Month: May 2009

Morons Trying to Drum Up Billable HOurs

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So, two lawyers specializing in IP litigation have proposed changes in copyright and anti-trust law to bolster newspapers.

Unsurprisingly, their proposals would create an explosion of litigation, which would mean that they could buy that yacht that they have their eye on.

What they propose:

  • Ummm….Making search engines indexing web sites a copyright violation?
    • The idea here is that creating an index is a copyright violation, which means that things like the old index of periodicals in the library, an essential research tool, would be illegal.
  • And allow newspapers to price fix, so that they can all start charging for online content.
    • Let’s note that newspapers are not in the business of selling the content called “news”, they are in the business of selling advertising. The cost of purchasing a paper only covers the cost of the ink, paper, and printing. That’s why, when the chains started buying up newspapers, and cutting newsrooms about 2 decades ago, they could generate those 20%+ margins on a much crappier product.
    • The threat to newspapers is not people reading their news online, it’s Craig’s List. It’s the loss of classified ad revenue that has put these institutions behind the financial 8-ball
      • Oh, yes, there’s also the issue of accumulating insane levels of debt to build these chains in the first place.
  • Federalizing the “hot news” doctrine.
    • This one is just plain stupid. It’s a 1918 decision which says that a news service cannot take a story from another, rewrite it, and pass it off as it’s own, which is a good idea, but they want to make the reporting that a news source broke a story, like, “The Wall Street Journal reported today that sources in the Treasury have determined

As Timothy Karr notes

But consider this. Just a few years ago, the average profit margin for newspapers was 20 percent — with some raking in twice as much or more.

“Did they use these astronomical profits to invest in the quality of their products or to innovate for the future?” asked Free Press’ Craig Aaron on Thursday. “No. They just bought up more newspapers and TV stations.” (On May 12 Free Press released a National Journalism Strategy that outlines forward-thinking policies to save journalism, and not merely prop up the creaking old guard.)

(emphasis mine)

I am not concerned about the future of news papers, I am concerned about the future of journalism……Scratch that…I am concerned about the present of journalism, because the professionals out there, whether covering George W. Bush, the housing bubble, or just publishing this bit of crap, seems to be in a state of incompetent free fall.

Professional journalism today in the United States is a captive of those that they cover, and so people like me go to foreign and not-for-profit sources to find our news.

It’s About Bloody Time

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There are indications that the government is pressuring Bank of America to make major changes in the composition of its board.

Basically, they want people who actually understand banking to be the directors of a bank, imagine that.

When juxtaposed with FDIC Chief’s Sheila Bair’s comments saying to expect that some bank CEOs will be given their walking papers, though the FDIC walked backed from the statement later, is a good sign.

We own the banks, now lets fire the rat bastards who broke them.

Bank Failure Friday on Thursday

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BankUnited, FSB, Coral Gables, FL, which is no surprise. BankU has been dead man walking for at least 2 weeks.

It’s the biggest failure of the year, and 2nd biggest ever, only exceeded by the failure of Indymac last year.

It’s the 34th bank failure of the year.

The closure will cost the FDIC $4.9 billion, almost doubling the amount of money that it has shelled out so far this year.

As to why do this on Thursday, probably because they have a very busy Friday planned.

Before the President’s Day weekend, there were 4 bank closings, the most this year, and my guess is because they had an extra day to straighten things out before the banks had to open their door, so I would expect this 3 day weekend to be very busy.

Full FDIC list.

Another New Word Learned in Real Estate

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Courtesy of Calculated Risk, I come across the term “loan recast.”

It’s similar to a “loan reset“, in that it means that your mortgage payments are increasing, but instead of being an increase in interest rates, it is a change in terms.

So, for example, if you have an interest-only or negative amortization mortgage, when the time comes to catch up, and make payments on principal, you have a recast.

They are in some ways much more worrisome than resets, because if a mortgage resets during a time of low interest rates, the payment may not change by much, but when a mortgage recasts, the payments go up regardless of the interest rates.

The yellow are recasts, and they look like a tsunami.

The graph on the right

A Battle Obama Needs To Lose

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And hopefully, he already might have lost.

There was every indication of a knock down drag out fight inside the Democratic party over the Panama free trade agreement, dealing with the fact that it did nothing about Panamanian money laundering or labor and environmental protections.

Well, after over 50 Dem Representatives sent a letter on this matter, Obama agreed to hold back on submitting the Panama free trade deal until there is a “framework” for protecting labor and the environment.

One of the unspoken consensuses in Washington, DC is that a bad free trade deal is better than no free trade deal, because free trade, raises living standards, spreads democracy, prevents rain on picnics, and keeps your daughter from dating the guy with the studs and tattoos.

I don’t believe that this pause is real. It is merely a ploy to get the votes he needs to pass the deal(s), which also include Columbia and Korea.

When you look at the people around him, like Austan Goolsbee, it’s pretty clear that these folks are free trade (except when it comes to IP) fanatics, and they keep coming back until they either win, or are slapped down firmly.

What Josh Said

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I don’t have much to say on Obama’s speech, I’ve only read the transcript, and Obama needs to be watch, but Josh Marshal finds the reality on Richard Bruce Cheney when suggests that Cheney is at best a figure of mockery and derision:

This is someone who not only organized and seemingly directed a policy of state-sponsored torture. He did it in large part to get people to admit to crankish conspiracy theories he got taken in by by a crew of think-tank jockeys in DC whose theories most even half way sensible people treated as punch lines of jokes. So it’s Torquemada or 1984 but only after getting rescripted by Mel Brooks.

This is an extremely gullible man who has just come off being the driving ideological force in an administration that most people can already see produced more fiascos and titanic, self-inflicted goofs than possibly any in our entire history. By any standard the guy is a monumental failure — and not one whose mistakes stem in some Lyndon Johnson fashion from tragic overreach, but just a fool who damaged his country through his own gullibility, paranoia and bad judgment. Whatever else you can say about the Cheney story it ain’t Shakespearean.

Indeed.

Economics Update

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The Economic Downturn and Contemporary Art Sales, courtesy of Felix Salmon

Well, Thursday is jobless claims day, and weekly initial jobless claims fell by 12,000, to 631,000, and the 4 week moving average fell to 628,500 from 632,000, but continuing claims hit yet another new record, hitting the number of the beast, 6.66 million.

Meanwhile, more GDP data from more countries has come out, and it is almost uniformly grim.

Additionally, the Philadelphia Fed manufacturing index is showing further contraction, though it did rise, from -24.4 to -22.6.

Of course, the press is touting the fact that the April leading economic indicators rose, but this is a volatile index, and is not supposed to mean anything until you have 3 straight months up or down.

Meanwhile, Treasuries fell, and yields rose, on reports that the Fed will be buying less of them, and on an announcement that the government would be selling an additional $162 billion of them next week.

Basically, it’s inflation concerns, which also drove the dollar to a 4 month low.

Oil rose, largely on profit taking from yesterday’s high.

Why Mass Transit Sucks in the US

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Matthew Yglesias points to an interesting study on world subway systems.

It’s just a bunch of maps printed out at the same scale, and you notice a difference between the US and the rest of the world:

Take a look:

London


New York


Tokyo


Moscow


Paris


Chicago


Berlin


Washington, DC


Osaka


San Francisco’s BART


Boston


Philadelphia

There some outliers in the rest of the world, Seoul, for example, but the difference, except in New York, is that America does not really build subways, which serve the city and allow you to get around in the city, it builds some sort of light rail, for commuters to get into the city, in yet another subsidy of the American suburb.

Martha Coakley Must Have Pictures of Them Doing an Underage Goat

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Because that’s about the only way that I can see that the Massachusetts Attorney General managed to pry $60 million from Goldman Sachs for engaging in deceptive loan and loan securitization processes.

$50 million dollars to the home owners, and $10m in fines to the state, which will reduce principal on, “first mortgages by 25-35% and second mortgages by 50% or more.”

Yes, I know, it’s a typical “no wrongdoing admitted” deal, but she had to have found an awfully big club to use on them.

I wonder what it was.

Signs of the Apocalypse

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It’s by Lanny Davis, a Washington, DC insider, and the guy who accused people supporting Ned Lamont in 2006 against Joe Lieberman of “Liberal McCarthyism“, and he is calling for the criminal prosecution of Dick Cheney for authorizing torture:

I have agreed with President Obama on the need to look forward, not backward.

But … I have changed my mind about the need to indict former Vice President Dick Cheney for complicity in illegal torture.

…

Even more, they seem to be an in-your-face dare by Mr. Cheney to the U.S. criminal justice system: “I am Dick Cheney, I approved violations of the law in the name of the war on terror, and what are you going to do about it?”

It reminds me of Gary Hart’s reaction in the early days of his 1988 presidential campaign to the rumors of his womanizing. …..

So as to Mr. Cheney: I think it is time to take him up on his implicit dare and indict him for violating the 1994 federal law against torture.

This is as big a Beltway Blowhard™ as they come, and he called for Dick Cheney to be prosecuted, and got it published in the Moonie Times (Link is to The Hill, which republished it.

I don’t think that he is suggesting this out of any real moral imperative, it’s just that he feels that Dick Cheney is, to paraphrase Bull Durham, “Calling the umpire a called the guy a c$#@sucker,” which offends his genteel Beltway sensibilities.

It’s a Chu-Chu Race

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But not between locomotives. Judy Chu won the special election to replace Hilda Solis in California’s 32nd Congressional district, but did not get an absolute majority, and Betty Tom Chu was the highest finishing Republican, so they, along with Libertarian candidate Christopher Agrella face off in a runoff in runoff on July 14, Bastille Day.

And, yes, it appears that the two Chu’s are distantly related.

In any case, it is a solidly Democratic district, so Judy Chu should likely be the next Representative from CA-32.

Where Are the Slime Going to Flow?

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One of the arguments about the obscene compensation on Wall Street is that they have to pay in order to keep their “talent” from jumping ship.

Brendan Coffey looks at this, and notes that these folks really have no where to go:

  • Hedge funds: They are shutting down, and now that they aren’t making double digit returns people are not interested in 2% of assets and 20% of gains any more.
  • Private Equity: It’s dependent on cheap credit, there isn’t that much any more, and it likely won’t be in the near term.
  • Foreign banks: Compensation for CEOs, except for the UK’s “The Street”, which is sicker than Wall Street, their CEOs make less than a lot of junior traders get for bonuses.

If these whiners are so sick of this, and threatening to jump ship, let’s not throw them a life raft when they land in the water.

Thoughts on Netanyahu and I/P Issues

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I think that Benyamin Netanyahu is a corrupt nutjob, and his economic policies, specifically his his economic and fiscal embrace of Thatcherism, are almost as crazy as his security policy.

That being said, one of the goals of negotiation is to negotiate and the Palestinians have been consistently infantilized in this process.

In any other negotiation, whether it be the UAW and General Motors, Croatia/Slovenia border discussions, or two people dickering over a used car, people try to maximize their advantage in a negotiation.

To use the case of the used car, it means that the price on the window is higher than the dealer really needs to sell it at, and the car has been repainted, and the customer comes with a magnet to look for bondo and paint jobs, and parhaps a carfax.com report, and they start off very far apart.

This is what happens in negotiations. Both sides take positions as a starting point that are more extreme than they expect to actually get, and try to define the situation on the ground (paint jobs, bondo, etc.) to bolster their positions.

This is what happens, and once this does happen in negotiations between the Israelis and the Palestinians, things will move forward, toward an (inevitable) Palestinian state.

People who believe that the normal give and take of a negotiation process is somehow unfair and unjust, and must be somehow avoided, it will forestall meaningful negotiations. It raises unrealistic expectations, and in the case of the Palestinians, those expectations mean that real negotiations, which will produce a less than optimal solution for everyone on both sides, create a very real risk of the death of whoever signs off on such a deal.

It probably won’t be Netanyahu who will be the one to finish the deal, but someone will.

As to the what a Palestinian state would look like, I rather imagine that it will be a typical failed Arab government, much like the corrupt and autocratic Egypt, Sudan, Algeria, Jordan, Iraq, UAE, etc., but it will be their failed government, and that is what they want.

One final note: A solution to this problem will not solve any other problem in the world. The idea that all of the problems in the Middle East somehow run through Jerusalem and Ramallah is as nonsensical as it is widely held.

This does not make the problem not worth solving. This is worth solving on its own merits.

Obama’s Guantánamo Show Trials

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It just gets better and better.

So, the details of the plan are dribbling out and it’s a distinction without a difference as was made clear when the New York Times obtained a filing made to the judges running the military commissions.

Remember the statement that, “The accused will have greater latitude in selecting their counsel?”

Not so much, Bush and His Evil Minions™ required that the defendants’ lawyers be appointed by the Pentagon, and, “assigned to a special office of military defense lawyers for Guantánamo, which meant, among other things, that they had to be uniformed military, and in the filing to the judges, Obama and His Evil Minions™ say that a detainee would be allowed to select a lawyer of their “own choosing”, but that the, “requested lawyer must be assigned to the Pentagon’s office of military defense lawyers for Guantánamo.“

“Any color you want, so long as it’s black,” quoth Henry Ford.

Furthermore, the right to confront witnesses against them will be ignored by using a very broad hearsay rule, because, according to “senior administration officials” said that although federal courts bar many kinds of hearsay evidence, “the hearsay rule is not one of those things that is rooted in American values.”

The right to confront witnesses in court is one of the most basic of legal rights in our system since the excesses of the Star Chamber in England.

Note that while coerced testimony will not be allowed, that the defendant will not be allowed to question the primary source of the testimony, only their interrogator, or possibly just someone who reads the interrogator’s report, will confirm this.

Economics Update

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Well, let’s lead with a rather unique bit of news, the volume of the derivatives market fell for the first time ever in the last 6 months of 2008.

The outstanding contracts fell by 15% to $592 trillion dollars (!!), or about forty times the GDP of the United States, and 110% of the entire planet.

My guess is that people suddenly realized that they had absolutely no idea at all what the hell they were holding, and started to unwind, because they did not know who they could trust.

It’s the sort of story I like, so I put it first even though by all rights the fact that Japan’s GDP fell at a 15.2% annualized rate in the first quarter of this year.

That’s Eastern Europe imploding numbers.

Export driven economies like Japan’s are going to take a hit, which is why
Moody’s is warning on possible downgrades of Asian banks, specifically those in Korea, Malaysia, the Philippines, and Indonesia.

Still we have a couple of glimmers on real estate, with the Architecture Billings Index holding steady in April, indicating that there future building is at least taking a pause downward, and mortgage applications rose in response to low interest rates, though much of that is refi activity.

Of course, the commercial real estate market market is still heading down sharply, which is why the Federal Reserve has expanded the TALF to include commercial mortgage backed securities.

Ending with oil and the US dollar, oil finished above $60 for the first time since November, $62.04/bbl, and the dollar hit a 5-month low on more optimism about the world economy.

I don’t get that last bit. All I see is a dead cat bounce.

Pelosi/CIA Update

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It turns out that some of the people’s notes on the briefings could not have been made contemporaneously, as the term enhanced interrogation techniques (EITs) was used extensively throughout, and this term was not used before 2004, and the briefing was given in 2002.

This does not mean that anyone at the CIA is lying, though my guess is that some of them are, but it means that the notes used are not those made at the time.

So, you have every Dem who was briefed on that day saying that the CIA did not say then that it was torturing, and you have numerous errors in attendance, staffers being called present, Rep. David Obey challenging the accuracy of the documents, and notes that Porter Goss was briefed along with members of Congress after he became head of the CIA.

As Adam Savage and Jamie Hyneman would say, “This one’s busted.”