Month: September 2009

The Devil’s Dictionary — Financial Edition

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It’s very funny.

Unfortunately, it’s subscription only content for the WSJ, but if you go to this Google News link, you can read it there, because when you click through “the Google”, you bypass registration.

Here is a snippet:

BANK FAILURE, n. 1. A process by which towns across America are denuded of their feckless local bankers, paving a way into the market for feckless private-equity investors. 2. An increasingly common Twitter tag that spikes on Friday afternoons. See #bankfail, #wheresmymoney, #runitsthefdic.

Heh.

And Andy Cuomo is on the Case

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OK, we all know the story, Bank of America bought Merrill Lynch, but before the deal closed, they discovered that they had uncovered a toxic waste dump and bonus mill, not a brokerage, and when they tried to get out of it, the Treasury and the Fed leaned on them not to.

That much is clear. What is not clear is just how badly this is flubbed, how much pressure was put on BoA, and whether any laws were broken.

In any case, the SEC has been investigating this, and about 3 weeks ago, when presented with a settlement, Judge Jed Rakoff balked, saying that the settlement seemed not to make any sense: The fines were too low, and the conditions were too favorable to BoA:

U.S. District Judge Jed Rakoff in Manhattan said today that he wants a fuller explanation of the settlement by Sept. 9. He wants to know why the SEC accepted the bank’s claim that executives who issued a misleading statement relied on lawyers’ advice and why the agency didn’t press the bank to waive its attorney-client privilege to keep communications with counsel confidential.

Relying on lawyers’ advice can be a defense to a securities fraud lawsuit. At a trial, in order to invoke the defense, defendants must waive their attorney-client privilege, the SEC has said.

“This is puzzling,” Rakoff wrote in a four-page order today. “If the responsible officers of the Bank of America, in sworn testimony to the SEC, all stated that ‘they relied entirely on counsel,’ this would seem to be either a flat waiver of privilege or, if privilege is maintained, then entitled to no weight whatsoever, since the statement cannot be tested.”

So what the SEC has been doing is to say that they accept the claim of bad legal advice, but will not demand any proof by actually looking at this legal advice. IANAL, but this is just fracked, so he deferred it, and today, he has out right rejected the settlement.

And now we are starting to see weirdness, specifically the fact that Merrill’s general counsel was summarily fired 4 days after the deal closed. (also here).

We’re talking seriously, “He was immediately escorted from the building without being permitted to return to his office,” fired.

And now, Bank of America is refusing to waive privilege in order to get to the bottom of this, they are demanding to be let off without having any proof, and while the SEC is good with this, Andrew Cuomo is not.

He is now writing letters making it clear that anyone who attempts to suggest that it was bad legal advice, but refuses to supply legal memoranda will be subject to prosecution (also here):

I think that is legal speak for pulling out the hand cuffs, and saying talk now, co%$-suckers.

Bank of America is denying all wrong doing, of course, and the SEC continues to aggressively stonewall both Cuomo and Rakloff.

Maybe I’,m just a paranoid son of a bitch, but I think that there is something very big and very ugly under this rock.

Warning To Whistleblowers: If You Turn in Big Fish, We Will Destroy You

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Bradley Berkenfeld was the man who turned informant to reveal that Swiss Bank UBS was actively aiding and abetting fraudulent schemes to evade taxes.

He has now been sentenced to 40 months in a Federal prison, while folks like Igor Olenicoff, who hid hundreds of millions of dollars from the IRS are getting probation:

Birkenfeld got slammed because, for all the good he did, he didn’t tell on himself. So prosecutors sought a 30-month prison term for him, and a federal judge in Fort Lauderdale, Florida, ratcheted it up to 40 months at sentencing last week.

…

If you’re looking to ferret out waste, fraud and abuse, that notorious trio of government parasites, there is nothing like an insider.

That is why Congress has for years passed laws encouraging whistleblowers by offering job protection to government employees and a cut of any funds recovered because of their informing.

The Birkenfeld sentence stands as an insult to any claim that the government wants whistleblowers to step up. Fear of retaliation and career suicide make it hard enough to rat on your boss. Now you can add the possibility of prison time as payment for your effort.

…

Prosecutors better hope that Birkenfeld’s tips will last them a very long time. They shouldn’t expect more whistleblowers to show up any time soon.

The author of this article, Ann Woolner misses the point: This is not a bug, it’s a feature.

Prosecutors and judges have a long history of going after white collar whistle-blowers with jail time because they don’t want people to rat out rich people, who after all, are not like you and me, and should not be subject to the rule of law.

In eulogizing Dominick Dunne, Daily Beast correspondent Allan Dodds Frank sheds some light on this attitude:

He [Dunne] had a view that nonviolent crimes committed by the upper class were understandable, defensible, and often just part of what they do. Martha and Al were getting raw deals, he felt. In fact, white-collar crime was so commonplace and garden variety that he had no desire to cover the great corporate crooks of the era who had so little class.

(emphasis mine)

Not enough bullets.

JSF Engine Update

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There is actually a fair amount going on here, with the F135 engine experiencing a test at supersonic conditions on the test stand. They discovered bits of engine, specifically fan tips on the integrally bladed first and second stage fans, flying out the nozzle at the back.

At this point, there is no evidence of foreign object damage, they have found no missing bolts or the like, but the cause is still unclear.

Along with this news, we have a report that defense acquisition chief Carter has ordered a high level investigation of the state of the F135 engine, particularly with regard to cost and schedule, as there are reports that it’s about 30% over budget.

It’s kind of ironic than that the Senate Appropriations defense subcommittee eliminated funding for the alternate F136 engine a few days ago, though chairman Inouye strongly implied that it would find its way to funding in conference committee.

I think that the primary motivator for killing the F136 engine is because they want to save money now, even if it costs more later, but the cost and technical issues with the F135 would seem to make this less likely.

Pay Per View Review

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Well, Verizon FIOS has some occasional specials, basically about 40$ off, $2.99 for a 24 hour rental, as versus $4.99, and so we went with one tonight, Race to Witch Mountain.

Dwayne Johnson … Jack Bruno
AnnaSophia Robb … Sara
Alexander Ludwig … Seth
Carla Gugino … Dr. Alex Friedman
Ciarán Hinds … Henry Burke
Tom Everett Scott … Matheson
Chris Marquette … Pope
Billy Brown … Carson
Garry Marshall … Dr. Donald Harlan
Cheech Marin … Eddie Cortez

The plot, what can I say that you don’t see in the trailer.

You have grizzled ex-con cab driver trying to lead a straight and narrow life, played by Dwayne Johnson, aka, the Rock, alien children with otherworldly powers, a beautiful scientist, evil government agents, and an alien assassin. You know where it goes from there.

The plot is basically a throw-away, there are no surprises.

One thing that is done well with the plot, is that they actually give a reason for children with extraordinary powers to need mere humans. I was pleasantly pleased to see that hole plugged in a way that flowed nicely.

Once again, Dwayne Johnson exceeds my expectations, as he did in Steve Carrel movie Get Smart.

Additionally, you have Garry Marshall, who is perhaps best known for his work on the other side of the camera, engaging in some very amusing scenery chewing.

The original children from the original “Escape to Witch Mountain” movies from the 1970s, Ike Eisenmann, Kim Richards have cameos, and the current child actors, AnnaSophia Robb and Alexander Ludwig, gave decent performances.

The special effects are certainly adequate, not surprising given the state of CGI these days.

The dialog is good, with a lot of very funny deadpan humor. I will say that science fiction/UFO convention held in Los Vegas figures prominently in the movie, as does Sin City itself, and that if you don’t like people making jokes about SF fans, you might be offended, but I was amused.

Additionally, as I went through IMDB, a lot of inside movie references.

It’s a thoroughly pleasant piece of child-friendly fluff, which is exactly what it promised.

Pictures below

Well, This Explains the Stock Market Bump

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I believe that I’ve mentioned this before, but what is going on here is that the Federal Reserve is printing money and giving it to bankers with instructions to buy stocks, in order to pump up the market.

There is a lot that is wrong with this, it’s the biggest pump and dump scheme in the history of ……Well……History is the immediate flaw that comes to mind, but this ignores the truly troubling aspect of these actions.

The scary part is that this is based in the heartfelt belief that the stock market really is the economy, and so by creating an artificial bump in stock prices, that you are creating a real bump in the real economy.

At it’s core, this is what is wrong here: The inability to see Wall Street and Main Street as separate items, and to recognize that Main Street is far more important.

When this peters out, and it will, we will be in a deeper hole than when we started.

USAF Light Attack Program Proceeds

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Boeing OV-10X Bronco

Hawker Beechcraft T-6

It looks like the USAF is getting serious about buying something to provide close air support in a counter-insurgency scenario, and we are now seeing the Boeing (originally North American Rockwell)It looks like the OV-10X Bronco and the Hawker Beechcraft (originally Pilatus PC-9) AT-6 Texan II being developed for these roles.

My own inclination would be to go with the Bronco. Twin engines, which can mitigate the effect of a lucky shot with an AK, along with a history of operating in austere conditions, works for me.

He Should Not Be Prosecuted for Marijuana Possession

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Because no one should be prosecuted on marijuana possession.

On the other hand, Andrew Sullivan’s endorsement of the racist pseudoscience of the Bell Curve, and his publication of the lies of Betsy McCaughey while editor-in-chief of The New Republic should be grounds for deportation from the United States on moral grounds.

You see Andrew Sullivan was smoking pot on the beach in Massachusetts, where marijuana possession has been decriminalized, only it was on a federal beach, and that makes it a federal beef.

The prosecutors decided not to pursue charges, which basically amount to a $125 fine, though they did with 3 other defendants that day, and US Magistrate Judge Robert B. Collings believes that this was a case of prosecutors not applying the law equally or fairly:

Three other defendants charged with the same offense had to appear before Collings the same day as Sullivan, the judge noted. But Sullivan’s case was the only one prosecutors did not pursue, out of concern that the $125 fine carried by the relatively minor offense could derail his US immigration application.

“It is quite apparent that Mr. Sullivan is being treated differently from others who have been charged with the same crime in similar circumstances,’’ Collings wrote in the 11-page memorandum, adding that prosecutors’ rationale for the dismissal was inadequate.

Collings added with obvious irritation that he had no power to order prosecutors to pursue the case, and granted their motion to dismiss it. The fact that he did, however, “does not require the Court to believe that the end result is a just one,’’ he wrote.

Needless to say, the United States Citizenship and Immigration Services, formerly the INS, could do the right thing, and deport him back to that socialist hellhole, England.

When a Hijacking Isn’t

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I’m reading conflicting stories about what happened to the Russian freighter that was captured by pirates, but there are also reports that the ship was carrying S-300 SAMs (Probably the NATO designation SA-12) to Iran, and that the capture of the ship by “pirates” was a ploy by Russia to avoid delivery of missiles that had already been sold by someone who should have sold them.

In any case, it is definitely weird.