Year: 2009

Economics Update

No Comments

So the latest investor confidence survey is down, no big surprise there, things are still not looking good.

Case in point, Fitch ratings is warning on prime grade residential mortgage backed securities (RMBS) created between 2005 and 2007 because so many of the mortgage holders are under water.

In energy, oil fell, though it’s still above $50/bbl, on profit taking from yesterday’s price increase.

In currency, the Dollar rose as people went back to it as a safe haven, and the Yen fell, because yields are so low in Japan.

Banking Industry Threatens Obama Administration

No Comments

That’s the subtext of this Wall Street Journal article on how Obama is dealing with the financial industry.

The bankers are saying, “If we don’t get our bonuses, we will destroy our companies and the economy.”

As Ezra Klein notes, patriotism is a joke for the super-rich bankers who run Wall Street:

But whenever it comes up in conversation, I’m shocked at the depth of my own fury. And here’s why: Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11.

And you cannot negotiate with terrorists.

Yoo May Have Tenure Revoked

No Comments

Basically, the question is whether the legal opinions that John Yoo supplied to Bush and His Evil Minions&trade are so outrageous as to justify the termination of his tenure at UC Berkeley law school.

I am of the opinion that Yoo actually broke the law, using the Nuremberg precedents for trying judges and lawyers.

One caveat about this article, ignore Alan Dershowitz, who has actually been a big supporter of torture, going so far as to suggest that judges should authorize it, and not an opponent of Yoo’s position as the writer states.

Barney Frank Walks Away from Fed as System Risk Regulator

No Comments

It looks like there will be some real good coming from the AIG bonus fiasco, as Barney Frank is taking a few steps back from his idea of the Federal Reserve as the über regulator of the economy:

A proposal to put the Federal Reserve in charge of market oversight is losing congressional support after its main backer, Barney Frank, said criticism over American International Group Inc. “undercuts” his proposal.

“There’s still a need for a systemic-risk regulator,” Frank, a Massachusetts Democrat who chairs the House Financial Services Committee, said yesterday. “The argument for the Fed alone has lost a lot of political support. I think that’s now got to be re-looked at.”

Senate Banking Committee Chairman Christopher Dodd and Richard Shelby, the panel’s top Republican, said March 19 they are reluctant to expand the Fed’s role, faulting the central bank for lapses leading to the financial crisis.

When one considers how opaque the operations of the Federal Reserve are, and how, of all the regulatory agencies, it was the one that failed the worst, the others being hamstrung through legislation or executive initiative, Dodd and Shelby are right to be dubious of the fed.

Just ask yourself this question: Do you want Alan “Bubbles” Greenspan to be the systemic risk regulator for the economy?

US Tried to Silence Detainee to Cover Up Torture

No Comments

US Government lawyers attempted to get Binyam Mohamed, the Ethopian detained at Guantanamo, to sign an aggreement not to discuss his treatment as a condition for his release.

Since Mohamed is alleging illegal torture, and the lawyers in question had reason to believe that there was a possibility of criminal prosecution, I do not see how this could be anything but a slam dunk case of obstruction of justice:

U.S. government lawyers tried to get a British resident held at Guantanamo Bay to sign a deal saying he had never been tortured and that he would not speak to the media as a condition of his release, according to documents presented in Britain’s High Court.

U.S. lawyers also wanted Binyam Mohamed, an Ethiopian citizen held at Guantanamo for more than 4 years, to plead guilty to secure his freedom, even though he was never charged with a crime, according to documents released by two judges who ruled in the High Court case.

The documents, relating to a ruling the judges made last October, reveal the U.S. military wanted Mohamed to agree not to sue the United States or any of its allies, and that any rights to compensation should be assigned to the U.S. government.

Any lawyers among my reader(s) want to weigh in on this?

Scatological Explanation of the Geithner Plan

No Comments

So, I was on a private BBS formed out of the ashes of Netslaves, and someone asked the following:

CNN keeps talking about it raising the DOW today, but I have no idea what it actually is supposed to do.

So I quickly riffed on this, and the response was very positive, so I thought that I should share my (somewhat profane) explanation with the world:

Short:

  • Place your hand in your pocket.
  • Remove wallet
  • Hand to Wall Street Executive.

Longer version:

  • The Treasury/FDIC/FED will make non recourse loans to allow investors to buy into the big sh@#pile of mortgage backed securities (MBS), credit default swaps (CDS) and other alphabet soup so that they buyer will put down about 3% for a 20% stake in this sh@#.
  • A non recourse loan means that if the investment fails, the lender (i.e. the taxpayer) takes back the sh@#, and the loan is settled, basically, they are only out their 3% (or less) down payment.
  • Basically, it’s a subsidy to the big banks and investment houses, who created the sh@#, because the small investor cannot get the sh@# for cash deal without going through the big banks and investment houses, and paying a sh@# load of commissions.
  • This has the effect of creating a taxpayer subsidy for the sh@# that is (at least, there are other programs that feed in) of at least 30%.
  • So eat your sh@# sandwich, and know that somewhere a Wall Street banker is spending your money on some prostitute to sh@# on him.

What can I say but sh@#?

Netanyahu is Terrified of His Campaign Promises

No Comments

Benyamin Netanyahu is aggressively pursuing a coalition with Labor, and strange as it sounds, it might happen because Ehud Barak really wants to stay on as head of the Defense Ministry, though some of his fellow Laborites are aghast at the prospect.

I would also take issue with one of the points that the author of the second link, Jeff Barak, has with Avigdor Lieberman being the Foreign Minister: It’s actually one of the two positions where his positions are least likely to cause a problem, because his three basic planks are a two state solution (and as FM he won’t get to draw those boundaries), hostility to the Arab population inside the Green Line, and staunch secularism.

I’d much rather see him being the Minister of Religious Services, but when all is said and done, the FM position keeps him away from internal Israeli politics.

Bernie Sanders Blocks Gensler as CFTC Chairman

No Comments

I wholeheartedly approve of the distinguished gentleman’s decision to place a hold on the nomination of Gary Gensler to be chairman of the Commodity Futures Trading Commission.

Gensler (along with Geithner and Summers, but those guys are water under the bridge) fought long and hard for the Commodity Futures Modernization Act of 2000, first as Assistant Secretary of the Treasury, and then as Undersecretary of the Treasury, which deregulated derivatives and swaps, and is one of the architects of the current meltdown, and Sanders is 100% correct in objecting to his having a any role in further regulation of derivatives.

Then there is also the matter of his brother being hip deep in Wall Street too, running a fund for T. Rowe Price, and Gary Gensler himself is another Goldman Sachs alum.

Enough is enough. We need people who aren’t the ones who created the problem in the first place in charge of policing those who were.

Un-dirtyword-believable, and good for Sanders to stand up for a semblance of competence and honesty in Barack Obama’s economic team.

Common Sense on Pakistan

No Comments

It looks like the White House will be linking future aid to Pakistan to their performance fighting the Taliban and limiting cross border incursions.

This is a very good idea.

There are elements in Pakistan who are still supporting the Taliban, because they see it as a way of offsetting Indian influence in Afghanistan, and much of the military establishment that isn’t doing this is completely focused on a future conflict with India, so they do not spend resources to assert a level of control in the “tribal regions.”

If they realize that spare parts for their F-16s is contingent on their performance in keeping the Taliban from using northern Pakistan as a staging area, maybe elements of the Pakistani security apparatus will get on the ball, as opposed to spending most of their time and energy on planning for an apocalyptic conflict with India.

Economics Update

No Comments

Since we’ve already covered the Geithner political suicide pact economic plan, let’s lead off with housing.

Happy, happy, joy, joy, home sales rose 5.1% in February relative to January, seasonally adjusted, though people not so closely attached to the realty industry have noted that it’s
really a pretty modest rise, or note that home sales have fallen year over year, and that about 45% of these sales are distressed in some manner.

I would say that year over year is the only metric to apply, because the so called “seasonal adjustment” if it ever were valid, has become meaningless in the current collapsing market.

Internationally, we have another member of the 0% benchmark club, as the Bank of Israel has cut its benchmark rate to 0.50%.

In currency and commodities, the dollar is down, because people are less concerned about safe havens, so there is less dollar flight to safety, and copper and oil rose.

It appears that these markets like Geithner’s plans, because, they are over paid and over bonused trader types, I guess.

Governor Paterson Gets Clue

No Comments

So, we now have a New York Post reporter breathlessly reporting that he is planning a “secret” tax hike on the rich.

Well, considering the fact that the Wall Street masters of the universe upon whom he hoped to fund his reelection bid are now less popular than either Dick Cheney or a case of the clap,* this is not surprising, though according to Dicker, Paterson wants to appear to be against the tax hikes while pushing them through, which indicates once again that he has the political instincts of Kathleen Kennedy Townsend, or a packet of Fleishmann’s active dry yeast.*

My guess is that he’s flailing around because the polls show him being crushed by Andrew Cuomo in the primary, and by Rudolph Guiliani in the general by numbers that exceed what a banker can supply to him by the way of campaign funds.

*For some reason, I always confuse the two.†
†I love it when I get to “twofer” footnotes.

Geithner’s* Plan

No Comments

So, the plan has been announced, and it’s pretty much what I said over the weekend: A massive subsidy to big investment firms, and the little guy can’t get in on the “3% down and that’s all you lose” deal.

It’s the buy the sh%$pile with taxpayer money thing all over again….and again….and again.

Geithner has an OP/ED in the Wall Street Journal,† where he rolls out the Treasury’s new weasel words for financial toxic waste, “Legacy Assets.”

I’m sure that he thinks of Chernobyl as an “accelerated sunshine facility” too.

We know that the financial masters of the universe love the subsidies, because players like BlackRock and Pimco are falling all over themselves to get in.

I won’t go over the problems with the plan here, you can look at my Saturday post for that, but the short form is that Wall Street is mugging you.

*Really Barack Obama’s plan, because he is where the buck stops, though a lot of the blame goes to Larry Summers too.
†Which, considering the WSJ’s editorial page reputation for outright deception, is utterly appropriate.

Reality Sets In

No Comments

It appears that the economic Calvanism* of the past 3 decades is on the wane.

Michael Hiltzik notes that one of the characteristics of the AIG scandal is the reemergence of the concept of the “undeserving rich” in the public discourse:

That the point is even open for discussion suggests that a sea change is taking place on the American political scene. For decades, the wealthy have been held up as people to be admired, victors in the Darwinian economic struggle by virtue of their personal ingenuity and hard work.

Americans consistently supported fiscal policies that undermined middle- and working-class interests partially because they saw themselves as rich-people-in-waiting: Given time, toil and the magic of compound interest, anyone could retire a millionaire.

That mind-set has all but been eradicated by the damage sustained by the average worker’s nest egg, combined with the spectacle of bankers and financial engineers maintaining their lifestyles with multimillion-dollar bonuses while the submerged 99% struggle for oxygen.

Here’s hoping that this is a generational change, and not a 15 minute fad.

*Traditional Calvanism sees profit, and wealth, as a sign of God’s grace.

Bush Appointee Incompetent and Corrupt: Afghan Edition

No Comments

It looks like the US and its NATO allies are looking to appoint a Prime Minister to bypass and diminish Hamid Karzai’s role in the day to day operations in the Afghan government.

The US and its European allies are ­preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president, Hamid Karzai, the Guardian has learned.

The creation of a new chief executive or prime ministerial role is aimed at bypassing Karzai. In a further dilution of his power, it is proposed that money be diverted from the Kabul government to the provinces. Many US and European officials have become disillusioned with the extent of the corruption and incompetence in the Karzai government, but most now believe there are no credible alternatives, and predict the Afghan president will win re-election in August.

Hooccoodanode that George “Heck of a job, Brownie” Bush would appoint people completely inept and corrupt to critical positions?

New York Times OP/ED Asks if Geithner/Summers/Bernanke is Obama’s Katrina Moment

No Comments

Frank Rich, who I generally find unobjectionable, but also unmemorable, asks this question, and I believe that he may be right.

I believe that Wall Street is being run by, and for, a corrupt class of overpaid crooks, and most of the country agrees with this, but Geithner/Summers/Bernanke believe that these folks posses the unique genius to fix the problem that they have created.

They are wrong, and unless, and until, the campaign to fix these things becomes a campaign against these folks too, a bit of reality that even perennial light weight Maureen Dowd gets, things will get worse.

These people don’t work for their banks or brokerages, they work for their own benefit at the expense of those banks or brokerages.

Body Armor for the Judean People’s Front Crack Suicide Squad

1 Comment

Judean People’s Front Crack Suicide Squad!
What, you haven’t seen Life of Brian? Rent it now!

You may, or not, be aware of the concept of reactive armor.

It’s used on a fair number of armored vehicles out there: It’s a box with explosives in it, and when struck by a round, it explodes, dissipating the jet from a shaped charge or altering the path of a kinetic energy penetrator dart.

Well, someone has taken the next forseeable step, and submitted a patent application for an exploding bullet proof vest:

As Dave Barry would say, “I am NOT making this up!”

Check out patent number 6474213, Reactive stiffening armor system, which proposes:

A reactive armor structure having an outer layer and a reactive element adjacent to and integral with the outer layer is provided. The reactive element provides an amount of support to the outer layer effective to restrain movement of the outer layer and to delay fracture of the outer layer when the outer layer is impacted by a projectile.

I wonder what happens when a limb is in the path of the detonation of:

10. The structure of claim 1, wherein the explosive material has a detonation velocity of from about 2 km/s to about 5 km/s.

…

24. The structure of claim 15 wherein said reactive material comprises a material selected from the group consisting of TNT, RDX, Comp-B, Octol, and nitromethane.

I’m not sure if it would be worse to be the guy in the armor, or the guy standing next to the guy in the armor.

A400M Troubles Continue

No Comments

Best evidence of this is that the seven partner nations in the program have agreed to a moratorium on cancellation until July.

They are not agreeing to continue, they are just saying that they won’t cancel in the next 4 months, because the program is 4 years behind schedule, and well over budget.

I think that the new lesson of defense procurement is never buy anything unless you can cancel it when costs escalate and schedule slips.