Month: April 2008

Shift at Top May Mean Shift in Tone for Clinton – New York Times

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I think that Penn’s kind of sort of firing is unlikely to pull it out for Hillary Clinton at this late date, but Geoff Garin does seem to be a breath of fresh air.

That being said, Josh Marshall published a reader letter that nails the Penn problem on the head:

….increasingly I think Penn is the main reason. His faults suffused and defined her campaign – think small and narrow, don’t change anything that worked for Bill, don’t roll your proposals into a larger vision, don’t suggest that you bring anything to the table but stolidity and experience – and, for targeted voters only, emphasize your gender. Penn took one of the most popular Democrats of the last 40 years and made her into a one-note bore.

Mark Penn and his “microtargeting”.

Hillary is not Bill, and something sucked much the life out of her campaign.

It’s why she seems better in the debates, there, it’s just her and her knowledge.

Economics Update

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Busy day in real estate, we have:

Of course with any of these situations, you will inevitably find the highly placed moron, and today’s is Morgan Stanley CEO John Mack, who is saying that he thinks that the credit crunch is, “in the final innings”. If you have money in Morgan, get it out now.

Why am I so certain about this? Because the Fed auctioned another $50 billion banks in their “crap for cash” program, which has now “auctioned” $310 billion to banks for their worthless mortgage paper.

If that doesn’t convince you, how about GMAC looking down the barrel of a ratings cut, which means that people who might want to buy a car will find it even more difficult to get a loan to do so.

Of course, Mack thinks that things are looking up because private equity firm TPG just put $7 billion into WaMu, which implies to him that private equity is on its way to a comeback.

Nope….Dead cat bounce. WaMu’s only virtue is that it’s better, and only a bit better, than Countrywide.

For an idea of how badly things are going, note that First Marblehead is at risk of imploding. Note that FM is a student-loan services provider. It should basically be impossible for them to lose money.

This is federally guaranteed, and cannot be discharged through bankruptcy, but given that their insurer, The Education Resources Institute Inc., just filed for bankruptcy, all bets are off.

Schadenfreude

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It looks like Senator David Vitter will be called to testify at the DC Madame trial by the defense.

Apparently, Vitter did not do “sex”, just the fantasy service….if reports are true, something involving his wearing a diaper.

BTW, his lawyer is suggesting that he will take the 5th.

For what’s worth, in addition to Vitter, “Randall Tobias, a former senior State Department official, and military strategist Harlan Ullman, the father of the ‘shock and awe’ tactics are also on the list.

Heh.

Bogus Job Creation Data?

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I would be stunned if the Bush Administration would take a nonpartisan collection of data, and massage it for political advantage. What if they did it on Global Warming Data ANWR Drilling Stem Cell Research Morning After Contraceptives Safe Sex Preventing AIDS Lead Paint Mercury Iraq

Well, it now appears that Bush and His Evil Minions™ are overstating job growth in the US, see Dean Baker and Barry Ritholtz.

Basically, it comes down to the fact that the BLS cannot get questionnaires regarding employment to all the businesses out there. A number of businesses, particularly newer and smaller ones, slip through the cracks.

It’s called birth-death adjustment, and in 2007, it guesstimated about 300,000 more jobs than were actually created.

Dean Baker notes that the BLS is showing that the restaurant sector is shown to have added 48,000 jobs in January and February, but restaurant spending is shown to have decreased by about 0.6% over the same period.

Barry Ritholtz notes that the B/D adjustment accounted for 80% of all new jobs in 2007, and he has a nice picture of 2008 adjustments:

Given Baker’s data on restaurants, I would circle hospitality too, but the idea that construction and financial services are surging is just loopy.

More Tanker Fun

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Well, in the latest bit of unmitigated bullsh&# to spew forth from Seattle Chicago, boeing is now claiming that the USAF had worries about the refueling boom, but covered these concerns up.

McDonnel Douglas had no problem whatsoever coming up with their own boom in the 1970s, and EADS is already working on one for the Australians, and it’s already flying.

Unmitigated crap.

We have a little one paragraph blurb in Aviation Week‘s Newsbreaks section (subscription required):

A factor that won the U.S. Air Force replacement tanker program for Northrop Grumman’s KC-45 may have operational repercussions, say U.S. Air Force critics. The KC-45’s ability to carry cargo and passengers is being used to validate the need for production of fewer C-17 transports. But a long-time operations expert says USAF will now be required to assign the tanker “for too many missions” because of its “significant strategic airlift capability,” he says. “It’s a convenient argument to kill the C-17, but it also means they’re going to try to use the tanker for everything under the Sun.”

Let’s see, they are claiming that there will be “operational repercussions” because the aircraft is too capable. That’s like claiming that you are too rich, or there is too much chocolate.

What they are really saying is that when choosing an airframe for the basis of the tanker, a 767 or a shortened 777, they went with the 767 because it did a better job of protecting the C-17 production line.

American Hero: Lieutenant Commander Matthew Diaz

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Lt. Cdr. Diaz is the man who got the list of the Gitmo detainees out when Bush and His Evil Minions™ were illegally concealing this information from the International Red Cross (It’s called “disappearing”).

The National Press Club just gave him the Ridenhour Prize for Truth-Telling.

He spent 6 months in the brig, and now the Pentagon is trying to take his law license.

Read the article from the always compelling Scott Horton.

A Good Commentary on Russia

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Boston Globe columnist James Carroll looks at what might be driving Russia’s hostility to recent NATO actions, and comes to the conlusion that it’s completely justified:

  • The dissolution of the Warsaw Pact was accompanied by a buildup of NATO.
  • Mikhail Gorbachev was assured that if the USSR accepted the reunified Germany’s presence in NATO, there would be no further eastern expansion of the alliance.

Carroll quotes George Kennan describing NATO expansion as, “the most fateful error of American policy in the entire post-Cold War era.”

The list of countries that have invaded Russia in the past few hundred years includes, “Poland, the Ottoman Empire, Sweden, Austria, France, Great Britain, and Germany”, though he leaves off the US’s direct military participation in White Russian revolts of the 1920s.

I would argue that Carroll does not go far enough.

If one looks at the Hart-Rudman Commission of the late 1990s looking at coming threats to America, and the behavior of Lynne Cheney, who continuously called for an immediate military strike on China, and resigned when she was created like a crazy aunt by everyone else, inclucing other Republicans, and juxtaposes it with the report that Francis Fukuyama said that “There was actually a deliberate search for an enemy because they felt that the Republican Party didn’t do as well“, I think that this is actually a deliberate strategy.

The Republican party needs an external enemy to succeed, and that this actions taken recently, particularly the missile shield, are part of a deliberate attempt to recreate the Cold War for partisan political gain.

B-2 Center of Gravity Seen as Likely Cause of Crash

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As with any flying wing, the moment arm for the controls is fairly short, so maintaining the CG within the proper range is crucial to controllability.

Actually, it’s not just flying wings. The first B-1 crash happened because the CG was too far aft, because the fuel was not properly distributed.

Well, investigators are now examining the fuel management system or other issues involving the CG of the aircraft. (Paid sub reqd)

The report (a short blurb really) says that the , “bomber rotated prematurely, lifted off too early and stalled”.

According to a former B-2 pilot, ““One of these things we always worried about on ferry missions is that you have a lot more fuel on board than on training or operational missions. So CG can play a role. You have to make sure you don’t overcontrol on takeoff because that’s easy to do with an aft CG in a fully loaded configuration.”

Iraq Update: Petraeus As Lying Dishonorable Disgrace to Uniform Edition

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We are still having c, see lashes between the Mahdi Militia and the Iranian Puppet Government forces.

David Petraeus is claiming that Iran supported the Mahdi militias in Basra, which is absolute BS.

While Iran wants a Shia dominated Iraq, they do not want Shia Arab nationalists dominating Iraq, they want people in their pocket, like Chalabi, Hakim, and Maliki.

Sir, in lying in this way to promote Bush’s war, you dishonor the sacrifices of your troops.

Zimbabwe High Court Rules Poll Results Case “Urgent”, Journalists Released

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The Zimbabwean High Court ruled that the MDC’s case to release voting results is urgent. This is not to say that they have ruled that the poll results must be released quickly, but that they will hear the case quickly.

In related news, Zimbabwe security forces have detained poll officials. I guess that they did not do enough voter intimidation and fraud before and during the election, so they are, as Emeril Lagasse would say, “Taking it up a notch”.

Two foreign journalists have been released from detention, New York Times reporter Barry Bearak and another unidentified (likely British) reporter. Bail was set at $Z 3,000,000. About $US 10,000.00 at the official exchange rate, and about $US 10.00 at the black market rate.

It appears that the upper house of parliament, the elected members of the Senate will be split evenly (actually 30 ZANU-PF, 26 MDC Tsvangirai, and 6 MDC Mutambara), with the appointed seats, “10 provincial Governors appointed by the President; the president and deputy president of the Council of Chiefs; 16 chiefs, being two chiefs from each province other than metropolitan provinces, and five Senators appointed by the President”, going largely ZANU-PF giving them a majority.

Signs of the Apocalypse: The WaPo Editorial Board Gets One Right

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They label the Senate foreclosure bill a, “A Pro-Foreclosure Bill“:

We refer to a $7,000 tax credit (payable over two years) to anyone who purchases a foreclosed home within a year of the proposal’s enactment. Supposedly, this would help clear the nation’s swollen inventory of repossessed properties, thus propping up home prices more generally. Here’s the catch. For lenders as well as borrowers, foreclosure is an expensive hassle. If at all possible, most banks would rather avoid repossessing a house, which they must then try to resell. But, by making it cheaper to buy a foreclosed house than a comparable unforeclosed property, the tax credit makes it more feasible to sell one. The cost and hassle — for the lender — of foreclosure go down, and the benefits go up. Other things being equal, lenders would be that much more likely to foreclose — rather than to help homeowners stay in their houses on modified terms.

The record of the Washington Post editorial board lately has been so bad that I’ve come to wonder if Richard Nixon was innocent.

H/T Dean Baker

Economics Update

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In the world of pipe dreams, we have the EU calling for a coordinated response to the credit squeeze.

The Euro-Wimps just don’t get it. This is America. We don’t do joint action based on a deliberate approach to everyone’s long term best interest. We shoot first, and ask questions later, and when the dead guy we shot doesn’t answer, we water board him, and then we bail out the bad actors, like Bear Stearns.

In the ever entertaining world of the monoliners, Fitch has cut MBIA’s rating to AA from AAA, because they are under capitalized (broke).

The disgrace here is that it took so long, though you knew that it was coming when MBIA asked Fitch to stop rating it about 3 weeks ago.

In the no surprise category, bankruptcies jumped 30% over in march 2007 year over year.

And for those of you who think that commercial real estate will be uneffected by the crash, vacancies at malls have skyrocketed.

Alan “Bubbles” Greenspan, the “I Didn’t Do It Kid”, Says that Housing is not His Fault

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Yep, he’s claiming that the housing bubble, and subsequent bust are not his fault.

  • He claims that evidence of any link between monetary policy and the bubble was “statistically very fragile”.

Let’s see, you nearly tripled the money supply before you stopped publishing M3 data in 2006, and that is “fragile”.

  • He Claims that he is, “puzzled why so many commentators seek to explain the US housing bubble in terms of Fed actions when many other economies with different central banks and different monetary policies also saw rapid house price gains.”

M3 again baby, with all that money that you created, it all had to go somewhere.

  • Mr Greenspan says, it is only with hindsight that it looks like the US economic recovery was well enough entrenched before 2004

Dude, that was you PIMPING yourself to George Walker Bush for the election, so you would get reappointed.

  • Mr Greenspan reaffirms his long-held belief that central banks cannot effectively “lean against the wind” by setting monetary policy a little tighter than it would otherwise have been during asset price booms.

Dude, you have actively pumped up and bailed out every asset boom under your watch. You engineered bailouts, either through monetary policy such as low interest rates, or directly, as you did with the LTCM hedge fund.

  • Mr Greenspan also takes issue with those who blame lax regulation by the Fed for allowing a serious deterioration in underwriting standards in the mortgage industry. The problem, Mr Greenspan argues, “is not the lack of regulation, but unrealistic expectations about what regulators are able to prevent”.

Which is why you did your best to effectively dismantle Glass-Steagall back when Paul Volker was Fed Chair.

  • The former Fed chief says the core of the subprime problem “lies with the misjudgments of the investment community”. The scramble to invest in what were initially highly profitable subprime loans would have overwhelmed any regulatory effort to slow the growth of this sector, he claims.

You allowed, scratch that, you encouraged the repackaging of garbage into Byzantinely complex instruments, and you called them good.

Regulators are more than able to prevent this, you were simply completely unwilling to take even the most basic advisory steps to do so. Your whole hearted of so called financial innovations like “credit default swaps” which are too complex for the people who trade them to understand is clear.

The legacy of Ayn Rand, your mentor, is bad writing, ugly prose, and the impoverishment of all but the most dishonest.

Thanks asshole.

Penn Fired From Clinton Campaign….Sort Of

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He is no longer a “Senior Strategist for the Clinton Campaign“.

Took them long enough to dump that incompetent jerk. The man has been a complete disaster.

The bad news is that he appears to still have a role in the campaign, albeit a diminished one.

This guy should have been given the boot long ago. He’s incompetent and expensive, and his continued presence on the campaign does not reflect well on either Bill or Hillary, both of whom stuck with him almost a year longer than they should have.

World Food Crisis Approaching

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Paul Krugman notes that we are in the middle of a major food crisis, with the prices of staples such as wheat, corn, and rice skyrocketing, and he blames, along with weather and energy prices, biofuels.

As he so eloquently states, “People are starving in Africa so that American politicians can court votes in farm states”.

It’s a nice sound bite, but it is incomplete, which may be an unfortunate fact of life when one has only about 800 words to put forth an idea.

Simply put, there is much more to this problem than simply the currently minuscule demand for feed stock for bio-fuels.

First, he misses the very real possibility of worries regarding social unrest, possibly to the level of failed nation states from food riots, that may very result from this, which may be far more lethal the direct starvation deaths.*

Major exporters, such as China, India, Egypt, Vietnam and Cambodia have introduced export restrictions to forestall this, which, of course, worsens the problem for net food importers.

More interisting is a Bloomberg article showing the problems in the market being akin to the current credit crisis. The reporting is mind boggling simple here telling , “Bad countries interfering with the free market by regulating their exports so that poor people don’t starve“, story.

The reality, and it can be teased out from the article, is that there is a lot of arbitrage generating volatility. The quotes are from rice traders, and they are wringing their hands. Let’s look at the various non-producing players in the market that were listed:

  • Pfaffikon, Switzerland-based Mother Earth Investments AG
  • Morgan Stanley Global Wealth Management
  • Singapore-based rice broker Hermes Investments Pte Ltd.
  • Padiberas Nasional Bhd.
  • Global Commodities Ltd. in Adelaide, Australia
  • Diapason Commodities Management SA

To the best of my knowledge, ot one of these companies owns a farm, nor processes the grain, they make their by extracting fees on trades, and while that can be useful to buy a contract for future delivery, the reckless Anglo-Saxon trading model that is at the core of the current credit crunch, where numerous people buy and sell contracts to generate trade profits is making things worse.

In fact, until we move back to depression era regulators to reign in this activity, it will continue to get worse.

*Yes, I’m looking at this cold blooded construct, and realizing that it means for many people the end of the world as they know it.

In Which I Declare Myself the Spiritual Leader of the Church of the Holy Ronald Reagan

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In the spirit of L. Ron Hubbard, who once declared, “I’d like to start a religion. That’s where the money is!*, I hereby declare myself the first Senior Ecclesiastic Authority of The Church of Ronald Reagan. I declare myself to be the supreme confessor and Pontifex Maximus.†

My inspiration is the inimitable Digby, who notes that when the Republicans discovered that Ronald Reagan was rated by historians as mediocre, “They put millions in to the project and succeeded in changing the names of airports, schools and highways all across the country. They have plan to put Ronnie on Rushmore and the ten dollar bill. Over time I would expect that someone will come up with the idea to declare Reaganism a religion.”

You know, designing and analyzing useful things, much like Hubbard’s few pennies a word, are not a great way to make a lot of money, but as Pontifax Maximus, the revenue possibilities border on endless.

Just think of that lucrative “selling tortillas with Reagan’s visage on eBay” market.

I would be set for life.

*Full disclosure, I have met editor Sam Moskowitz, one of the sources of the quote, though I don’t recall talking with him, I think that I was just in the audience at an SF con.
†This is a reference to the Roman Emperor’s role as head of the state Church, not the Pope. Both terms derive from the word for “bridge”.