Remember what Jon Stewart did to Jim Cramer and CNBC’s predictions, well that hasn’t stopped Jim Cramer from making more predictions, and now he is predicting that the “depression is over”.
We are unbelievably screwed.
H/T Option Armageddon.
Year: 2009
Mr. Obama, Tear Down That Wall!
In his meeting with bank presidents, he said, “My administration is the only thing between you and the pitchforks.”
True, and perhaps you would get better results if these people felt fear, rather than smugness.
Economics Update
Scare Pic of the day courtesy of Calculated RiskToday’s lede has to be the unemployment numbers with non farm payrolls dropping 663,000 in March and unemployment (U-3) hitting 8.5%.
It should be noted that if you use the broader U-6 metric, then unemployment is 15.6% up 6.3% from last March’s 9.3%.
We also have the number of involuntary part-time workers increasing from climbed by 423,000, to 9.0 million, and the contraction of service industries is accelerating.
The best metric of the employment situation may be the employment-population ration, and it fell to 59.9%, the lowest level since 1985.
BTW, remember when I posted about UK house prices going up for the first time since 2007 in March? Not sop much, alternate data shows another fall in prices.
The dollar rose on a flight to safety after the crappy jobs report, and oil fell for the same reason.
How to Know When Your Ideas are Completely Stupid
When Sarah Palin endorses them.
She’s jumped on the let’s have a new Senate election in Alaska, bandwagon.
Jon Stewart on Limbaugh Leaving New York
What can I say, but “you go girl,” funnier than Governor Paterson, but Stewart is a professional.
Brilliant
Blagojevich Indicted
Not a surprise.
Hopefully, there will be only one or 2 more times when I’ll have to spell his damn name again.
Is All of AIG a Scam?
Or maybe it’s the whole damn system.
The folks at Institutional Risk Analytics have concluded that AIG’s reinsurance business was little more than a Ponzi scheme well before it set up its Financial Products division that took down the firm with its credit default swaps (CDS) business:
One of the first things we learned about the insurance world is that the concept of “shifting risk” for a variety of business and regulatory reasons has been ongoing in the insurance world for decades. Finite insurance and other scams have been at least visible to the investment community for years and have been documented in the media, but what is less understood is that firms like AIG took the risk shifting shell game to a whole new level long before the firm’s entry into the CDS market.
In fact, our investigation suggests that by the time AIG had entered the CDS fray in a serious way more than five years ago, the firm was already doomed. No longer able to prop up its earnings using reinsurance because of growing scrutiny from state insurance regulators and federal law enforcement agencies, AIG’s foray into CDS was really the grand finale. AIG was a Ponzi scheme plain and simple, yet the Obama Administration still thinks of AIG as a real company that simply took excessive risks. No, to us what the fraud Bernard Madoff is to individual investors, AIG is to the global financial community.
The crux of this accusation is that they reinsurance contracts that they did not have the resources to back up.
So their reinsurance, essentially insurance bought by insurance companies to insure themselves against a catastrophe, was essentially meaningless, and all the parties involved knew this:
One of the most widespread means of risk shifting is reinsurance, the act of paying an insurer to offset the risk on the books of a second insurer. This may sound pretty routine and plain vanilla, but what most people don’t know is that often times when insurers would write reinsurance contracts with one another, they would enter into “side letters” whereby the parties would agree that the reinsurance contract was essentially a canard, a form of window dressing to make a company, bank or another insurer look better on paper, but where the seller of protection had no intention of ever paying out on the contract.
My guess is that both the CDS and reinsurance business functioned the same way, which means that neither had legally binding contracts.
Essentially, it means that much of the insurance industry, whether reinsurance or CDS, is simply an attempt to deceive regulators, and defraud investors.
This raises an obvious question: if what was largely thought to be the largest insurer in the world was little more than a Ponzi scheme, how many other huge fraudulent enterprises are out there.
H/T The Big Picture.
Bagram Detainees Allowed to Petition for Habeas
Basically, the judge drew a distinction between people caught “on the battlefield” in Afghanistan and those caught elsewhere and transferred to Bagram.
Simply calling it a POW camp, particularly when you are not treating the detainees as POWs didn’t cut it for the judge.
Needless to say, the Obama administration is expected to appeal this decision, in yet another case of going to the wall to support Bush era assaults on civil rights.
Senate Budget Bill Forces Fed to Name Names
In response to the Federal Reserve impeding attempts to get information as to the institutions that they have aided, the Senate has inserted a provision in the budget that would, “require the Fed to identify each firm it has given assistance to, how much the assistance was worth, and what the firm is doing with the money..”
Unfortunately, it appears that it won’t make it to the President’s desk, at least not according to a, “senior Democratic Senate aide,” but it would be a good thing.
Signs of the Apocalypse
David Whoreowitz (Horowitz) is making sense loony toon, fellow traveler with cop killers, and all-around bigot, is saying that the right wing attacks on Obama have been profoundly unhinged.
When this man is the voice of reason in a discussion, the rapture, or at least some helium filled blow up sex dolls, is not far off.
OK, So Fire Away
In an interview with Katie Couric, Tim Geithner said that firing bank CEOs is an option if they are not properly managing their firms.
Bank of America CEO Ken Lewis is not properly managing his firm.
Even if you ignore the disaster that is Merrill Lynch, the purchase of the toxic waste dump known as Countrywide Mortgage was his doing, and an unmitigated disaster, what’s more, he’s been calling you, and the whole Obama administration a bunch of C%&$suckers, saying that he will repay the TARP money to be done with you…Only not right now, because BoA is a bit short on folding green at the moment:
In his latest media appearances, including an interview on CNBC, Lewis said that BofA would repay taxpayers for the $45 billion in TARP proceeds his bank received. Eventually. (Lewis also said he ”regrets” having taken that much, saying the bank took more than it needed, describing the total as ”his mistake.” From this vantage, seems like the government’s … but po-tay-to, po-tah-to, right?)
But he quickly added that the economy will have to rebound. And then several quarters will have to pass.
Seriously, it’s like that bit in Bull Durham, when Crash is ejected from the game for calling the ump a c%&$sucker.
You call the ump a c%&$sucker, and you are ejected.
Eject Ken Lewis, the self-important, pampered, anti-union, incompetent prima donna from the game, or ask for the full $45 billion back tomorrow, and initiate an investigation of how AIG unwound their swaps at 100%.
Video of interview here.
Alaska Republicans: Go Cheney Yourselves
In the wake of the DoJ’s decision to drop charges against Ted Stevens, Alaskan Republicans are calling for Mark Begich to resign so that they can get a new election for Senate.
Because, you know, some people probably voted for Begich because Stevens was a convicted felon, because, you know, no one ever votes on information that might not be 100% accurate.
Let’s be clear, Ted Stevens is still a completely corrupt son of a bitch, even if the Beltway Bozos and their Evil Minions™ are now wringing their hands over the injustice, as Zachary Roth ably makes clear:
But even leaving criminal wrongdoing aside, no one disputes that Stevens accepted hundreds of thousands of dollars worth of home renovations and gifts (remember that massage chair?) from a supporter who had a slew of business interests that Stevens was in a position to affect as a powerful federal lawmaker and appropriator. That’s what we call “corrupt”.
I would add that he also did this supporter a lot of favors.
If the DoJ had done its job, Ted Stevens would die in a jail cell, and he still deserves that.
FASB Re-Enables Crooked Incompetent Bankers
Under pressure from bankers, and their lackeys in Congress, the Federal Accounting Standards Board has relaxed mark-to-market rules.
This means that bankers can go back to creating more of the big sh$#pile, and calling it a pony:
Changes to fair-value, or mark-to-market accounting, approved by FASB today allow companies to use “significant” judgment in gauging prices of some investments on their books, including mortgage-backed securities. Analysts say the measure may reduce banks’ writedowns and boost net income. Firms could apply the changes to first-quarter results.
The FASB just got pressured to allow liars accounting again. This is a bad thing.
“Significant judgement”, my ass. Wall Street has no judgment at all.
Credit Where Credit is Due
In response to Rush Limbaugh saying that he would sell his condo and leave New York because of the income tax increase, Governor David Paterson has told him Don’t let the door hit your butt on the way out:
If I knew that would be the resultI would’ve thought about the taxes earlier.
I still think that David Paterson is a tool, but I have to give him credit for the perfect response.
Good riddance to bad rubbish.
Economics Update
We have the weekly unemployment claims report, and it is not pretty, with 669,000 new claims, an increase of 12,000, the 4 week moving average was up 6,500 to 656,750, and the continuing claims hit 5,728,000, up 161,000.
Note that the initial claims number constitutes a 26½ year high, and continuing claims are at the 9th all time record level in 9 weeks.
Meanwhile, the credit news is not good, with Calculated Risk’s Credit Crisis Indicators somewhat improved, though still at pretty awful levels, but Moody’s downgraded $1.76 trillion in corporate debt in the first quarter of 2009, and both credit card charge-offs and home equity loan delinquencies have climbed to record levels.
In real estate commercial real estate defaults hit a new record, and the formerly unassailable real estate of Manhattan is sales volume falling 48%, though house prices rose in the UK for the first time since 2007.
Additionally, the Feds efforts to lower mortgage rates appear to be working, with the 30 year fixed mortgage rate hitting a new low.
In the meantime, auto industry analysts are doing handsprings over the March auto sales figures, because annualized sales figures rose to 9.86 million up from February’s rate of 9.12 million, though dealer incentives also rose 5%.
Your call as to whether an 8% increase of awful, the normal annual sales runs at about 16 million, is something to crow about.
In either case, other manufacturing had an uptick, with Chinese manufacturing increasing for the first time in 4 months, and US factory orders rising for the first time in 7 months.
In Yurp, the European Central Bank cut its rates by only 25 basis points (¼%), less than expected, and as a result the Euro strengthened vs the US dollar, though the ECB President has said that more rates might be forthcoming
In energy, the rising stock market (Dow above 8k for the first time in about 7 weeks) has driven oil higher.
Reviewing Dick Cheney’s Security Clearance
So I was reading this account of a Seymour Hersh interview on Fresh Air in which he says that Cheney loyalists have been “burrowed” into sensitive government positions, and continue to feed him information:
“I’ll make it worse. I think he’s put people left. He’s put people back. They call it a stay-behind. It’s sort of an intelligence term of art. When you leave a country and, you know, you’ve been driven out the, you know, you’ve lost the war. You leave people behind. It’s a stay-behind that you can continue to have contacts with, to do sabotage, whatever you want to do. Cheney’s left a stay-behind. He’s got people in a lot of agencies that still tell him what’s going on. Particularly in defense, obviously. Also in the NSA, there’s still people that talk to him. He still knows what’s going on. Can he still control policy up to a point? Probably up to a point, a minor point. But he’s still there. He’s still a presence.”
(Audio at bottom)
And the first thing that went through my head was, “People from the NSA are talking to a guy who orchestrated the outing of a covert CIA agent?”
Then I realized that the real question was, “Why does Richard Bruce Cheney still have a security clearance?”
Based on my reading of the entire Lewis “Scooter” Libby case, it’s clear that Patrick Fitzgerald had concerns that Cheney was aware of the leaks on some level, though he lacked any hard evidence (missing emails anyone?) to go any further.
That being said, a security clearance is not a legal procedure, it’s an administrative procedure, and to a significant degree, it is necessary for the holder of this clearance to show that they not a security risk, either intentionally or through negligence.
There is also an additional duty to report any credible potential security violations to the appropriate authorities.
This is a lower standard of proof than, for example, the Intelligence Identities Protection Act, or obstruction of justice statutes.
There is therefore a significant concern that Dick Cheney violated the terms of his clearance, and pending an investigation, his clearance should be suspended pending an investigation.
Unlike a government employee whose livelihood is dependent on having a clearance, this should not provide an undue burden, and a hearing, with witnesses, including Lewis “Scooter” Libby and Mr. Cheney, testifying under oath, would be an appropriate venue to decide whether or not he was either deliberately or negligently cavalier with sensitive intelligence data.
Of course, if Mssrs Cheney or Libby were to make untrue statements in the process of giving their testimony, that would be a matter for the federal prosecutors.
File Under: I Used to Be Disgusted, Now I Try to Be Amused
It appears that the Treasury Department is stonewalling the body charged with monitoring the various bank bailouts.
But “without a clearer explanation” about parts of the program, “it is not possible to exercise meaningful oversight over Treasury’s actions,” said Elizabeth Warren, a Harvard Law School professor who leads a special congressional oversight panel monitoring the TARP program. Her comments came in a Senate Finance Committee hearing on the bailout program.
Noting that TARP passed Congress six months ago, Warren said that her group has repeatedly called on the Treasury Department to provide a clear strategy for the program — and that “the absence of such a vision hampers effective oversight.”
Dr. Warren, this is not a but, it’s a feature.
Geithner is a former Federal Reserve Bank of New York president. Opacity and secrecy are how they think that it’s supposed to work.
That’s the whole idea behind the Federal Reserve system.
Reports that GM Wants to Force GM Into Bankruptcy
We have reports that appear to be leaked from the White House that say that they want to see GM go through some sort of preplanned bankruptcy here, and here.
I don’t see this happening, and I tend to agree with Yves Smith’s analysis that says that this would be next to impossible, because you would have to essentially get all the creditors to agree ahead of time.
Smith suggests that a realistic timetable for a bankruptcy would be over a year, and the analysis of the cascade effect on auto parts suppliers is that no one in the United States, including Toyota, Nissan, and Honda, would be able to make automobiles for something on the order of a year, because it would force the already tightly strapped auto parts suppliers into bankruptcy too.
I see this as primarily a way to apply pressure to two parties, the UAW and Pimco, who runs the world’s largest bond fund.
I think that Pimco is particularly a problem. Their behavior in the GMAC bailout was to dig in their heels, and make everyone else take a haircut, and all indications are that they are doing the same thing with GM.
25 Votes In NY-20
That’s how much Murphy(D) is leading Tedisco(R).
2 Weeks before absentee and provisional ballots will be counted, and Tedisco has already filed suit.
Nobel Laureate Stiglitz and Black Swan Author Blast Obama and Geithner
Joseph Stiglitz calls the plan, “Obama’s Ersatz Capitalism,” in a New York Times OP/ED, where he runs the numbers and shows that the plan is at least a 50% subsidy to the private buyers, and Black Swan author Nassim Taleb says Geithner’s bank recovery plan will fail, and simply socialize losses and privatize gains.
They are both good reads.