interesting proposals on the current housing/mortgatge* mess.

  • Require lenders to assess borrowers’ ability to pay the mortgage even after a rate reset if they’re signing up for an adjustable-rate loan.
  • Require lenders to verify subprime borrowers’ income with documentation. Earlier this year, the Federal Reserve
  • Prohibit pre-payment penalties and yield spread premiums (YSP) in subprime loans. A pre-payment penalty is the fee some lenders charge if you end up paying off your mortgage early, including if you choose to refinance. It sometimes can be as high as six months’ worth of mortgage payments. A YSP is the difference between the the lowest interest rate a borrower qualifies for, and the actual rate he gets. A broker’s fee may be based on it.
  • Prohibit steering borrowers to more expensive loans when they qualify for lower cost ones.
  • Hold lenders liable for appraisals and for brokers’ actions when the broker is paid based on yield spread premiums.

These are good policies, and they would have been much better had they been implemented, or at least proposed, 2 or 3 years ago. to the degree that these can be made retroactive, they should be (you could make prepayment penalties immediately illegal, for example).

More importantly, it places much of the onus upon those who profited through their highly leveraged, and ruinous, financial products.

It’s taken him up a notch in my view of the presidential candidates.

*To all but the blind, this horse has left the subprime stables, and is roaming the prairie.

Military Penile Inferiority Complexes.

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Well, it appears that Retired Lt. General Thomas McInerney, in a bid to talk about large US munitions, has revealed that he has feeling of inadequacy about his small penis.

Specifically, when talking about the recent Russian demonstration of their massive fuel air/thermobaric bomb recently:

…

McInerney said the U.S. has “a new massive ordnance penetrator that’s 30,000 pounds, that really penetrates … Ahmadinejad has nothing in Iran that we can’t penetrate.”

He also said the new Russian bomb was not a “Penetrator.”

To quote Shreck, “Do you think maybe he’s compensating for something?” In the future, we should call our weapons “Anal Intruders” to remove any doubt

Then again, this guy is so batsh&% insane, that he makes Curtis LeMay look like the Dali Lama:

He said that bombing would be launched by 65-70 stealth bombers and 400 bombers of other types.

“Forty-eight hours duration, hitting 2500 aimed points to take out their [Iranian] nuclear facilities, their air defense facilities, their air force, their navy, their Shahab-3 retaliatory missiles, and finally their command and control. And then let the Iranian people take their country back,” the general said describing the campaign, adding it would be “easy.”

So, in addition to being crazy, he is just plain stupid.

Any US attack will cement the rule of the Mullas for at least another 20 years, just as Saddam’s attack on Iran secured their rule for the past 20 some odd years.

Moron.

Schadenfreude, Silicon Valley Rat Bastard Edition

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SCO has filed bankruptcy.

Now that they have lost their bogus Unix claims, and owe back royalties, they are running to the bankruptcy court. I just hope that the court looks into the ties between SCO and Microflaccid™, because it’s clear that they were induced by Bill Gates, Steve Ballmer, and their Evil Minions™ to do this in order to sow fear, uncertainty, and doubt (FUD) about Linux.

U.S. Retail Sales Rise Less Than Forecast in August

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There is more to this story than what you might read in this Bloomberg article.

Specifically, a number of states, including Florida, have pushed their back-to-school sales tax holidays into August this year, and a number of other states, Oklahoma comes to mind, have introduced ack-to-school sales tax holidays in August, and the retail was still sluggish.

The recession has started, and we are like the headless chicken, still running around.

Oil Above $80

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It’s record high, and the basic reason is supply and demand, but it is also that oil is being denominated in a depreciating asset, the US dollar.

Oil exporting countries buy things denominated in Euros, Yen, Sterling, etc., and they can buy less of this when the dollar falls.

If the Fed cuts rates tomorrow, and all signs point to this, I would expect to see a new record low vs the Euro in the next 5-10 business days.

On Republican Wives

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I don’t generally venture too deeply into sexuality. It’s not that I’m a prude, but except on an academic level (I can give you schpiel on how neoteny influences human sexuality), I’m not particularly interested in the sexual motivations of people that I don’t know.

Suzie Bright, however, has a very good insight into the head of the Republican political wife, when she asks the question, “How does Suzanne Craig, wife of the outed senator, stand next to her liar of a husband at a press conference and not hurl her guts?“

It is a complex matter, but I think that Ms. Bright’s essay shines a lot of light on it.

Greatest Prankster in Ohio Granted Repreive

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Remember when I wrote about Kyle Garchar? He convinced the audience on the rival side of the stadium to spell “We Suck” in the 3rd quarter of a football game.

Originally, the principal, who I still think is a humorless jerk, banned him from all extracurricular activities, but he has seen the error of his ways, and
granted Garchar a reprieve.

Davidson administrator Cindi Goldhaber said two factors weighed into the decision: Garchar represented the school well by not complaining while in the media spotlight, and he made an effort (albeit an unsuccessful one) to have students hold up a “Go Cats” message using cards at Friday’s game.

The story given by Ms. Goldhaber is, of course, complete bull s&%$. Without the worldwide support of people who appreciate Mr. Garchar’s intellect, initiative, and sense of humor, he’d still be under this, but the administration was forced to do the right thing.

OOPS!!!!! I Just Pepper Sprayed My Entire Family

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Today is Sloppy Joe night. My wife and kids were not yet home, but would be shortly, so I put the old cast iron skillet on the burner, and get it hot, and get to chopping the garlic, onions, and the cayenne peppers from my wife’s garden.

After I finish, I toss about 2 TBSP of olive oil into the pan, and toss in the peppers.

Pan was a bit hot, and we got a bit of a cloud off the peppers. It didn’t effect our eyes, but we were all coughing like a bunch of 70 year old 3 pack a day smokers.

Everyone(but me, I had to cook) took refuge in the basement.

STUPID

Christopher Shays (R-CT) Is Threatening to Retire.

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Desperation is the reason that Shays is threatening retirement unless he is given the top GOP spot on the House Oversight and Government Reform Committee.

He is the last Republican member of Congress from New England, and people are starting to recognize that he is irrelevant, because Republicans ignore their more moderate members, so he is unleashing this threat.

He almost lost last time, and there is no way that another Republican can win.

His language is actually a bit stronger:

Even if he runs and wins, and somehow gets denied the top Republican spot anyway in 2009, “I will resign,” Shays said.

That’s fear speaking.

Petraeus Is Eddie Haskell

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For those of you who are not American, or are too young to remember him, Eddie Haskell is a character from an almost year old comedy, “Leave it to Beaver*“. He was the friend of the title character’s older brother, and a repulsive troublemaker who never failed to suck up to the adults when they were around†.

Well, it appears that Admiral William Fallon, chief of the Central Command (CENTCOM), and the good general’s boss feels much the same way about Petraeus as the audience was supposed to about Eddie Haskell. It has been reported that the admiral told the general that he thought he was:

“an ass-kissing little chickens*it” and added, “I hate people like that”, the sources say. That remark reportedly came after Petraeus began the meeting by making remarks that Fallon interpreted as trying to ingratiate himself with a superior.

Of note, Fallon appears to be a stand up guy, who is doing major pushback against the politicization of the military, and he has been steadfast, in opposing an attack on Iran.

Fallon acquired a reputation for a willingness to stand up to powerful figures during his tenure as commander in chief of the Pacific Command from February 2005 to March 2007. He pushed hard for a conciliatory line toward and China, which put him in conflict with senior military and civilian officials with a vested interest in pointing to China as a future rival and threat.

He demonstrated his independence from the White House when he refused in February to go along with a proposal to send a third naval carrier task force to the Persian Gulf, as reported by IPS in May. Fallon questioned the military necessity for the move, which would have signaled to Iran a readiness to go to war. Fallon also privately vowed that there would be no war against Iran on his watch, implying that he would quit rather than accept such a policy.

It should also be noted that the General’s duties in Iraq had been securing arms Saddam’s military, the ones that are used against us, and training the Iraqi police force, the one that is a Shia militia actively engaging in ethnic cleansing.

Let us pray that there are more Fallons than Petraeus in the Pentagon.

Sorry if this is old news, but Rosh Hashana has gotten me a bit behind.

*This show had what had to be the most unintentionally sexual line on TV of the day, at least until Batman’s gay innuendo, “Gee Ward, weren’t you a bit hard on the Beaver last night?”

†It should be noted that the actor who played him, went on to become a police officer, and was shot in the line of duty, forcing his retirement from the force, so he was nothing like Eddie.

The Dollar Auction: Why We Are Still in Iraq

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The artical is an excellent description of the dynamic that leads people to see a “light at the end of the tunnel” in Viet Nam Iraq.

Lessons on the surge from economics 101

By OLIVER R. GOODENOUGH

Economics professors have a standard game they use to demonstrate how apparently rational decisions can create a disastrous result. They call it a “dollar auction.” The rules are simple. The professor offers a dollar for sale to the highest bidder, with only one wrinkle: the second-highest bidder has to pay up on their losing bid as well. Several students almost always get sucked in. The first bids a penny, looking to make 99 cents. The second bids 2 cents, the third 3 cents, and so on, each feeling they have a chance at something good on the cheap. The early stages are fun, and the bidders wonder what possessed the professor to be willing to lose some money.

The problem surfaces when the bidders get up close to a dollar. After 99 cents the last vestige of profitability disappears, but the bidding continues between the two highest players. They now realize that they stand to lose no matter what, but that they can still buffer their losses by winning the dollar. They just have to outlast the other player. Following this strategy, the two hapless students usually run the bid up several dollars, turning the apparent shot at easy money into a ghastly battle of spiraling disaster.

Theoretically, there is no stable outcome once the dynamic gets going. The only clear limit is the exhaustion of one of the player’s total funds. In the classroom, the auction generally ends with the grudging decision of one player to “irrationally” accept the larger loss and get out of the terrible spiral. Economists call the dollar auction pattern an irrational escalation of commitment. We might also call it the war in Iraq.

….

Emphasis mine.

Democratic Suggestion for AG to Replace Gonzalez

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It’s Michael Mukasey.

Considering the names that have been floated by the Bush admin, Ted Olson, and other F%$# yous to the Senate Democrats, it appears that someone must been able to twist his arm over this.

Senator Charles Schumer originally suggested the name, so Bush had to choke to select this guy.

I just can’t think about what they had for leverage to stop him from acting like a petulant child…Unless Senator Larry Craig knows that Bush has a “wide stance” too.

What a Sad Pathetic Old Man

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John McCain is now saying that he has been a baptist for years:

Republican presidential candidate John McCain, who has long identified himself as an Episcopalian, said this weekend that he is a Baptist and has been for years.

He’s not going to get the nomination. He needs to accept that, absent some major upheaval not of his own making, he will not get the nod.

I’d say that he should try to take all of this with a bit of class, but really and truly, he’s never shown any, he’s just convinced the press that he has some by keeping their glasses filled, both literally and figuratively.

On the Patriots Stealing Signals Via Video Tape

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Point 1: It’s against the rules, and it should be penalized.

Point 2: It should be legal. I believe that plays should generally be called on the field by the players, generally the QB on offense, and the MLB on defense. I think the constant sending in the plays from the sidelines has diminished the game, and making signal stealing a legal activity would have more players calling their own plays.

Subprime meltdown finally affects beer drinkers

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It’s a wonderful headline for this Asia Times article, but there is some real meat and potatoes if you scroll down a bit.

…

He relates, “In 1983, the Bureau of Labor Statistics [BLS] was faced with an awkward dilemma. If it continued to include the cost of housing in the Consumer Price Index, the CPI would reflect an inflation rate of 15%, thereby making the country’s economy look like a banana republic. Worse, since investors and bond traders have historically demanded a 2% real return after inflation, that would mean that bond and money market yields could climb as high as 17%.”

Yikes! What to do, what to do, what to do whattodowhattodo? “The BLS’s solution was as simple as it was shocking: exclude the cost of housing as a component in the CPI, and substitute a so-called ‘Owner Equivalent Rent’ component based on what a homeowner might ‘rent’ his house for.” Hahaha! The government resorts to lying! “Wow! Why didn’t we think of this before?” they are heard to ask among themselves.

Fortunately for the government, it worked. “The result of this statistical sleight of hand was immediate and gratifying,” Mr Hardaway writes, “for the reported inflation index quickly dropped to 2%”, down from the real, and horrifying, 15% which was due “in part” to the drop in rents caused by speculators wanting to “offset their holding costs by renting out their homes while their prices skyrocketed, thereby flooding the market with rentals that pushed down the cost of renting a house or apartment.” Hahaha!

You can almost hear the contempt in his voice when he says, “While the BLS was correct in assuming that this statistical ruse would fool the average citizen into believing that inflation was only 2% (and therefore be willing to accept a meager 4% return on his bank savings), what is remarkable is that the ruse also fooled the bond traders, and apparently continues to do so, leading analyst Peter Schiff to describe these supposed savvy bond traders as the ‘hormonal teenagers of the capital markets’.”

Putting it all together, he concludes, “The present subprime credit crisis can be directly traced back to the BLS decision to exclude the price of housing from the CPI. It is now clear that the ‘benign’ inflation figures reported over the last 10 years” were, (using my awesome editorial powers to insert my own words for special emphasis), “A big stinking load of lying crap by the corrupt Federal Reserve and the despicable government (except Ron Paul).”

…

This subterfuge has not just been about housing. It’s everywhere in the BLS statistics, and it’s used to shortchange pensioners and to mask the real decline in standard of living for the median worker in the US since the early 1970s.