That’s what Alan Schwartz, who was head of Bear Stearns when it imploded is asking whether Goldman Sachs was aggressively shorting and talking down Bear Stearns to generate a quick profit.
I would not be surprised. The same was alleged regarding the collapse of hedge fund Long Term Capital Management in the late 1990s.
Wall Street is a cesspool, and it needs to be drained.
Remember when I said that Pelosi has said that the Judiciary Committe might hold impeachment hearings?
No such luck. It appears that the committee will instead investigate the behavior of Bush and His Evil Minions™, and if they find something inappropriate, I’m sure that they will write a very strongly written letter, and perhaps hold a very upset press conference.
But as to impeachment, and a possible vote on impeachment, that’s just:
NOT ON THE TABLE! NOT ON THE TABLE!
Wimps.
Stephen Payne, who was selling access to the Bush administration for contributions to the Bush Library (insert “which book” joke here), has now been asked to step down from his position on the Secure Borders and Open Doors Subcommittee of the Homeland Security Advisory Council.
No big surprise there. They have him on tape reciting a price list of bribes.
Hopefully, he’ll see some jail time, and he’ll roll on higher-ups…..How many times have I thought that recently?
(See here for background)
Tom Coburn, the Australopithecine Senator from Oklahoma, has repeatedly abused the Senate courtesy known as a “hold”, and has applied it to over 100 bills, and Harry Reid has had enough, so he has repackaged all of these bills into an omnibus legislative package that will hit the floor in August.
Reid in uncharacteristically blunt language, says of Coburn, “For those of you who may not know this, you cannot negotiate with Coburn. It’s something that you learn over the years, that it’s a waste of time.”
Seeing as how this legislation will have earmarks and pork for many pet projects, all Reid has to do is to peel off 9 Republicans limit debate and get it passed.
Of course, they could vote against the bills….two months before election day….
Well, here we have another article full of hand wringing about how the US is not graduating enough people with technical degrees.
The problem is very simple. We have policies like the H1B and L1 visas that depress the wages of people in technical in fields.
People inclined to go into technical fields tend to have a greater facility with math than the rest of the population.
Mathematically inclined people look at pay as a part of their career and educational choices, and they determine that there is more money, in going into law, or business administration, or medicine, or video editing, so so choose those professions.
In order for you to increase the supply of graduates with technical skills, you must increase the benefits that accrue as a result of getting those skills.
The efforts this far, which consist mostly of crap like sending astronauts around to encourage kids to take science, don’t work because they are, at their core, a lie.
Our society does not value technical expertise. It it did, it would pay more for it.
Specifically, where he relates what he said on a Bloomberg TV Interview, where he says that he expects the worst financial crisis cince the Great Depression and worst U.S. recession in decades.
No surprise to me, or his other regular readers, but if you don’t read RGE Monitor regularly, it’s a must read.
I think he’s right, though he may be too optimistic.
He predicted the housing/credit/insurance bubble collapse, but was actually more optimistic that reality.
This is actually fairly complex. It starts with he fact that there is a possibility that the GSEs may reduce or suspend dividends because of their losses, which is pretty straightforward: No profit, no dividend.
However, it ends up creating some complex tax and cash flow issues for traders that could have triggered rampant short selling of the stocks.
In order to to a normal “non-naked” short sale, you have to borrow a stock, pay a fee to the owner, and you sell that stock now with the promise that you will buy later and return to the lender.
Most of the shares so lent are held in brokerage margin accounts where the original purchaser of the stock would borrow money from the brokerage to cover some of the purchase price of the shares, which increases the upside and downside possibilities of the stock (if you put 25% down on purchasing a stock, and the stock makes 25%, you make 100% profit, as opposed to 25% if you paid 100% down).
However, dividends create an incentive not to keep stocks in margin accounts. The buyer does not get dividends, but instead gets payments-in-lieu of dividends, which are treated as ordinary income, and taxed more heavily.
So as an corporation cuts, or eliminates, its dividend, as Fannie Mae and Freddy Mac seem likely to do (see first ‘graph), people are more likely to put their shares in margin accounts, which makes more shares available for people to short, and hence, makes it easier more people to short the stock.
The SEC does not want this to cascade into a death-spiral for the 2nd and 3rd largest borrowers in the world, so they issued an emergency rule to restrict short selling.
Everything clear?
Good. Because I’m still confused as hell.
They were polite about it, they called Sarkozy’s order that they conduct a revote “premature”, though the Irish Times reported “quiet fury” in the government when presented with his ultimatum.
Good for them. Maybe some people in France should tell Sarkozy to go pound sand now and then.
Heinrich Kieber, a former bank clerk in Lichtenstein, downloaded the names and accounts of thousands of secret bank accounts, burned them to three CDs, and then sold them “tax authorities to 12 countries including Germany, Great Britain, France, Italy and the United States.”
Well, it now appears that a fair number of these rich pig tax dodgers people will be facing some serious scrutiny from the IRS.
It’s been a while since I had a Schadenfreude post.
Brian O’Keefe, and editor at Fortune Magazine wonders why OPEC isn’t opening the spigots to prevent a world wide recession with the possible result of a collapse in oil demand which would drive prices down.
There are two answers, they want the money now, or the spigot is already full open.
Well, Steve LeVine at competitor Business Week has received a copy of a document which, if true, settles the dispute, because it says that the House of Saud is incapable of pumping oil at the volumes that they promise:
But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. Business Week obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.
The fact that the House of Saud is notoriously closed mouth about its assessments of its oil reserves lend additional credence to this document.
It means that oil is high because we are pumping, and burning, as much as can be pumped out of the ground, and so minor disruptions create spikes, and a long term minor spike could create actual physical shortages.
The Consumer Price Index CPI, just
jumped 1.1% in June. For the past 12 months, it’s been 5.5%.
Considering how bogus the CPI stats have become, I’d be inclined to at at least 3% to both numbers, but but I’m an engineer, not an economist, dammit!*
On the other hand, oil is now down about $11 over two days, which would explain why the dollar is holding steady for now, though we are not seeing any good news at the pump, as we hit a new record again.
Industrial production in June was up by 0.05%, which beat expectations, though part of that number was a rebound from the strike at American Axle in May.
Mortgage applications were up 1.7% last week, though I’m not sure how much of this is low rates, and worry about rising rates, and noise.
Let me finish that I will have a separate post on the GSE’s and how their possible reduction/elimination of dividends may have led to the SEC’s restrictions on naked shorting.
*I LOVE IT when I get to go all Doctor McCoy!!!
This is what happens when you divert resources to Iraq:
U.S. troops pulled out of a remote outpost in northeastern Afghanistan, three days after Taliban militants briefly breached the defences and killed nine U.S. soldiers, the biggest single loss of life for American forces in Afghanistan since 2005.
This is not winning, and it wasn’t the military men who took their eye off the ball to go after Saddam Hussein.
Sen. Elizabeth Dole (R-NC) has proposed an amendment to rename the HIV/AIDS, Tuberculosis, and Malaria relief bill after Jesse Helms.
Jesse Helms? The Senator who was so bad on this issue, that AIDS activists once encased his house in a giant condom?
That Jesse Helms?
Whiskey Tango Foxtrot?
Well, after years of saying no contact with the Iranians until they capitulate on uranium enrichment, the Bush Administration is sending Williams Burns, under secretary of state for political affairs, to a meeting with the Iranians nuclear negotiator.
My guess is that this is just making nice before a military strike in October driven by the desire for partisan political gain..
Ali Saleh Kahlah al-Marri a legal US resident who was arrested for credit card fraud, and then declared an “enemy combatant” will now have his day in court, after more than 5 years in solitary confinement.
The court ruled that he could be detained, but that the basis of the detention, the statement of a defense department official without supporting evidence, was insufficient to justify his classification.
Note that as a legal resident, he has the same rights to due process as a US citizen, and so the Bush administration’s position was thus that they were free to detain anyone at any time forever without any supporting facts.
Personally, I think that if they have evidence, it should be addressed in a real trial, though I would be not at all surprised if this hearing reveals that the emperor has no clothes.
The SEC has just issued an emergency against naked short selling (Wiki has a good summary of what naked short selling is.)
It’s in response to the plummeting Fannie Mae and Freddie Mac stock price, but it actually probably had very little to do with that drop, there are simply too many shares of the GSEs, though it can be devastating to small and micro cap companies.
Guantanamo records show that Salim Hamdan was subjected to sleep deprivation for 50 days (see also here).
After 72 hours of sleep deprivation, people start to hallucinate. They literally become psychotic and desperate.
It’s a great technique to get false confessions, because you tell them what they want, and they are inclined to give it to you, but to get accurate information, not really, because after a few days, much less 50 days (!), they no longer have a grasp on reality.
There are a few thousand people, both in the active duty military and in government civilian service, who need to spend the rest of their lives in jail over this.
It appears that with only 6 months to go, Bush and His Evil Minions™ are doing their level best to make birth control unavailable a significannt portion of the US population.
First, they have now defined abortion as “anything that results in the termination of the life of a human being in utero between conception and natural birth, whether before or after implantation.”
This would be many birth control pills, emergency contraception following a rape, and the IUD, in addition to a number of medications not normally used for contraception, but for which are likely to cause a failure to implant, or a spontaneous abortion.
What’s more, any medical provider receiving money for a Health and Human Services Department program would have to, “sign written certifications”, certifying that the would not, “will not refuse to hire nurses and other providers who object to abortion and even certain types of birth control.” (see also here)
What’s amazing is that Mr. “I don’t listen to polls” HHS is using a poll, as opposed to the American Medical Association’s definition of “abortion”.
If you think that you can compromise with abortion-criminalization terrorists, you are wrong.
Their ultimate goal is to make all forms of birth control illegal in the United States of America.
Image courtesy of Feministing.
Looks like a 3:1 victory for Vichy Democrat John Barrow in Georgia’s 12th district.