Month: April 2009

Enough Schadenfreude for the Whole Month

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I’m shocked, shocked to find that gambling is going on here!

Two articles on how the rich investment bankers are so upset about people thinking that they are overpaid scumbags, The Wail of the 1%, about how they all feel unjustly vilified, after creating the financial crisis, and still demanding 7 figure bonuses and 7 figure life styles, and Confessions of a Bailout CEO Wife, whose content is pretty much obvious from the title.

It should be noted that the Gawker has an absolutely devastating summary of the latter article. The final lines of which are prize:

Sounds awful. If only there were some good news too. Oh, what, there is? “The good news is that Americans have short attention spans. Before long, some other group will come along to absorb all the frustration and anger.”

Such as: Rich wives.

(emphasis mine)

I’m not an empathic guy, and I don’t feel your pain, I just go Nelson Muntz.

With children going hungry, and ordinary folks who actually work for a living having lost their jobs and their medical coverage, the idea that you are wailing about not being as overpaid to mismanage people’s money fills me with nothing but contempt.

How about you do some real work, physical labor, even if it’s something as simple repaving a road, and then ask yourself: just how onerous is your work, and why do you need to be paid so much to do it?

Lessons Learned in Defense Budgeting

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SecDef Gates says, and I agree, that the non-disclosure agreements that he required participants to sign made the process work better:

“[It] was critically important as we considered dramatic changes in the way we were going to procure things and programmatic changes to specific programs was that we be able to have those deliberations among the senior military and the senior civilians in the department without the newspapers printing, every single day, the results of our deliberations the preceding day,” Gates said last week, speaking at the Naval War College, Newport R.I.

Gates took the unusual step earlier this year of requiring everyone involved in the 2010 budget deliberations sign nondisclosure agreements. The 2010 defense budget had already become politically hot well before deliberations began in earnest when news got out that the Joint Chiefs of Staff had prepared a draft budget request of $584 billion (an 8 percent increase over 2009), putting the incoming Obama administration into the position of having to “cut” defense. The Obama administration’s 2010 defense budget request is $527 billion.

The military budget process has become so politicized and pork laden that it was the only way to get things done.

Financial Firms Lobby to Cut Cost of TARP Exit – WSJ.com

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It looks like the Treasury will allow some of the TARP recipients to pay back their money early, though it is implied that the stress test has to be complete, and that their financial status has to be well capitalized, in order for them to do this.

In a related note, the banks are lobbying to reduce the costs of the loans that they took:

The banking industry is aggressively lobbying the Treasury Department to make it less costly for financial institutions to get out of the Troubled Asset Relief Program.

…

At issue are “warrants” the government received when it bought preferred stock in roughly 500 banks over the past six months as part of TARP. The warrants allow the government to buy common stock in the banks at a later date so taxpayers can receive more of a return on their investment when the banking industry recovers.

Many banks want to return their TARP money and, as part of that effort, want to expunge the warrants. To do that, banks must either buy them back from the government or allow the Treasury to sell them to private investors.

Today, most of the warrants are essentially worthless, because their exercise price is higher than where most banks’ stocks are trading. But the government believes the warrants still have value, since they give the Treasury the right to buy common stock at a set price for 10 years.

Bankers say it is unfair to charge what amounts to a “prepayment penalty,” which makes it additionally onerous to escape TARP. Bank representatives say the cost of buying back the warrants could be equivalent to paying 60% annual interest on short-term loans. That, they argue, would exacerbate banks’ existing problems.

(emphasis mine)

Awww….the poor little babies, they have a “prepayment penalty“, such a pity.

The irony is delicious.

Props to Senator Pat Leahy

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He is saying that he will not allow bipartisanship to be used as an excuse to delay an investigation into torture:

Sen. Patrick Leahy pledged today that if he cannot get the votes to create a bipartisan commission to investigate U.S. torture policy under former President George W. Bush — and regardless of calls by President Obama that any inquiry be bipartisan — he’ll conduct his own partisan inquiry in the Senate Judiciary Committee.

Leahy’s comments after a press conference on Capitol Hill today exposed a growing rift between Democrats in Congress and the White House on how to seek accountability from Bush-era Justice officials for condoning torture in the aftermath of 9/11.

Leahy is right, and Obama is wrong, morally, legally, and politically.

When you do not prosecute, these people keep coming back, which is why you had so many Watergate and Iran-Contra alums in Bush’s staff and cabinet.

Economic Scene – The Bottom for Housing Is Probably Not Near – NYTimes.com

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Dave Leonhardt looks at various metrics for home prices and concludes that foreclosure auctions may be the pest metric, because many people are deferring putting their house on the market, hoping for prices to increase.

Auctions indicate that house prices still have a way to fall, as I agree, and Dean Baker has the graph shown to indicate that prices are still above historical norms.

I actually expect a measure of overshoot. so if you assume that prices will head down to about 80 before rebounding, and the the path is a straight line, you are looking at a real estate turn around somewhere in 2011-2012, based on my imprecise eye.

Seriously, These People Should Be Thrown in a Hole So Deep That They Forget What the Sun Looks Like

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Well, the Senate report on torture is out, and it appears that Rumsfeld and His Evil Minions™ were authorizing torture before the infamous memos justifying such behavior had been drafted, despite the fact that numerous experts on interrogation said that it torture does not work.

Notably, it was based on the Survival, Evasion, Resistance and Escape (SERE) training which was used to allow captured Americans to resist torture designed to elicit false confessions.

Bush, Cheney, Rumsfeld, Rice et all did not care. They just wanted to torture out of a combination of sadism and machismo.

That being said, I do like the last line of the article, “If torture occurred before the memo was written, it’s not worth the paper it’s written on, and the writing of the memo is potentially criminal.”

In a related note, we now know the answer to the question, “Why waterboard someone 183 times in one month?”

They did it for propaganda purposes, specifically, in order to extract false statements linking al Qaeda to Saddam Hussein”

The Bush administration applied relentless pressure on interrogators to use harsh methods on detainees in part to find evidence of cooperation between al Qaida and the late Iraqi dictator Saddam Hussein’s regime, according to a former senior U.S. intelligence official and a former Army psychiatrist.

Seriously, these people need to spend the rest of their lives in a SUPERMAX facility.

Supreme Court Discovers the 4th Amendment

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In Arizona v. Gant, by a 5/4 decision, the Supreme Court largely reversed New York v. Belton, which had said that a police officer could search a car when they arrested someone without probable cause.

It was an odd mix of judges too who voted in favor of the 4th amendment, Stevens, Souter,Ginsburg, Scalia(!) and Thomas (!!!).

Basically, the old rule was that if you arrested someone, you could search his car, and now the standard is, “police may search a vehicle without a warrant only when the suspect could reach for a weapon or try to destroy evidence, or when it is ‘reasonable to believe’ there is evidence in the car supporting the crime at hand.”

The other 4, including the 2GW Bush appointees, think that it will be too confusing, but it’s not: If you arrest someone for an expired license, or not seat belting their kids, and they are away from the car, you do not have authority to search it.

This ain’t rocket science.*

*Full Disclosure, in 1999-2000 and 1996-1998, I worked as a mechanical engineer for what is now Lockheed Martin Missiles and Fire Control, and I have some claim to actually having been a rocket scientist.

Now We Know Part of Why Obama Backtracked Over Torture Prosecutions

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It appears that Rahm Emanuel’s and Robert Gibbs statements about not prosecuting people, incensed senior career lawyers at the Department of Justice, who saw this as political meddling in a law enforcement decision.

Interestingly enough, as Scott Horton notes, the net result of this fallout may be to force AG Holder to appoint a special prosecutor in order to defuse those charges, which to my mind is a good thing.

A Mindset that Bob Gates and His Successor Need to Break

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SecDef Gates is looking to insource acquisition expertise into the Pentagon, hiring 4,100 people in this area by 2010, and 9,000 by 2015.

This is a good idea, but the mindset in this article shows why it will be hard, starting with the title, Top Talent Won’t Pick Pentagon for Pay.

The first assumption is that junior hires, “they won’t know enough to make much of a difference for at least six or seven years,” is simply wrong.

A good person can be online and doing good work in under 6 months, one who is merely competent can do the same in 18.

What’s more, with the expansion of internal positions at the Pentagon, the job prospects for outside consultants shrink accordingly, which will both bring new people in, and dissuade people who have done a few years in there from moving into outside positions.

It’s not going to be easy, but it will be much better than what we have now.

D’oh! I Miss the Obvious!

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And the Shrill One, Paul Krugman, catches it

So the market was greatly reassured when Tim Geithner declared that the “vast majority” of banks are well capitalized. Count me as baffled. …..

After all, there are a lot of banks in America. There are 1,722 institutions on the Fed’s list of “large commercial banks”. And I have no doubt that most of these banks — indeed, the vast majority — are in fine shape. That’s because they’re regional institutions that never got into the risky games played by the big guys.

But the big guys are where the money is. ….

The construction of the statement was odd, and I noticed it, but missed the connection, that about 20 banks control something in excess of ¾ of the assets out there. If 17 of those banks are insolvent, only 1% of the banks would be in trouble, but a majority of bank holdings would be wiped out.

I Want BlogAds

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So, I’m reviewing my post on GGP going bankrupt, and my schadenfreude regarding NY Times columnist Thomas “The ‘Stache of Banality” Friedman’s wife’s family’s net worth has gone from $4 billion to $25 million, and I see this Google ad in the left column:

Umm….Once again, it looks like Google Ads has chosen to serve up ads that are selling something that I am lambasting.

Anyone know anyone at BlogAds?

Actually, I really don’t generate much revenue, about enough to treat my wife to a dinner and babysitting about twice a year, which still makes me the most overpaid writer in the blogosphere, but I reserve the right to bite the hand that feeds me.

Economics Update

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Well, the IMF has updated its recession forecast for 2009, and their estimate has become much more pessimistic, with their estimate for contraction at -1.3%, down from -0.5%, they are also anticipating credit losses on the order of $4.1 trillion, and that the financial system will not stabilize until sometime in 2010.

Honestly, I still think that the new estimate is overly optimistic, but I’m a born bear.

This is born out by the fact that official UK economic predictions are that the British Isles will experience their fastest contraction since the end of the WW II, and Japanese exports are down year over year by almost ½.

That being said, we have some good news in real estate, with the Architecture billings index rising last month, and home were up 0.7%month to month in February, though prices are still down 6.5% year over year, but it’s the first two month price gain in about 2 years.

Additionally, mortgage applications are up, though this is largely refi activity, and the delay in foreclosures in California have returned with a vengeance, now that the little “holiday” created by the law changes that lengthened the time line from default to eviction has passed.

Banking still sucks though with Fannie and Freddie losses from defaults rising, Capital One’s losses on credit card defaults were worse than expected, as were Morgan Stanley’s losses (the cut dividends too), though Wells Fargo, who largely eschewed the high flying ways of the other large banks, had record profit and displaced Bank of America as the nation’s top lender.

In energy, oil rose slightly, despite reports of a growing inventory, and in currency, the dollar fell on reduced investor worries.

Living in Bizarro* World

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Because Dick Cheney is demanding that more torture memos be declassified, because his memos, or at least the ones that he wants released, show that torture worked, and got important information.

Not surprising, as Cheney is a master of bureaucratic infighting and the CYA memo

I agree with Dan Froomkin when he says, “Call Cheney’s bluff,” I also think that if he wants memos releases, they should be reports from the agents in place, and not self serving memos from the OVP.

*If you do not know what Bizarro World is, go here, or better yet, read some classic Superman® comic books….Bizarro, and Superman® are a part of basic American cultural literacy.

This Whole Rep. Harman Thing is Going Very Weird

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First, we have a report that the “Israeli agent” that Jane Harman was having a phone conversation with was an Israeli-American named Haim Saban, if the name sounds familiar, it’s because you watch the credits for Mighty Morphin’ Power rangers.

He’s a producer who made much of his fortune by importing and redubbing the children’s show.

Then we have Ron Kampeas at the JTA noting that the phone call in question happened in the Summer of 2005, which is pre-Katrina, has her discussing becoming Intel committee chairman.

Katrina hit New Orleans on August 29, 2005. It was around a week before the scope of the incompetence hit, and began destroying whatever remained of Bush’s post 911, so the possibility of a Democratically controlled house was remote. People were still talking about a permanent Republican majority.

In any case, Keampeas points us toward

Laura Rozen at Foreign Policy magazine, who appears to have a line on the personalities, and the machinations therein within the intelligence establishment that might figure in this:

  • That Bush Era intel officials felt on the defensive about the recent torture and wiretap revelations, and might want to push back.
  • Porter Goss authorized the wire tap, and Goss has always, “intensely disliked,” each other. (It is claimed that FBI Chief Mueller was unavailable at the time the warrant was requested)
  • According to an interview with Goss, Harman was the only member of Congress briefed on water boarding whose reaction wasnot , “encouragement,” which included, “Reps Pelosi and Harman, and Sens Rockefeller and Sen. Pat Roberts.”

On the other side, the statement from the Neww York Times editor that Harman did not attempt to influence the publication of the illegal wiretap article may not be true, as Bill Keller has clarified his statements, and it appears that she contacted Washington Bureau Chief Phil Taubman regarding the matter, at the request of Michael Hayden, who keeps showing up in every bit of evil in the intelligence establishment like a demented Amway salesman.

It also means that Harman was actively working against the election of John Kerry, because if the Times had published before the election, it would likely have swung the race.

Finally, we have Jane Harman asking for the transcripts of her phone calls to be declassified and released.

Here is my older post on this, and try to figure this out.

It’s beginning to read like a John le Carré novel.

Elections Update

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Tho the surprise of no one, and to the disappointment of almost everyone, Norm Coleman has appealed the decision of the election court to the Minnesota Supreme Court. His lawyers are claiming that it’s the principal of the thing.

Meanwhile, in upstate New York, the NY-20 vote count continues apace, and it looks like Scott Murphy is picking up votes with each round.

What is interesting here is that it looks like Democratic campaigns are out-hustling Republicans on absentee ballots, which in years past, always seemed to trend Republican.

It’s a very good development.