Year: 2008

The Problem With Journalists

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Will Bunch has an interesting observation regarding the press, that they are almost completely divorced from life around them.

He was reading an account of Len Downie upon his retirement from the Washington Post, and he noted that Downie said that he did not have any friends outside of the paper. Note also that Downie also did not register to vote until he retired.

So Bunch asks the question, “If Len Downie only hung around with other journalists, where did he get his ideas for what was news?”

The answer is, of course, PR flacks, because he has no context to make these decisions on his own.

What the War Nerd Said

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Gary Brecher makes a very good point, that the Neocons who are suggesting that Georgia needs to be reorganized along the lines of Hezbollah do not have the best interest of the Georgians at heart.

Rather, as the War Nerd so eloquently puts it, “America’s chickenhawks are ready to turn Georgia into a nation of missing-relative-seeking refugees.”:

I’m pretty sure if you asked any Georgians, they’d screech, “Agh! No! We don’t want to live like Hezbollah, cowering in our huts under constant bombardment, raising kids with no prospects but martyrdom!” But then the neocons haven’t asked anybody in Georgia. Safe in their living rooms, they think it’d be a great idea for Georgia, a very unwarlike little middle-class country, to try to imitate the Lebanese Shia who make up Hezbollah’s suicide squads.

Why Save Bear Stearns, and not LEhman

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Buried in a very good post by the Angry Bear is this little gem:

But the effect of LEH going out of business would not be so severe as the effect of BS going out of business for one reason that Roubini, for some reason, appears not to have mentioned.

Lehmann has no clearing business.

Had Bear gone out of business, about 30% of the hedge funds in the country would not have been able to execute virtually any transaction for the following thirty days. Not a payment. Not a redemption. Not a trade on a listed exchange. Not a receipt. Not a de-leveraging. Not a swap payment, not a CDS payment, not fulfilling an option exercised against them.

There’s not just a “maybe” about financial collapse in such a scenario; P probably well in excess of 0.9944. $30 billion is a “bargain” in such a situation.

(emphasis mine)

Bear Stearns was a surprise. Lehman was not. This has been bubbling up for months, and the firms have been able to create contingencies to allow for trading in the departure of the firm from the market.

Diving Deeper in the Financial Mess: Lehman and Bankruptcy Laws

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Well, it appears that while Lehman technically filed for chapter 11 reorg, because of changes to the laws the effect is much closer to that of a Chapter 7 liquidation, particularly with the 2005 changes to the bankruptcy laws.

The bullet points:

  • The holding company has filed for BK, but , its subsidiaries, “its brokerage-dealer subsidiaries, asset management unit, and investment management division”, continue to function.”
  • Lehman will try to sell off the good bits.
  • Under normal BK procedures, there is a stay on collecting debts, but, “most financial contracts — including securities contracts, swaps, repurchase agreements, commodities contracts, and forward trades — are unaffected by automatic stays.“
  • By declaring bankruptcies, it means the creditors can file to collect immediately.

So have this problem:

Now comes the downside potential. The risk is that lots of these commercial counterparties will choose to terminate their financial contracts with Lehman — say, for instance, credit default swaps — all at once, and then try to rehedge themselves all at once, causing the market to seize up.

But the market is already seized up.

The US financial system is in a pit of ugly, and no know knows which way is out.

Economics Update

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Obviously, with Merrill Lynch ceasing to exist as an independent entity, and Lehaman ceasing to exist completely, it has been a busy day.

This update, therefore just covers the more ordinary stories, as opposed to the 767s slamming into the US financial system, though many of these stories are in fact driven by the bigger stories.

Let’s start with one that has nothing to do with Lehman or Merrill, retail gasoline is up for the 3re time in 3 days, because Hurricane Ike has closed about 20% of US refining capacity.

We’ll see how this shakes out over the next few days, but we also now have another unrelated pice of news, that the New York Fed Manufacturing Index Decreased to -7.4 in September, indicating that it’s not just those Wall Street whores getting it up the ass, it’s all of us, which is why
credit card debt and delinquencies are up the past month.

And now on to the main show:

And in the World of Ineffective Abusive Security Techniques …..

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Mario Labbé, a frequent flying record executive in Montreal, has discovered that his name was erroneously on the no-fly list.

After many attempts to have this corrected, Mr. Labbechanged his name to François Mario Labbé, which ended his monthly harassment.

I’m not sure what concerns me more, that one can be put on the no-fly list with no recourse, or that you can fix it by tweaking your name.

So, I guess Osama bin Laden could fly around the United States as LeRoy Ricks, Professional Elvis Impersonator.*

*3 Shows a day in Vegas……Think about it. It’s the last place that anyone would look for bin Laden.

Sorry if it Seems All Palin, All the Time…..

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But each time someone turns over a rock, we see more evidence of corruption, self-dealing, etc.

It appears that Sarah Palin collected per diem payments for times when she was at home:

Palin, who earns $125,000 a year, claimed and received $16,951 as her allowance, which officials say was permitted because her official “duty station” is Juneau, according to an analysis of her travel documents by The Washington Post.

The governor’s daughters and husband charged the state $43,490 to travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away, the documents show.

I’ve done per Diem deductions, and if I did it that way, the IRS would take my house and throw me in jail.

Well, the WaPo Finally Talks About Junkie Cindy McCain

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It appears that the story was written, and the title put into the feed a few days early, so here it is.

The issue is not that she is* a junkie. The issue is that even though she had the ability to feed her need in a number of ways that would not have put people at risk, she forged other people’s names at her charity, etc. which placed them at risk through no fault of their own, and then she used her money, and McCain used his position, to protect her and to pursue vendettas against people who did the right thing, and went to the DEA.

Honor, my ass.

*Once someone is an alcoholic or junkie, they always are, the question is just whether they are recovering, or still doing whichever substance they have a problem with.

Republicans to Use Foreclosure Data in Black Neighborhoods to Suppress Votes

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Because, as we all know, the real motto of the Republican party is, “N*gg*rs should not be allowed to vote.

The thing is, this is illegal:

“You can’t challenge people without a factual basis for doing so,” said J. Gerald Hebert, a former voting rights litigator for the U.S. Justice Department who now runs the Campaign Legal Center, a Washington D.C.-based public-interest law firm. “I don’t think a foreclosure notice is sufficient basis for a challenge, because people often remain in their homes after foreclosure begins and sometimes are able to negotiate and refinance.”

Once again, the Republican’s cynicism exceeds my capacity to be cynical.

Paul R. La Monica is an Idiot

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As I have said before, and will undoubtely say again, , the writer of CNNFN’s “The Buzz” column, Paul R. La Monica, is a complete Pratt.

Well, a few days back, La Monica claimed that the next bubble will be — get this — short selling.

This is the statement of someone who does not get the concept of a bubble beyond the fact that it’s an “in word” in the media.

A bubble is an artifact of an unreasonable optimism, and short selling is a manifestation of pessimism, but the clue train has not arrived to La Monicaville.