It also makes it clear just how unethical, and possibly illegal, these actions were.
Goldman Sachs deliberately crippled products that they created, and then took out insurance policies against them, “naked” Credit Default Swaps (CDS), even though they did not own what they were insuring, and made lots of money when the US government bailed out AIG, so that AIG could pay off the policies.
And Timothy “Eddie Haskell” Geithner, our Treasury Secretary, still has not backed down from his position that the “naked” CDS is essential for “price discovery.”
This would not make sense. While the Scud is mobile, and hard to detect when it is deployed, it is a liquid fueled missile that uses caustic fuels and oxidizers (Kerosene or UDMH as fuel and RFNA as an oxidizer) that requires a significant amount of infrastructure to maintain and keep at ready status.
Having something like this, as opposed to smaller solid fueled rockets that can be stored and maintained without a fixed base and fueling location, is akin to painting a big target on whatever facilities are used to maintain the missiles.
Honestly, I think that this something ginned up by Netanyahyu for either domestic political consumption, or as a way to push back against Obama on the housing units in Jerusalem.
I would note that the entire Jerusalem problem is one of Netanyahu’s own making. He has a history of doing this to Democratic presidents, so I do not buy that the timing of the construction permit announcement was just a “bureaucratic oversight” either.
In a study due out March 15, consulting firm McKinsey & Co. examined how efficiently 33 nations that account for 90 percent of worldwide defense expenditures perform a range of functions. The study looked at how these militaries go about doing certain tasks in three key areas: personnel, maintenance and weapon buying.
…………
“The United States and Australia are the lowest performing countries with regard to equipment output for every dollar spent,” McKinsey concludes.
Brazil had the greatest efficiency of the countries surveyed.
The Soviet Union spent themselves to destruction on huge amounts of military hardware, and it appears that the good old USA is spending itself to destruction on tiny amounts of military hardware.
General Stanley McChrystal is now saying that Dick Cheney’s model for the army,* with contractors galore, simply does not work:
The U.S. commander in Afghanistan said April 16 that the military is wasting money by employing too many private contractors to do jobs better done by soldiers or local Afghans.
“We have created in ourselves a dependency on contractors that is greater than it ought to be,” General Stanley McChrystal told an audience of French officers and military experts at France’s defense university in Paris. Related Topics
“I think we’ve gone too far. I think that the use of contractors was done with good intentions so that we could limit the number of military. I think in some cases we thought it would save money. I think it doesn’t save money.”
This is the right thing to say, but it’s a tough thing to say, since lucrative consulting gigs follow general officers who play the game, and now McChrystal will have to work for a living after retiring.
Of course, it’s going to take years to rebuild the capabilities that Bush I, Clinton, and Bush II privatized and moved out of the Pentagon.
*In one of his worst miscalculations in a lifetime of abject failure, Cheney did this as Secretary of Defense under Bush I, where he decided to privatize everything in sight that was not a “primary military function.”
The oil and currency numbers are really about the Goldman Sachs enforcement action by the SEC, which raised concerns about the economy, and this uncertainty has pushed oil down, and the dollar up, on a concern about demand and demands for safe havens respectively.
Gary Jackson, the former president of the mercenary firm Blackwater*, the former general counsel, executive vice-president, and two other formerly employees on for crimes related to gun-running.
Here’s hoping that someone in this group sings to the prosecutors, and maybe takes Eric Prince down, and maybe he’ll sing to prosecutors.
Of course, if he has dirt, it will be on Bush/Cheney/Rumsfeld, and nothing will happen, because Obama and Holder don’t want to look back.
This is not true. It was Paulson & Co. Inc., run by John Paulson, the protagonist of the book The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History, about his fabulously successful shorting of the subprime market.
My guess is that he’s going to seem a Paulson, no relation to the former Treasury Secretary, will find his star dimmed a bit, particularly since the SEC has made it clear that he is under investigation as well.
I guess he sounds a bit less like a brave hero now.
So, Allee Bautsch, a fundraiser for Bobby Jindal, the Governor, and Village Idiot, of Louisiana gets mugged in New Orleans, and “source close to Bautsch tells Yahoo! News that they were politically motivated.”
Note that official sources have made no such claims, but a conservative blogger seems to have put words in the mouth of a NOPD spokesman.
In any case, the Times Picayune has some decent coverage which appears to make it clear that no political epithets were involved, it was a bunch of drunken assholes.
As an FYI to those living under rocks in the past year, the pic is not of Ms. Bautsch,* but of Ashley Todd.
*Whose name, for some reason, I keep spelling Bat-sh%$.
The SEC has charged Goldman Sachs and one of its VPs with, “defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter.”
It sounds to me like they assembled a particularly crappy CDO at the request of a hedge fund, most likely the now infamous Magentar:
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, Director of the Division of Enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
So it sounds like Goldman Sachs assembled CDOs, a form of mortgage backed security, at the request and to the specifications of the hedge fund Magetar, which demanded that the CDOs that it funded be as crappy as possible so that it could win on bets against high rated tranches.
This was apparently fairly common knowledge on the street, and Goldman did it anyway, and then sold the instruments as being “rock solid”. Oopsie
Background, and links to Pro Publica‘s and This American Life‘s stories on Magnetar’s, “burn down your neighbor’s house for the insurance money,” investment strategy are here.
There are two potential outcomes:
A tepid settlement followed by an inconsequential fine.
That the string is being pulled, and a whole lot of stuff comes unraveled.
I hope for the latter, but I expect the former.
*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.
Full complaint and embedded PDF of the filing are after break:
Washington, D.C., April 16, 2010 — The Securities and Exchange Commission today charged Goldman, Sachs & Co. and one of its vice presidents for defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. Additional Materials
The SEC alleges that Goldman Sachs structured and marketed a synthetic collateralized debt obligation (CDO) that hinged on the performance of subprime residential mortgage-backed securities (RMBS). Goldman Sachs failed to disclose to investors vital information about the CDO, in particular the role that a major hedge fund played in the portfolio selection process and the fact that the hedge fund had taken a short position against the CDO.
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, Director of the Division of Enforcement. “Goldman wrongly permitted a client that was betting against the mortgage market to heavily influence which mortgage securities to include in an investment portfolio, while telling other investors that the securities were selected by an independent, objective third party.”
Kenneth Lench, Chief of the SEC’s Structured and New Products Unit, added, “The SEC continues to investigate the practices of investment banks and others involved in the securitization of complex financial products tied to the U.S. housing market as it was beginning to show signs of distress.”
The SEC alleges that one of the world’s largest hedge funds, Paulson & Co., paid Goldman Sachs to structure a transaction in which Paulson & Co. could take short positions against mortgage securities chosen by Paulson & Co. based on a belief that the securities would experience credit events.
According to the SEC’s complaint, filed in U.S. District Court for the Southern District of New York, the marketing materials for the CDO known as ABACUS 2007-AC1 (ABACUS) all represented that the RMBS portfolio underlying the CDO was selected by ACA Management LLC (ACA), a third party with expertise in analyzing credit risk in RMBS. The SEC alleges that undisclosed in the marketing materials and unbeknownst to investors, the Paulson & Co. hedge fund, which was poised to benefit if the RMBS defaulted, played a significant role in selecting which RMBS should make up the portfolio.
The SEC’s complaint alleges that after participating in the portfolio selection, Paulson & Co. effectively shorted the RMBS portfolio it helped select by entering into credit default swaps (CDS) with Goldman Sachs to buy protection on specific layers of the ABACUS capital structure. Given that financial short interest, Paulson & Co. had an economic incentive to select RMBS that it expected to experience credit events in the near future. Goldman Sachs did not disclose Paulson & Co.’s short position or its role in the collateral selection process in the term sheet, flip book, offering memorandum, or other marketing materials provided to investors.
The SEC alleges that Goldman Sachs Vice President Fabrice Tourre was principally responsible for ABACUS 2007-AC1. Tourre structured the transaction, prepared the marketing materials, and communicated directly with investors. Tourre allegedly knew of Paulson & Co.’s undisclosed short interest and role in the collateral selection process. In addition, he misled ACA into believing that Paulson & Co. invested approximately $200 million in the equity of ABACUS, indicating that Paulson & Co.’s interests in the collateral selection process were closely aligned with ACA’s interests. In reality, however, their interests were sharply conflicting.
According to the SEC’s complaint, the deal closed on April 26, 2007, and Paulson & Co. paid Goldman Sachs approximately $15 million for structuring and marketing ABACUS. By Oct. 24, 2007, 83 percent of the RMBS in the ABACUS portfolio had been downgraded and 17 percent were on negative watch. By Jan. 29, 2008, 99 percent of the portfolio had been downgraded.
Investors in the liabilities of ABACUS are alleged to have lost more than $1 billion.
The SEC’s complaint charges Goldman Sachs and Tourre with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Exchange Act Rule 10b-5. The Commission seeks injunctive relief, disgorgement of profits, prejudgment interest, and financial penalties.
# # #
For more information about this enforcement action, contact:
Lorin L. Reisner Deputy Director, SEC Enforcement Division (202) 551-4787
Kenneth R. Lench Chief, Structured and New Products Unit, SEC Enforcement Division (202) 551-4938
Reid A. Muoio Deputy Chief, Structured and New Products Unit, SEC Enforcement Division (202) 551-4488
In case you were living under a rock, this is why he left so quickly from his position managing the bailouts of GM and Chrysler:
New York Attorney General Andrew Cuomo confirmed his office is investigating former Obama administration auto industry advisor Steven Rattner, in a growing probe into illegal kickbacks involving the state pension fund.
Rattner, who helped craft the federal rescues of General Motors and Chrysler, left the Obama administration abruptly last year. This morning, the private equity firm he co-founded, Quadrangle Partners, agreed to pay $7 million to settle allegations it made illegal payments to a New York state official and a political consultant in exchange for millions of dollars in pension investments.
But the settlement specifically excludes Rattner, who Cuomo says is no longer with the firm and remains under investigation. What’s more, Quadrangle issued a scathing statement against its co-founder.
“We wholly disavow the conduct engaged in by Steve Rattner,” the statmement says. “That conduct was inappropriate, wrong and unethical.”
This is a guy who operated a corporate “chop shop,” and we are surprised to discover that he is a dirt bag.
This “experience” thing, which justified, Rattner, Geithner, Summers, etc. is highly overrated.
Ethics first, allegiance to the American public second, and only then consider experience.
Of course, the actual rule is still months away, but my guess is that John Aravosis’s Don’t Ask, Don’t Give donor boycott has finally developed critical mass, and the fund raisers are beginning to notice.
So, now we know, that, if absolutely backed into a corner, Barack Obama is willing to take the most timid steps for LGBT civil rights.
Well, so much for a recovery in employment, initial unemployment claims rose by 24,000 to 484,000, with the 4-week moving average rising by 7,5000 to 457,750, and continuing claims rose by 73,000 to 4.64 million.
On Monday, I had a regular appointment with our doctor, and mentioned that I had a tick bite on the prior Tuesday, and that since I had Lyme disease before (1992), and actually ended up in the hospital with Lyme Carditis.
Since the standard test would show positive, it tests for the antibody whether or not I had it, so the Dr. S. prescribed a prophylactic antibiotic regime.
The standard drug for this is something in the Tetracycline family, most commonly Doxycycline, which he prescribed, and I filled at the CVS near our house.
It’s a mile away, and open 24 hours, but we have never been too satisfied with the service.
In this case, they filled the prescription in ½ hour while I got some blood tests, and filled it, no muss, no fuss ……… Or so it seemed.
The instructions on the label called for taking the pills at least two hours after, or one hour before, eating; i.e. on an empty stomach.
It should be taken with a full glass of water, after food, and patients should be upright for at least 30 minutes after administration to prevent irritation of the esophagus and stomach. Failure to take food prior to ingesting Doxycycline may induce vomiting.
Take doxycycline with food or following a meal. If you have taken doxycycline on an empty stomach before and gotten away with it, the next time may be different. Doxycycline induced nausea is quite unpleasant and more serious stomach irritation can occur.
Also, no note on the label not to take it before bed, nor to avoid sunlight and UV, though Dr. S. told me that last part.
I’ve been wondering who the hell has been doing the flaming sword dance in my stomach for the past few days.
No, I’m afraid not. The 2010 election campaign, more than any other, has underscored the continuing gulf between Tory values and my own. It is not only that the renewed marginalisation of the single, the divorced and the widowed brings back very bad memories. There has also been the revelation, after ten years of prevarication on the subject, that Lord Ashcroft, deputy chairman of the Conservatives, is non-domiciled for tax purposes.
Now, I never, ever, expected to find myself in a position where I could understand, from personal experience, the choices and temptations open to a man as rich as Lord Ashcroft. The fact remains that the first time I ever met my recently retired accountant, he put it to me point-blank: would I organise my money around my life, or my life around my money? If the latter, it was time to relocate to Ireland, Monaco, or possibly Belize.
I chose to remain a domiciled taxpayer for a couple of reasons. The main one was that I wanted my children to grow up where I grew up, to have proper roots in a culture as old and magnificent as Britain’s; to be citizens, with everything that implies, of a real country, not free-floating ex-pats, living in the limbo of some tax haven and associating only with the children of similarly greedy tax exiles.
A second reason, however, was that I am indebted to the British welfare state; the very one that Mr Cameron would like to replace with charity handouts. When my life hit rock bottom, that safety net, threadbare though it had become under John Major’s Government, was there to break the fall. I cannot help feeling, therefore, that it would have been contemptible to scarper for the West Indies at the first sniff of a seven-figure royalty cheque. This, if you like, is my notion of patriotism. On the available evidence, I suspect that it is Lord Ashcroft’s idea of being a mug.
You will inevitably find people, both in the UK and the US who will make noise about moving their primary residence, or their company’s “headquarters” to some other country because of taxes or regulations that they do not like.
These people are Quislings, and they should be viewed as the lowest of the low, and their opinions should be of no concern of any person who cares about this country.
It’s not that government is too big, it’s that you are giving money to n*****s:
“That’s a conundrum, isn’t it?” asked Jodine White, 62, of Rocklin, Calif. “I don’t know what to say. Maybe I don’t want smaller government. I guess I want smaller government and my Social Security.” She added, “I didn’t look at it from the perspective of losing things I need. I think I’ve changed my mind.”
It seems that they think that it will cost, “13 of the largest banks $20 billion in annual earnings.”
This is probably right. When things are going well, going in hock up to your eyeballs is a good way to maximize your profits, and since the executives of these banks are paid largely on the basis of year to year profits, and the taxpayer bails them out when they fail, it means that they may have to forgo that 5th vacation for a year or so.
As to the dire consequences of such restrictions:
Standard & Poor’s said the new Basel rules could force some banks to change their business models.
“We expect smaller, deposit-funded retail banks to find it easier to comply with more stringent liquidity and capital requirements than larger wholesale-funded institutions with extensive trading operations or large loan books and securities holdings,” the credit rating company said in a report today. “For investment banks, the increase in capital requirements could be sizable.”
I don’t know about you, but it seems to me that this is a plus, not a minus.
I still favor a small (20-50 basis point) Tobin tax on all financial transactions and leverage, as well as a larger tax on M&A activity, but that is in addition to much larger capital requirements.
I have been following the comings and goings in Zimbabwe since Tsvangirai’s election, subsequently stolen, as President in 2008.
At first, I did so because I thought that we could see a real game change and a peaceful transition from one of the nastier pieces of work on the African continent, Robert Mugabe.
This has not happened, largely because Mugabe does not care, but additionally because the surrounding community, in particular South Africa and its former President Thabo Mbeki, have been most accommodating to Mugabe and his Zanu-PF party.
I don’t see this changing, and I have been posting about once a month because I feel guilty about not caring any more, which is a silly reason to post.
I have little knowledge of the area, nor of the complex social and political dynamics of the region, and honestly, little interest, just some guilt, so I’m throwing the towel in.
I would suggest the BBC and the Guardian for updates if you want them.
So, Allee Bautsch, a fundraiser for Bobby Jindal, the Governor,