If Goldman Sachs is seeking a 9 figure settlement with the SEC, reports are $250 million, then they really should paying at least a 12 figure settlement.
Month: May 2010
Well, Obama is In a Conundrum
The Defense appropriations bill that recently passed the Senate has a (sort of) repeal of the discriminatory Don’t Ask Don’t Tell law.
It also has funding for the F136 alternate engine for the F-35 Joint Strike Fighter, which the White House opposes, so now the Pentagon staff is throwing around a veto threat on this issue:
F-35 Joint Strike Fighter Program: The Administration strongly objects to provisions of the bill which could limit the procurement of the 42 aircraft requested in the President’s FY 2011 Budget. The onerous restrictions impose unacceptable schedule and budget risks on the JSF program. While the Department believes the restructured development schedule is achievable, failure to achieve any one of the criteria would affect the procurement decision with significant impact on unit cost, production ramp, and TACAIR force structure. The Department’s F-35 procurement request is in line with independent manufacturing studies, risk review recommendations, and the FY11 request reflects an optimized production. If the final bill presented to the President contains provisions that would seriously disrupt the F-35 program, the President’s senior advisors would recommend a veto.
(emphasis original)
If Obama is looking for an excuse to kill DADT because of cowardice, this would be it.
If Obama really wants to repeal DADT this year, than he has a decision to make.
So, which is it, the lady or the tiger?
Warren Buffett Subpoenaed
He was invited to speak before the Financial Crisis Inquiry Commission, and politely declined, so now he has been subpoenaed to testify:
When Warren Buffett testifies before the Financial Crisis Inquiry Commission next Wednesday, it will be because he was subpoenaed. If you don’t know how a subpoena works, this one begins with capital letters, “YOU ARE HEREBY COMMANDED to appear and give testimony.”
As Buffett characterizes it, “This is an offer you can’t refuse.”
………
But ah, it was. Buffett could by then see the likely end of this argument. But he was also determined to stick to his belief that the “private interview,” followed by hearings, would neither be beneficial to anyone nor a good use of his time. So Buffett told Cohen in a phone call that he would not be volunteering to testify — and if that meant a subpoena was in the cards, let it happen.
The subpoena — that command in capital letters — came on May 25. But the continuing, urgent wish of the commission to avoid coercion was contained in an accompanying letter, also dated May 25, that “respectfully” requested Buffett’s testimony at a hearing on June 2 in New York City.
My guess is that the net effect here is that the board won’t get its private interview, and so won’t know what he intends to say until he testifies in public, which might make for some good theater.
On a more salient legal note, now that Buffet has been compelled to testify, he can say anything, and not be held liable for those statements, since it is compelled testimony, which might make it even better theater.
Personally, I think that Buffet should bring the Geico Gecko with him. (Buffet owns Geico)
Economics Update (Friday Morning Edition)
Click for full size
Home sales up, but prices are down
And inventory is rising again
Yes, I know, I haven’t been posting this regularly.
Yesterday’s miss was due to thunderstorms.
In any case, yesterday was jobless Thursday, and initial unemployment claims fell slightly, by 16,000 to 460,000, which was worse than expected, with the 4 week moving average rising slightly, and continuing claims fell, though, as I frequently note, people who move from continuing claims to emergency claims fall out of that number.
We also now know that mass layoffs rose in April.
additionally, we are seeing more of that whole “paradox of thrift” thing, with personal income rising, but spending remaining flat, which implies that an increase in consumers buying crap that they really don’t need won’t be our economic salvation.
Also note that the US GDP in the 1st quarter was revised downward, to an annual growth rate of 3% from 3.2%.
I think that he Obama’s already anemic stimulus package is running out of steam.
In real estate, the flight from the Euro has pushed the 30-year fixed mortgage rate to a record low, which, along with the recently expired home buyer tax credit, drove existing home sales higher, though inventories are increasing as well, and prices are falling once again, which implies that a resurgence in the housing bubble won’t be our economic salvation..
In terms of more general metrics, the consumer confidence index rose slightly, as did the Chicago Fed Activity Index, and the Chicago Fed Midwest Manufacturing Index.
I just wish that the PTB were as concerned about 9.9% unemployment as they are about a twitch in the DJIA that ran for about an hour.
Just F%$#ing Marvelous
It looks like my extended unemployment benefits , as well as those of a few million wanting-to-be-working Americans, will expire as Congress rushes out the door to take their vacation recess:
The House of Representatives Friday was to vote on a reduced package of safety-net spending and tax measures that would raise taxes on fund managers, but it likely was too late to avoid disrupting jobless benefits for hundreds of thousands of Americans.
Democrats, who say the bill would lower the country’s 9.9 percent unemployment rate, had hoped it would clear Congress this week to ensure that jobless benefits and other safety-net provisions do not expire. But the Senate was set to leave town for a week-long break without taking action.
As a result, hundreds of thousands of jobless Americans will probably lose the weekly payments that help them cover their bills as they look for work in a sluggish economy.
Congressional wrangling has delayed such benefits at least four times in the past year. Democrats say they will restore the benefits when they return in early June.
To whoever is slow walking this, and to whoever is letting them slow walk this, “Go Cheney Yourself.”
Its a Death Trap, It’s a Suicide Rap
Rupert Murdoch has decided that Times of London and the Sunday Times will go behind a pay-wall.
I generally think that this is a bad idea since:
- People haven’t paid for content from news publications for over a century, it’s been advertising supported, with the cover/subscription price covering only a portion of the actual cost of printing.
- Putting general interest content behind a firewall tends to remove it from the Internet consciousness, which drives subscriptions and ad revenue down. (See the New York Times‘ abortive attempt with their OP/EDs)
That being said, I think that Murdoch’s plans go way beyond a simple pay-wall, and straight into crazy town, because, as the New York Post, a Murdoch publication that I would like to see vanish into pay-wall obscurity notes, observes, the Times of London won’t just be going behind a pay-wall, they will also lock out the search engines almost completely:
The UK’s Times and Sunday Times are putting up search walls in addition to pay walls.
The papers, which plan to start charging users for access to their newly redesigned Web sites in late June, will prevent Google and other search engines from linking to their stories.
Although they are not the first papers to erect pay barriers around their content, the papers are going a step further by making most of their site invisible to Google’s Web crawler. Except for their homepages, no stories will show up on Google.
The papers are betting that loyal readers will covet access to scarce content. Critics say the move will make it tougher to attract new readers who discover content by searching the Web.
This isn’t just a misbegotten business plan, it’s an attempt to force payment for links, and it ain’t gonna work, at least not unless Murdoch can convince various legislatures to make linking illegal, a course of action that I find profoundly unlikely, since it essentially bans the web.
I Went and Done It
For about the past 15 months, I’ve had a beard, closely cropped when I get a haircut, rather more rustic in between.
Well, I’ve decided to shave it off. Hopefully, it makes me look a bit younger.
Once Again, the White House Does the Right Thing, When Forced To……
And then they weaken it significantly.
In this case, the White House is now behind repealing Don’t Ask, Don’t Tell this year, because it’s clear that it’s going to hit the floor of the House, and probably the Senate, and while they have been fighting against this behind the scenes, Obama and His Minions™ don’t want to fight against this in public.
The thing is, in order to get Obama’s tepid support, they have created a repeal of DADT that does not repeal DADT:
Discussions around what that repeal measure would include were ongoing as Levin continued to lobby his colleagues. But a couple concessions designed to pacify Gates were being considered: allowing the Pentagon to complete its study before implementation proceeded and potentially requiring a stamp of approval (e.g. a certification letter) from military leadership and/or the president.
But by the time repeal advocates were invited to the White House on Monday morning to be briefed on a new compromise, a third concession had been added. There would be no nondiscrimination mandate. In other words, even after the law is repealed, it will not be replaced at any point with a policy that explicitly states gays and lesbians are allowed to serve openly in the military.
So, the repeal of DADT is just putting the policy back in the hands of Barack Obama, who will doubtless delegate to Robert Gates, who appears to be the most hostile person to gays serving currently working in the Pentagon.
Not feeling hopey changey.
Why Senior Management at BP’s Should Be In a Deep Dark Hole
Click for full size
The Crime Scene
Hours before the Deepwater Horizon exploded, representatives of Slumberger*, who had been called in to perform a “Cement Bond Log (CBL) ” test.
Slumberger, much like Halliburton, is primarily an oil services firm, though it’s rep is as the Cadillac of the service companies, and is, unlike Halliburton, considered to be highly ethical.
Well, they were getting ready to run the test, about 6 hours before the blowout and explosion, and they look at the numbers, and say shut down the operation now, and when the BP management says, “no”, they ask to be flown off, and BP refuses, so they call in a Slumberger helicopter to get the hell out of dodge:
BP contracted Schlumberger (SLB) to run the Cement Bond Log (CBL) test that was the final test on the plug that was skipped. The people testifying have been very coy about mentioning this, and you’ll see why.
SLB is an extremely highly regarded (and incredibly expensive) service company. They place a high standard on safety and train their workers to shut down unsafe operations.
SLB gets out to the Deepwater Horizon to run the CBL, and they find the well still kicking heavily,† which it should not be that late in the operation. SLB orders the “company man” (BP’s man on the scene that runs the operation) to dump kill fluid down the well and shut-in the well. The company man refuses. SLB in the very next sentence asks for a helo to take all SLB personel back to shore. The company man says there are no more helo’s scheduled for the rest of the week (translation: you’re here to do a job, now do it). SLB gets on the horn to shore, calls SLB’s corporate HQ, and gets a helo flown out there at SLB’s expense and takes all SLB personel to shore.
6 hours later, the platform explodes.
Note that we do have confirmation that this cement bond log test was never conducted:
BP hired a top oilfield service company to test the strength of cement linings on the Deepwater Horizon’s well, but sent the firm’s workers home 11 hours before the rig exploded April 20 without performing a final check that a top cementing company executive called “the only test that can really determine the actual effectiveness” of the well’s seal.
A spokesman for the testing firm, Schlumberger, said BP had a Schlumberger team and equipment for sending acoustic testing lines down the well “on standby” from April 18 to April 20. But BP never asked the Schlumberger crew to perform the acoustic test and sent its members back to Louisiana on a regularly scheduled helicopter flight at 11 a.m., Schlumberger spokesman Stephen T. Harris said.
…………
Schlumberger’s Harris said the contractor was ready to do any such wireline tests, but was never directed to do so. The team had finished doing tests on the subsea layers of earth being drilled five days earlier and hadn’t done any work since, Harris said.
In fact, Harris said there was no time to get the company’s wireline testing equipment off the rig before it exploded.
So BP’s side of the story is that they hired the most expensive, top of the line, oil field services company out there to run a test, and never bothered to let them complete what they had paid for, and the time line is a bit different.
But what is clear is that Slumberger left, and they left their very expensive equipment in their haste to get off the platform, because they saw a disaster coming, and they could not stop it.
H/t Thom Hartmann.
*Full disclosure, one of my step-mother’s oldest and dearest friends was a Slumberger, yes, one of those Slumbergers.
†Basically, as they drill a well, they add fluid (mud) to balance the pressure so that it does not erupt out of the well head. When a well is “kicking”, it means that the pressure is not properly balanced and the oil/gas/water is blowing out the mud. See the Wiki.
I Need Help With a Prank
Renovation of the door is called forI need a group of people who know how to handle themselves around tools, and can look like they know what they are doing.
What I am planning to do is generate a false work order and then install revolving doors at RNC headquarters:
The departures began in earnest about two months ago, shortly after reports of the RNC spending nearly $2,000 in donor money at a nightclub called Voyeur West Hollywood, an establishment where “impromptu bondage and S&M ‘scenes'” are “played out on an elevated platform by scantily clad performers throughout the night.”
The heads have been rolling ever since, even in departments that had nothing to do with the controversy.
It’s been tough to keep track of the staff shake-ups. The party’s finance chief and deputy finance director were recently forced out, as were three members of the RNC’s communications team. Those announcements came on the heels of departures from the party’s chief of staff, a top RNC strategist, and Alex Castellanos, who was brought on to help shape the party’s message. All of this has unfolded since late March.
The party may want to consider revolving doors at RNC headquarters.
Well, I saw that bit of snark, and decided that it’s time to make it reality.
I want a crack team to go there, show up with a work order, and install an actual revolving door.
Yes, I am really serious here, or, at least I think I am.
Hey kids, let’s put on a show in dad’s barn with mom’s costumes!
My guess is that we will get caught, and likely arrested, but if anyone knows a producer for The Daily Show, we can probably get on that.
One of the Reasons that I Read WallStreetJackass
Because he finds things like this.
Brilliant.
Credit Where Credit is Due
The White House has come out against letting auto dealers cheat their customers.
To quote the first few ‘graphs of the official statement:
Later this afternoon, the Senate will vote on a motion to instruct conferees on the Brownback Amendment. That basically means members of the Senate will cast a nonbinding vote on whether or not they think the House and Senate conferees should consider carving out a loophole for auto dealers that make auto loans from the financial reform bill.
The President has been clear on this issue, repeatedly urging members of the Senate to fight efforts of the special interests and their lobbyists to weaken consumer protections. The fact is, auto dealer-lending is an $850 billion industry, which is larger than the entire credit card industry and they make nearly 80 percent of the automobile loans in our country.
Is there any question that these lenders should be subject to the same standards as any local or community bank that provides loans?
This is the right thing to do.
Hoisted from the comments
In a discussion of raising marginal tax rates, reader DJ wrote:
Interestingly enough, raising taxes on the rich does not result in prosperity either, it only serves to drive the economic activity out of the country derived from the holdings of the rich. The 90% tax rate in the depression only served to drive milliona[i]res out of the country.
Note here, that on the basis of his comments, DJ knows what he’s talking about and has a good grasp of the facts.
The fact that he made this comment is an indication of the truth of the old Mark Twain quote, “A lie can travel half way around the world while the truth is putting on its shoes.“
DJ has assumed that self serving statements from people who don’t want their taxes raised actually have a basis in reality.
The myth that rich people did, and will again, “go Gault,” is just that, a myth.
First, and most importantly, the 90+% tax rate was not implemented until 1944-1945 (and then again in 1951-63, not times of slow GDP growth).
Second, there is no evidence that millionaire’s fled the country during the depression. The case is generally made that the recession of 1937 was caused by this, but only by people like Amity Shlaes (who is not to be trusted, see below) in her execrable book The Forgotten Man.
They suggest that because Roosevelt pursued tax evaders, it triggered the recession of 1937, because they went “Gault” and withdrew their money from the economy and put it in their mattresses.
Of course, the fact that neither Keynes, who blamed the tightening of fiscal policy by the government (which did include a tax hike) nor Friedman who blamed the tightening of monetary policy by the Fed, viewed this argument with anything but scorn, and this is the alpha to omega of honest economic thought.
Additionally, in order for people to flee the US income tax (after the first $91,400) you have to renounce your citizenship, which also precludes the ability to make campaign donations, which makes the regulatory arbitrage that generates this income, particularly in finance, which is where most of the tax rates increase would fall.
Essentially, if they leave the country and renounce their citizenship, the government guaranteed infinite ATM that they have goes away, because the Congress will no longer feel compelled to do their bidding.
I would also note that while the top 1% of earners account for 23.5% of income (2007), they account for less than 20% of spending (2008, they do quintiles, so it’s an approximation, and I don’t want to tease it out any further), so a dollar going to a rich pig™ is much less stimulative than a dollar going to a dollar going to someone in the bottom 4/5 of the population.
There is a legitimate question as to whether or not we should raise taxes on the rich today because we are still in a depressed economy, though I favor it.
That being said, many of our long-term structural problems come from the fact that income distribution is increasingly unequal, and the the use of high marginal tax rates is one of the best ways to change this.
I would also note that if the “geniuses” at Lehman, Bear Stearns, and Citi withhold their ideas for “financial innovation” as a result, we are all the better for that.
As to Amity Shlaes, who is typical of the people supporting the “going Gault” hypothesis, and arguably one of the most prominent proponents:
- She has no background in economics (degree in English)
- She is in idiot who lets her ideology dictate the facts (she was fired by the Financial Times for repeatedly submitting stories about the heroism and competence of Bush and His Evil Minions™ during Katrina).
- In order for her to justify her conclusions about 1937, she states as fact things that are unequivocally false.
My Apologies to Roger Parloff
When I suggested that he link to the article in question, he had already linked to the article in question.
I missed it.
I am a complete pratt.
Anti-Vacc Fraud Doc Gets Medical License Pulled
The General Medical Council, the physicians’ regulatory body in the UK, has revoked the medical licens(c)e of Andrew Wakefield and his colleague John Walker-Smith, though the 3rd participant in the study, was exhonerated when it was determined that he stopped doing tests when he determined that they were unethical.
The first two “doctors” subjected children to excruciating tests like lumbar puncture without any review from ethics committees,
For a devastating cartoon version of the facts, which details how Wakefield did this because he was bought and paid for, see here.
Unfortunately, it is highly unlikely that he will get what he really deserves, which is a very long time in gaol.
Speaking of Series Finalies
My wife is watching the last episode of 24 as I type this.
I consider it to be poorly written torture and espionage porn, though it is well directed, its pacing reminds me of the first Taking of Pelham 123 movie with Walter Matthau and Robert Shaw, which is high praise from me.
Still, I don’t watch it, after about 5 minutes, I find myself numb.
Apologies to Declan McCullagh
In an earlier post, regarding an article where a quote:
“Don’t be silly,” McLaughlin responds. “No one’s backed away from anything. . . . Isn’t . . . the author of the article, an anti [net neutrality] zealot?”
I put 2 and 2 together, and got 5. I said that it was clearly CNET reporter Declan McCullagh.
Well, it was not Mr. McCullagh.
It was someone else, and here is (my best guess) his article.
It sounded as if was something that came from Mr. McCullagh, who is a somewhat-saner-than-Rand-Paul libertarian, but I was wrong.
I had an exchange with the author, Roger Parloff, who told me who the author was, and that he felt that naming the author would require space for a response, which would have crowded out other information in an article with a limited length.
Perhaps the solution here is for online articles from dead tree publications, Fortune Magazine in this case, would be better served by providing links under such circumstances.
It’s bloggy, but I’ve always been a fan of hyperlinks, or their old school predecessor, the footnote.
In any case, I was wrong, and I apologize to my reader(s) and Mr. McCullagh.
Deep Thought
I never watched, nor was interested in watching, the television show Lost.
I don’t know what happened, but I have read that some fanboi (and fangrrl) have been profoundly disappointed.
I feel some schadenfreude at all the fans who were disappointed by the series finale.
I guess that makes me a bad person.
It’s Official: Andrew Cuomo to Run for New York Governor
Not a surprise, and he is clearly the front-runner, since Republicans like George Patacki, who could at least pretend to be sane, can no longer make it through the primary process in the Republican Party in New York State.
Not Sure What this Means
Or if it means anything, but a Republican candidate, Charles Djou,won the special election in Hawaii’s 1st district, largely because it was winner take all election, and two Democrats split the vote:
In Hawaii, Djou received 67,610 votes, or 39.4 percent. He was trailed by Hanabusa, who received 52,802 votes, or 30.8 percent. Case received 47,391 votes, or 27.6 percent.
I would add to this the fact that Djou courted the teabaggers, and it increasingly looks like those folks have run out their string, and people are realizing that there is an awful lot of racism at the bottom of that cesspool.
I find the election results in PA-12, John Murtha’s old district, a week ago, where a Democrat won despite being behind in the polls a bit more indicative, but I am not an unbiased observer.