Year: 2009

What Barry Ritholtz Said

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In his post, Dear Lord, Anyone but Lawrence Summers . . . , about the possibility of Larry being Fed chair:

I read articles like these with dread and horror:

…

So help me God, if Obama nominates this incompetent, lacking-in-judgment jackboot to the FOMC chair, then in 2012, I will write in George W. Bush’s name for President . . .

I’m not that angry, but writing in Ron Paul’s name is beginning to look appealing.

BTW, in his description of Mssr. Summers, he left off “corrupt.”

The inestimable Mark Ames wrote about that almost a year ago.

Economics Update

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So, the Michigan swurvey of consumer sentiment is down. Perhaps the average person knows something that the “green shoots” folks don’t, or maybe it’s that average people pay more attention to the unemployment rate, which is a lagging indicator.

One interesting thing is that U.S. trade deficit in May fell to its lowest level in a decade, and it was falling imports, along with an increase in exports, that appears to have driven this.

The implication here, assuming that this is not a 1 month blip in the stats, is that the US is lagging the rest of the world in economic recovery, which is not what it has been historically.

It does seem that investors are heading for safety, which drove bond prices up, and bond yields down.

These concerns have led to the biggest weekly drop in oil prices in 6 months, and a strengthening of the Yen and dollar, as a result of demand and safety concern.

Obama is Dog Whistle Gay Bashing

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Normally, I’m not a big fan of protest theatrics, to my mind, Code Pink frequently does more harm than good to the cause, but I have to approve of ACT-UP’s chaining themselves to the Capitol Rotunda today.

What’s going on here is that during the campaign, Barack Obama promised to lift the ban on funding needle exchange programs, which:

  • Do not encourage drug use.
  • Reduce AIDS transmission.
  • Reduce the cost to society.
  • Provide an entry point with addicts for counseling.

The problem is that the White House submitted a budget to Congress still contained the ban on federal funding for needle exchange programs.

So this wasn’t even a matter of his not fighting for the program, it’s a matter of him submitting language reauthorizing a program that he explicitly campaigned against in his budget.

A president’s budget is purely advisory. Congress can, and does, amend it, or ignore it, as they see fit, but he is unwilling to even leave out a bit of language authorizing a program he claims to oppose.

I’m with John Aravosis’s take on this

  1. The candidate promised to lift the ban.
  2. The White House Web site reaffirmed the president’s commitment to lifting the ban.
  3. The White House Web site no longer reaffirms his commitment to lifting the ban.
  4. The president now refuses to lift the ban.
  5. The president actually affirmatively makes things worse by administratively supporting [and] defending the ban.
  6. The spokesman reiterates the president’s support for lifting the ban, some day, once Congress gets around to it.

There is a pattern to all this, whether it’s his sucking up to homophobic screeds “reformed homosexual” Donnie McClurkin, using legal arguments equating gay marriage with pedophilia and incest, refusing to take administrative actions to even modestly impede the anti-gay witch hunt in the military, and now affirmatively submitting anti-gay legislation to Congress.

Either there is some real homophobia here, or there has been a political calculus made that appealing to homophobia is a political win, because the opposition wants gay people dead.

At best, it’s no different than the prosecutors in and around Baltimore who will routinely demand more severe sentences in plea bargains for black defendants, because they know that they have a better chance to convict a black man, even in front of a black jury.

I believe that this action has been taken because it can be seen as a gay issue, not in spite of it.

This is dog-whistle gay bashing, and it is quite deliberate.

It Would Be Nice if Obama Didn’t Try So Hard to Emulate the Worst Excesses of Bush and His Evil Minions&trade

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In this case, it’s his veto threat of the intelligence authorization bill, because the notification requirements have been strengthened in it.

As opposed to just notifying the gang of 8 (4 actually) who are not allowed to discuss the contents with anyone else, the whole intelligence committee would have to be notified.

It appears that Barack Obama wants to preserve the, “long tradition spanning decades of comity between the branches regarding intelligence matters,” which BTW, involves the CIA having, “affirmatively lied to” the panel, according to House Intelligence Chairman Silvestre Reyes.

The idea that a briefing be given in a closed room, with no notes taken, and so few people as to make verification of a felony impossible is somehow “comity,” is setting George Orwell spinning so rapidly in his grave that he could power all of Sussex.

Light Night Comics Must Love Republicans

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Because this stuff writes itself.

Case in point, the rebounding scandal of John Ensign’s affair and his payoff of his mistress and her husband, where we now discover that , “His lawyer has just released a remarkable statement saying that Ensign’s parents paid the Hamptons $96,000 after the 51-year-old senator told his Mom and Dad about the affair.”

Republican family values….Things go bad, and rich daddy bails you out.

Pig Fight!!!!!!!

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It looks like the primary campaign between Arlen Spector and Joe Sestak is heating up, with Specter calling Sestak a hypocrite for not registering as a Democrat until a few years back, and Sestak has responded that he felt that it was his obligation as a military officer not to declare party affiliation until he left the service.

Seeing as how the person making the initial attack about insufficient party loyalty is Democrat-turned-Republican-turned-Democrat Specter, I’m inclined to go with Joe Sestak.

So it would seem are a fair number of campaign donors, as Sestak raised over a million dollars in this Spring.

Additionally, even if Specter were a better Senator than Sestak, and there are some issues where Spector is closer to me than he is to Sestak, Specter being challenged by Sestak is a better Senator than just Specter.

We are not hearing any more of the crap about how he won’t toe any party line, and he’s fallen into line on labor, healthcare, and climate change legislation as a result of this challenge.

Economics Update

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Thursday is new jobless claims day, and new jobless claims fell by 52K, to 565K,, bringing the number down below 600K for the first time since late January of this year. (Full disclosure here, one of those 565,000 people was me, if anyone knows of mechanical engineering openings in the greater Baltimore, MD area, it would be greatly appreciated.)

The other shoe dropping is that continuing claims hit an all time high, rising by 159 to 6.88 million.

Also note that these numbers are the seasonally adjusted numbers, and actual claims increased by 17K to 577.5K, and the seasonal adjustment includes a correction for auto factory shutdowns for model changes, which occurred early this year for GM and Chrysler, because of the bankruptcies.

Ain’t statistics grand?

A slightly more realistic metric than the massaged jobs claim data is the fact that retail sales missed expectations in June.

The fact that retailers were selling less than expected led to wholesalers drawing their inventories to the lowest levels since August 2007.

The big news in central bank land is that the Bank of England neither cut its rates nor increased its bond purchases, which had the effect of driving treasuries down, and their yields up.

In any case, it appears that the bogus job numbers (see above) have halted the slide in crude oil prices, with prices settling at $60.41/bbl.

The Bank of England’s move not to cut rates or buy bonds (print money) any faster had the effect of weakening both the dollar and the Yen.

Well, At Least I’m Not in the New York Senate

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With nothing going on, and a 31-31 tie continuing, Governor David Paterson has named former MTA chief Richard Ravitch as Lieutenant Governor, who could theoretically cast the tie breaker vote.

The thing is, it appears that he has no authorities to do so, at least not according to the Republicans, Democratic turncoat and poster child for corruption Pedro Espada Jr., and Democratic State Attorney General Andrew Cuomo.

Is Goldman Sachs Running a Scam Right out of The Sting?

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Yes, we now have a case of what appears to be industrial espionage, or perhaps geeky security breaches, this is once more pulling back a part of the masque from that great vampire squid wrapped around the face of humanity*, Goldman Sachs.

Specifically, a former programmer at Goldman Sachs, one Sergey Aleynikov, is alleged to have stolen the proprietary program trading software that they use and stored it on a server somewhere in Germany. (Also here and here)

What is interesting is what this software actually does:

The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-profitable automated trades.

Or as is noted in the criminal complaint:

The Financial Institution has devoted substantial resources to developing and maintaining a computer platform that allows the Financial Institution to engage in sophisticated high-speed, and high-volume trades on various stock and commodities markets. Among other things, the platform is capable of quickly obtaining and processing information regarding rapid developments in these markets.

So basically, we have high speed software to execute computer driven trades in response to market fluctuations, to the tune of about 60% of all of these trades, about $100 million a day,

We also have this tidbit from the prosecutor, “The bank has raised the possibility that there is a danger that somebody who knew how to use this program could use it to manipulate markets in unfair ways.”

The reality here is that it is being used to manipulate markets in unfair ways, by Goldman Sachs.

Vet74 at Daily Kos explains in a fairly technical way, but basically, this is the scam within a scam from the Paul Newman/Robert Redford movie The Sting, where the man they are cheating, murderous gangster Doyle Lonnegan, believes that they are delaying the ticker tape of race results so as to place bets on horses that have already won.

When they note that the software, “quickly processes rapid developments in the markets,” what they really mean is that this software can pick up on large orders in process, and get their orders in ahead of those orders already in process, and generate profits.

If this were a human transaction, with the agent doing it to a client, it would be called front-running, and it would be a felony.

I’m pretty sure that Goldman does not want everything to come out in court, because, even if it’s legal, the revelations would likely lead to calls for additional regulatory reform.

They just want this gut to cop a plea, extract some sort of non-disclosure agreement, and then make him disappear.

You can tell this, because they are playing some serious hardball here.

They discovered the loss of the code some time in mid June, but held off on notifying authorities until July 1, pretty much guaranteeing that the arrest, and setting of bail would take place over the holiday, and he would have to spend the weekend in jail.

He is out on bail now, but I expect a plea, or a convenient suicide, because the exposure in open court of what amounts to a massive, pervasive, and thoroughly corrupt insider trading scheme is something that the squids* will find unacceptable.

Then again, I am a bit tinfoil hat on such things.

*Alas, I cannot claim credit for this bon mot, it was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

Economics Update

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Consumer borrowing has fallen for the 4th straight month, as households continue to deleverage.

The real question is whether this is a long term or a temporary change in consumer behavior.

In banking, interest rates are falling again, with yields on treasuriess falling as more people flock to their relative safety, and falling interest rates on mortgages have boosted mortgage applications.

In currency, concerns over unrest in China have driven both the Yen and the dollar up vs the Euro, though the dollar is has fallen to a 5 month low vs. the Yen.

I think that the currency traders are more sanguine about Japan than about the US.

In energy, increased inventories and concerns about future demand drove the priuce of oil down to near 60.