Month: June 2009

Credit Where Credit is Due

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On Joe Scarborough’s show on MSNBC, Chuck Todd said that the emperor had no clothes, when he said that in the Ricci case that, ““he majority actually, well, to put it bluntly, legislated from the bench.”

I have repeatedly called Chuck Todd, “one of the stupidest muthf%$#ers in the White House press room,” for his sometime absurdly naive acceptance of the beltway conventional wisdom.

This is not one of those times though. He nailed it when he described the conservative majority’s intent in this vote as being judicial activism, even if Joe Scarborough reacted like a cow that had just stepped on its own udder.

Making Things Worse

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Representatives Travis Childers (D-Criminally Stupid)and Gary Miller (R-Stupid Criminal) have proposed an 18 month suspension of the Home Valuation Code of Conduct (HVCC), which is intended to reduce fraud in appraisals.

Unsurprisingly, in the world before politics, Childers and Miller were a realtor and a home builder respectively, and fraud=profits for that lot.

We know this bill sucks because of who supports it:

The National Association of Realtors’ Lawrence Yun says “stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment.” The National Association of Mortgage Brokers proclaims, “Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule.” The appraisal management companies, critics say, don’t seem to care if the appraisers they pick know anything about the neighborhoods in question.

This is a bad, bad bill.

Talk About Regulatory Capture

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Remember those bank warrants we got for TARP money?

Well Timothy Geithner and His Evil Minions™ want the banks themselves to set the price, at least initially:

The Treasury Department said the banks will make the first offer for the warrants. Treasury will then decide to sell at that price or make a counteroffer. If the government and a bank cannot agree on a fair price for the warrants, the two sides will have the right to use private appraisers.

If you want a fair price, put them out for public bid.

This is just another backdoor payout to the investment banks.

First, we overpay for the warrants, and now, we sell them back at less than their value.

The hole damn system is corrupt, and the bank bailout needs to be pursued as a criminal investigation, not as a crisis.

Economics Update

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Case-Shiller data vs. the Stress Test Assumptions
H/T Calculated Risk


Default rates on mortgages, Also
H/T Calculated Risk

Uh-oh, consumer confidence fell in June, largely based on job concerns.

The reporter interviews an analyst who is surprised about this, because of , “the fact that the S&P 500 is close to 40 percent off its March lows.”

The fact is that the general public is better at recognizing a dead cat bounce than this analyst, because they are concerned about jobs, which are still being lost.

Meanwhile in the world of real estate, or perhaps we should call it unreal estate, the
Case-Shiller index posted an 18.1% year over year drop, and delinquencies on prime mortgages going off the charts.

We also got GDP numbers for the 1st quarter from the UK, and we have their economy falling off a cliff, down 2.4% for the quarter, and 4.9% year over year.

Maybe the good news is that there U.K. house prices rose in June, following May’s increase, up 0.9%, though it’s still down 9.3% year over year.

Until I see year over year numbers below 2%, I don’t see any green shoots, just the 2nd derivative of price going positive.

In any case, the crappy consumer confidence report drove oil down and the dollar up, as there are concerns about reduced demand for oil, and a flight to safety in dollars.

Read Bob Herbert

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Seriously, excerpts do not do justice to his essay on Mohammed Jawad, where he describes the US government torturing a 12-16 year old boy, and now is attempting to use his tortured confession to keep him confined, but here are the last 2 ‘graphs:

There is no credible evidence against Jawad, and his torture-induced confession has rightly been ruled inadmissible by a military judge. But the Obama administration does not feel that he has suffered enough. Not only have administration lawyers opposed defense efforts to secure Jawad’s freedom, but they are using, as the primary basis for their opposition, the fruits of the confession that was obtained through torture and has already been deemed inadmissible — without merit, of no value.

[Jawad’s former prosecutor] Colonel Vandeveld is no longer on active duty and has joined the effort by military defense lawyers and the American Civil Liberties Union to secure Jawad’s freedom. Six years of virtual solitary confinement, he said, is enough for someone who was not much older than a child when he was taken into custody.

(emphasis mine)

Barack Obama, tear down that wall.

But he won’t because it’s inconvenient.

Franken Wins, Coleman Concedes

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The Minnesota Supreme Court declared that Al Franken won, and Norm Coleman conceded:

Democrat Al Franken won Minnesota’s disputed U.S. Senate seat as a loss at the state Supreme Court prompted Republican Norm Coleman to concede.

“I congratulate Al Franken” on his victory, Coleman said at a news conference outside his home in St. Paul. “Sure I wanted to win,” the Republican said, though he said further litigation would damage the state’s unity.

The fact that Coleman conceded indicates that he’s going to run for governor, because it was clear that the RSCC would have continued funding challenges all the way to the Supreme Court.

He knew that if continued the challenge from here, that he would not be able to be elected dog catcher in Minnesota.

But really, it’s all about him, Al Franken.

Whiskey Tango Foxtrot? Wal-Mart!?!

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Yes, Wal-Mart has come out in favor of an employer mandate on insurance.

This is real end of the world stuff, cats sleeping with dogs and the marshmallow guy appearing in city streets:

Wal-Mart, the nation’s largest private employer, joined hands with a major labor union Tuesday to endorse the idea of requiring large companies to provide health insurance to their workers, a move that gives a boost to President Obama as he is pushing for health legislation on Capitol Hill.

“Not every business can make the same contribution, but everyone must make some contribution,” Wal-Mart’s chief executive, Michael T. Duke, wrote in a letter to White House and Congressional officials, adding that he favored “an employer mandate which is fair and broad in its coverage.”

There are, of course, caveats, there are always are, and Wal-Mart’s top lobbyist is saying that there have to be some sort of strict cost controls.

My guess is that the company has two goals here:

  • To make sure that it’s not required to offer better insurance than it does now, which is at relatively high cost to the employee and has relatively high deductibles.
  • An attempt to forestall unionization efforts at its stores, which are gaining steam.

But I’m a cynic.

Who Obama Is On “Free Trade”

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Cap and trade barely passes the house, and Barack Obama is wringing his hands about how the tariff against nations with weaker measures, “At a time when the economy world-wide is still deep in recession, and we’ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there.”

Barack Obama is a smart guy. He knows that there are similar tariffs in countries that have a VAT, so that you cannot evade the tax by outsourcing production, and he knows that the economic consensus is that the absence of such measures distort free trade by subsidizing foreign manufacture of goods.

He also has to know that the WTO just signed off on these tariffs as legal, so long as they are not, “a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade”.”

He expresses these “concerns” because he believes that any restriction on the flow of goods and services,* is dangerous and bad.

He is a free market mousketeer™ who believes that free trade will, inexorably spread democracy throughout the world, raise everyone’s standard of living, keep ants away from your picnic, and keep your daughter from dating the guy with the tattoos and piercings.

Do not expect meaningful labor or environmental measures as a part of his free trade deals. They won’t happen.

*Except for IP, where excessive US copyright and patent restrictions must be adopted world wide.

Financial Products Should be Precertified as Safe and Effective

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That’s what the Bank for International Settlements (BIS) is saying about financial products:

Financial products should be treated like medicines and sold to consumers only when they are certified safe to prevent a repeat of last year’s financial meltdown, the world’s central bankers said on Monday.

The Bank for International Settlements (BIS), which acts as a forum for central banks, said government efforts to revive the global economy might have only a temporary impact because banks are not being pushed hard enough to fix their underlying problems.

…

The BIS was alarmed by how a collapse in the value of opaque and complex securitized products propelled the world’s financial system into crisis. It said in its annual report all financial products should be registered like medicines.

The safest instruments would be available to everyone, a second tier only to people with authorization, like prescription drugs, and a third tier to a limited number of pre-screened individuals and institutions, like experimental drugs are.

It’s a very good idea, but it won’t happen, because it’s what the Masters of the Universe want, so the Masters of the Universe won’t let it happen.

If you require that products be safe and effective, you prevent them from churning money into fees, and reduce their base salaries and bonuses, so they say, and so says Summers and Geithner.

Fundamentally, until financial instruments are completely clear and transparent to regulators, and certified as such, they should be forbidden.

Coup in Honduras

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As near as I can figure out, the pity is that both sides cannot lose, see here, here, and here.

You have the corrupt land owning/political class in one corner, and a megalomaniac president in the other.

One waits to see what Obama will do beyond condemning this, because even if the President is a jerk, as it appears, this is a coup.