Christmas Tree + 32 Estes D-10-0 Engines=
Year: 2010
Shoot Me, I Agree With David Frum
Who is a Canadian turned right wing former George W. Bush speech writer.
Frum takes Commentary magazine,* and staff writer Jennifer Rubin, over her article “Why Jews Hate Palin”, in which she suggests that Jews, or at least Jewish liberals, hate rural people, hunters, people who work with their hands (note here, Palin never really worked with her hands except for summer jobs when she was in school), people who have large families, the military and military families, and people who denigrate education.
Also she thinks that Jews find her too pretty, and hate her for that.
You know, her article could come from the mouth of Patrick Buchanan, it’s so full of stereotypes, and Frum is remarkably kind to her in his response, but he nails her to the last wall.
The last paragraph says it all”
But even this is not the worst of it. Just guessing, but I think the real and most fundamental problem Jews have with Palin is not her gleeful ignorance, but her willful divisiveness. More than any politician in memory, Palin seems to divide her fellow-Americans into first class and second class citizens, real Americans and not-so-real Americans. To do her justice, she has never said anything to suggest that Jews as Jews fall into the second, less-real, class. But Jews do tend to have an intuition that when this sort of line-drawing is done, we are likely to find ourselves on the wrong side.
Also, add the fact that she literally shared a stage with a professional witch hunter, one who had driven “witches” out of his community, at her church, and the juxtaposition of Christian witch-hunters and the Jewish community is………How to put this?………Most unfortunate.
That being said, Frum does miss a point: that Jews don’t view her more negatively than the general population:
The entirety of the Commentary article rests on the notion that Jews actually disproportionately dislike Palin. As her one piece of evidence, Rubin cites a 9/08 poll showing that only 37 percent of Jews approve of Palin. Is this really disproportionately low?
………………
So going by their partisan voting patterns alone, we would expect 36.5 percent of Jews to approve of Palin — almost exactly what that poll found.
Though to be fair to Mr. Frum, I found that blog post in his tweets, and the negative tags for this post apply to Ms. Rubin, and not him.
*No links to the magazine, ever. It got hijacked by the John Podhoretz Neocon insanity in the late 1960s, and no more link to them than I would link to Michelle Malkin.
Paul Krugman Destroys the Fannie/Freddie CRA Myth
Paul Krugman looks at both home and commercial real estate, and notices that they had a virtually identical trajectory.
So the bubble in commercial real estate, where Fannie and Freddie do not lend, and where the Commercial Reinvestment Act held no sway, had just the same sort of bubble.
From my perspective, the CRE bubble is highly significant; it gives the lie both to those who blame Fannie/Freddie/Community Reinvestment for the housing bubble, and those who blame predatory lending. This was a broad-based bubble.
While I agree that the graph shows that government involvement in the US residential real estate market did not produce the crisis, I do think that the bubble was an artifact of excessively lax lending standards and excessively low interest rates, and these were an artifact of government policy, at least if you consider the actions of then Federal Reserve Board, and its Chairman Alan “Bubbles” Greenspan to be government acts.
Economics Update
Click for full size
Deleveraging: The recession continues until it’s done
h/t Calculated Risk
H/t Calculated Risk
Well, the NFP came out, and the non-farm payroll fell by 85,000, and unemployment (U3) remained at 10%, which kind of gives the lie to all those forecasts that predicted an increase.
On bright spot, however, was that “November payrolls were revised to show the economy actually added 4,000 jobs rather than losing 11,000,” so the 22 month losing streak is broken….Kind of. (BLS link)
Consumer spending is not bouncing back either, as US consumer credit fell by $17.5 billion, a new record, indicating that consumers are continuing to deleverage and pay down their debts, taking us yet further into the paradox of thrift.
The fact that US office vacancies hit 17 pct, a 15-year high, reinforces the idea that things are still not turning around, though a surprise increase in wholesale inventories weighs in on the other side of the ledger.
Treasuries rose. and the dollar fell on the jobs report, as investors fled the dollar, and ran to treasuries, because of concerns about the strength of the recovery.
Of more concern is the fact that oil still rose after the abysmal NFP report, which implies that the new stable level for oil prices is above $80/bbl, which would have the effect of further crippling any recovery.
Cracks in the Republican Façade
Dick Lugar just called out Dick Cheney on his statements about terrorism:
Richard Lugar, the top Republican on the Senate Foreign Relations Committee, defended President Barack Obama’s handling of recent terrorism threats, taking issue with former Vice President Dick Cheney’s criticism.
“It’s unfair,” Lugar said in an interview for Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “I think the president is focused.”
It’s either a sign of the apocalypse, or Senator Lugar is thinking about switching parties.
Little Timothy Geithner has Been a Bad, Bad, Boy
Bloomberg is reporting that the New York Bank of the Federal Reserve instructed AIG not to make disclosures that SEC regulators were demanding regarding their payouts on swap contracts (The New York Times has more, including copies of the emails in questions, which I’ve posted below.):
The Federal Reserve Bank of New York, then led by Timothy Geithner, told American International Group Inc. to withhold details from the public about the bailed-out insurer’s payments to banks during the depths of the financial crisis, e-mails between the company and its regulator show.
AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.
Now, I take anything from Darrell Issa with a grain of salt, he’s a liar, and one of the rather more corrupt Republican members of Congress, but seeing as how House Banking Committee Chairman Barney Frank is saying that this is “Troubling,” and he wants hearings, and both Edolphus Towns, Chairman, and Elijah Cummings, member, of the House Oversight and Government Reform Committee, have been screaming about getting a hearing about this, it seems that Frank may get his wish.
The big deal here is that the NY Fed took over negotiations, and paid off AIG’s swaps at 100¢ on the dollar, which is pretty much unheard of, and at the time that this information was being suppressed, Geithner was already the nominee to be Secretary of the Treasury:
This episode suggests that the NY Fed – and Geithner, then a nominee for Secretary of the Treasury – were worried about any political fallout from the swap payments. When the details were released months later (and after Geithner was confirmed as Treasury Secretary), critics alleged that Geithner had failed to negotiate a better deal for the swap payments with the Wall Street firms.
They perpetuated a fraud upon the American public and on Congress, because little Timmy wanted to be SecTreas.
The New York Fed is now saying that Geithner was uninvolved in the decision to suppress this information, but it’s a no-win situation.
Geithner was front and center in making sure that the swaps were paid off at face value, so the attempt to suppress the date was either because he was covering his own ass., or because he was incompetent and uninvolved, and the Fed bureaucracy bailed him out because they saw him as being the Fed’s Bitch*.
FWIW, I think that this was all part of the campaign by the bureaucracy of the Fed to make Geithner Secretary of the Treasury, though Felix Salmon has a point when he says that the completely over the top culture of secrecy at the central bank was has always been a flaw in the culture of the institution: Independence does not equal secrecy, though the Fed always has seen it that way.
David Dayen at FDL makes the cogent point that even if the payouts were legal, it appears that the cover-up was not legal.
The real problem, as Barry Ritholtz so ably notes, is as follows:
Between Summers and Geithner, it appears that President Obama has made the exact same mistake that one George W. Bush did: Instead of filling his administration’s most important posts with his own people, he reached back to prior admins (Cheney, Rumsfeld, etc) and loaded up on incompetent retreads.
(emphasis mine)
One thing is certain though, that the case for auditing the Federal Reserve has been made much stronger by the most recent scandal.
*A good bet, since the history shows that Timothy Geithner has been the bitch of anything remotely close to a bank or a brokerage his entire career.
Emails reproduced after break:
E-mails from N.Y. Fed to A.I.G. to Not Disclose Counterparty Payments
I Have Mixed Feelings about the French Burqa Ban
The leader of the French Parliament, Jean-François Copé, has restated his intention to ban the Burqa (see pic) in France.
He plans to put forward a law to impose fines of up to €750 ($1050) for anyone who appears in public with their faces covered, and there would, “Stiffer punishments would be laid down for men who ‘forced’ their wives or daughters to wear full-body veils.”
There would be exceptions for the wearing of masks on “festive occasions,” which means, I guess that Halloween has become an institution in France too.
Interestingly enough, Nicolas “President Bling Bling” Sarkosy is trying to slow this down, though one wonders, considering his statements about having a “debate on national identity” got the ball rolling, how sincere he is.
It’s clear that the politics play into some very base feelings, but there is a legitimate question about what is, or should be appropriate public behavior in any society, even a modern Western society.
While societies should be accommodating, there does have to be a line drawn.
I believe that a head scarf (Hijab) should be allowed both in public and the workplace, I do think that the Burqa, and it’s slightly less extreme cousins the Niqab and Chador are over when used outside of a religious observance.
The politics here get really weird though:
Yesterday the veteran far-right leader, Jean-Marie Le Pen, also rejected the need for new legislation against the burka, perhaps surprisingly. He said that the existing French legal code already banned masks in public places. “All they need to do is apply the law,” he said.
Le Pen opposes the Burqa ban? Le Pen?!!?!? I do not understand French politics.
I would also note that the number of people who wear the extreme coverings in France is well small, perhaps 2,000 out of a female Muslim population of 1½ million, so either it’s a problem that does not need to be addressed, or it’s one that can be nipped in the bud, depending on where you feelings lie in this matter.
As I said at the beginning, I am conflicted: I think that the Burqa is a very bad thing, but I’m still not sure if it rises to the level of a problem that requires a formal prohibition under law.
Krugman Just Called Ben Bernanke a Wanker
It was pretty polite, but it was also rather firm:
Here’s the story of two metro areas, Los Angeles (which has run out of room to sprawl) and Atlanta, the ultimate Sprawl City:
Huge bubble in LA; nothing in Atlanta. Looking at the national data was deeply misleading.
So here’s one of the charts from Bernanke’s paper at the meetings:
Yep, he’s using average US housing prices as a bubble indicator. This wouldn’t matter if the division between Flatland and the Zoned Zone was comparable across the advanced world, but it isn’t: other advanced countries lack sprawling metros comparable to Atlanta or Houston. So we aren’t learning much from this comparison.
And the whole thing suggests that the Fed hasn’t learned much about how to identify housing bubbles.
(emphasis mine)
Meow! I whole heartedly approve.
Damn
The New Jersey Senate just defeated marriage equality.
More Ass Covering by the Fed
We are now getting whispers that the Federal Reserve is planning to get tough with the banks:
If the Fed chairman’s speech didn’t worry investors, his timing is interesting. Ben Bernanake now flies to Switzerland for a meeting with the world’s other central bankers.
Saturday’s invitation from the Bank of International Settlements specifically questions whether banks—using cheap money—are returning to the aggressive behavior that prevailed during the pre-crisis period.
What we will see is a lot of fake toughness, because Bernanke is trying to do everything that he can to kill the Fed audit bill.
Barack Obama Lobbies for Tax on Elderly and Labor Unions
Yes, Barack Obama is finally taking a stand in the healthcare bill, and he is lobbying for a tax on high cost healthcare plans, as opposed to a tax on the wealthy. This means that older people, who have to pay more for health insurance, and labor unions, who literally shed blood for their health care, are getting completely screwed.
It’s also horrifically bad policy:
- It will target a much larger swath of the population than is promised.
- It will do little to reign in healthcare costs, just look at the Health Savings Account debacle, and the “Rand study from the 1970s found that higher co-pays and deductibles led patients to limit medically necessary care as much as wasteful care, possibly leading to more costly health-care needs later.”
- Much of the tax revenue from this is from the completely delusional assumption that the money taken out of insurance will be returned to employees as wages by their employers.
Seriously, I knew that we had elected a center-right Democrat as president, but I am surprised that we apparently elected a Republican.
Unsurprisingly, Obama is getting some pushback from the liberals in the House, most notably Raul Grijalva (D-AZ), who is saying that this clusterf%$# is his baby now, and he needs to work to make the bill better, and that this tax proposal violates Obama’s campaign promise not to raise taxes on the middle class.
Of course, whenever a politician promises not to raise taxes on the middle class, he’s lying.
Economics Update
first time unemployment claims rose slightly this week, up 1,000 to 434,000, down from the 490,000 at this time last year, and the 4 week average fell to 450,250.
I would note that this number needs to be below about 400K before non-farm payroll increases, and if the December numbers show an increase in NFP, it’s seasonal adjustment bull sh$#.
The numbers are better, but it’s still, “better in a not getting worse as fast,” way.
That being said, retail sales surprised on the upside, with December sales up 3% over the 2008 numbers, though still down by about 2-3% FROM 2007.
We also had some big news in central bank land, with China’s central bank raising its benchmark rate, with 3-month bills increasing to 1.3684%, up 4.04 basis points (0.0404%) from the rate that it had maintained for the past 4 months.
It indicates that they will be tightening on the money supply, which could get interesting, because much of the Chinese stock market is smoke and mirrors. Additionally, it may be a first step in allowing the Yuan to drift higher, as higher returns make the currency more attractive.
On the less surprising side of stupid central bank tricks, the Bank of England left both rates and policy unchanged, which means that they are still printing money hand over fist.
Also, Treasurys fell slightly, though I think that this is concern regarding the NFP payroll data.
Energy and currency surprised. The surprise increase in Chinese rates would normally presage an increase in oil prices, because there is the assumption that there is additional demand that is being tamped down, and the dollar down, because the Yuan becomes more attractive, but in fact, oil fell slightly, to below $ 83/bbl, though that might be profit taking, and the dollar rose fairly sharply.
A Very Good Idea
The FDIC is looking to use a formula for its insurance fees that is driven by banker pay:
U.S. regulators are set to consider a plan that would tie the amount banks pay for deposit insurance to the riskiness of the institutions’ pay structures, a source familiar with the matter said Thursday.
Under the proposal to be considered next week by the board of the Federal Deposit Insurance Corp, banks that base compensation on solid performance metrics and include measures such as “clawbacks” would pay less for deposit insurance, the source said, speaking anonymously because the proposal has not yet been released.
Banks with riskier schemes that reward short-term gains would have to pay higher fees.
This is a good start, but it’s too easy for the bankers to game, and gaming financial contracts is what bankers do.
Set the fee based on total remuneration of the highest paid person at the bank, including bonuses.
For each multiple of the President of the United State’s salary ($400K) raise the insurance fee by 1 basis point (0.01%).
If your highest paid guy gets $4 million in a year, the surcharge is a manageable 0.1%, if he gets $40 million a year, it’s 1%, if it’s $70,324,352, which is what Lloyd Blankfein received in 2007, then it is 1¾%.
That should cut down on banker bonuses.
Hell, make it a payroll tax, and apply it to businesses across the board. It would cut down on overpaid athletes too.
Some Sanity in Tax Abatement Russian Roulette
After years of offering capital improvements and tax abatements to big businesses to lure them to town, some cities are now going after those business for their taxes when the companies do not fulfill their end of the bargain:
Cash-strapped communities have a message for corporations that promised jobs in return for tax breaks: A deal’s a deal.
As the recession drags on, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don’t hire enough workers, lay them off or close up shop. At the same time, they’re sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don’t deliver.
The example they give is a $600K tax bill in DeKalb, Il, when they did not meet the mandated job level (500) in their distribution center.
My suggestion, and it’s one that would involve lots of tax lawyers, is not that the taxes be waived in such a deal, but that the amount of the taxes be a loan, so that when a company violates the terms, you can claw back all the money, plus interest.
John Taylor Calls out Ben Bernanke
Click for full size
Ben Bernanke in his younger days
He politely says that Bernanke is full of it, and that low rates caused the bubble:
John Taylor, creator of the so-called Taylor Rule for guiding monetary policy, disputed Federal Reserve Chairman Ben S. Bernanke’s argument that low interest rates didn’t cause the U.S. housing bubble.
“The evidence is overwhelming that those low interest rates were not only unusually low but they logically were a factor in the housing boom and therefore ultimately the bust,” Taylor, a Stanford University economist, said in an interview today in Atlanta.
Taylor, a former Treasury undersecretary, was responding to a speech by Bernanke two days ago, when he [Bernanke] said the Fed’s monetary policy after the 2001 recession “appears to have been reasonably appropriate” and that better regulation would have been more effective than higher rates in curbing the boom.
The Taylor rule, from the Wiki:
In economics, a Taylor rule is a monetary-policy rule that stipulates how much the central bank would or should change the nominal interest rate in response to divergences of actual inflation rates from target inflation rates and of actual Gross Domestic Product (GDP) from potential GDP. It was first proposed by the U.S. economist John B. Taylor in 1993.
I’m not sure of the value of the Taylor rule, there seem to be some “miracle occurs here” bits in the coefficients used, but it is significant that someone with his sort of academic credentials (he has a fracking rule named after him) is coming out hard against the Fed Chairman’s excuses.
Year End Auto Wrap Up
Click for full size
Numbers are year over year h/t CNN
The surprising news is that in 2009, more old cars were scrapped than new cars were bought, meaning that the US auto fleet fell to 246 million from 250 million.
Note that “cash for clunkers” accounted for only about 700,000 vehicles, so the auto fleet would have contracted without the program.
This is the first time that the US fleet has shrunk since probably the end of WWII.
So the year sucked in terms of sales, though December was good for Ford and Toyota, but bad for GM and Chrysler.
Sales had to go up, as at their nadir, sales would have resulted in a fleet age of almost 30 years.
Oh, God, Not This Jerk!
Harold Ford, of the deeply corrupt Ford political clan in Tennesee is being groomed to challenge Kristen Gillibrand in the New York State Democratic Senate primary:
Encouraged by a group of influential New York Democrats, Harold Ford Jr., the former congressman from Tennessee, is weighing a bid to unseat Senator Kirsten E. Gillibrand in this fall’s Democratic primary, according to three people who have spoken with him.
Mr. Ford, 39, who moved to New York three years ago, has told friends that he will decide whether to run in the next 45 days. The discussions between Mr. Ford and top Democratic donors reflect the dissatisfaction of some prominent party members with Ms. Gillibrand, who has yet to win over key constituencies, especially in New York City.
Let’s be clear what they mean when they say, “especially in New York City”: they mean that they think that they might have a chance because Harold Ford is black.
Since losing his race for the Senate in 2006, Ford has been a mouthpiece for the corporatist Democratic Leadership Council (DLC) what is going on here is that the powers that be in New York, well, the DINO ones, have been “disappointed” in Gillibrand, because, as she has moved from a very conservative congressional district to a rather liberal state as her constituency, her positions have changed:
Some of the donors who have urged Mr. Ford to consider a run expressed alarm as Ms. Gillibrand, who as a congresswoman represented a conservative upstate district, has abandoned some of her previous positions on issues like gun control and immigration as she prepares to run statewide. Several executives interested in a Ford candidacy said that Ms. Gillibrand’s positions echoed Mr. Schumer’s and that the state needed a second independent voice in the Senate.
What they are saying here is that they don’t want a real Democrat here, they want a corporate whore, and that is what Harold Ford is.
Most of the opposition to Gillibrand in the New York Democratic party comes from people who think that she is too conservative for the party and for the state, but the people mentioned here, like “Financier Steven Rattner,” who ran the auto bailout until an influence buying scandal forced him out.
I’m not a fan of Gillibrand, but Harold Ford? What they hell are they thinking?
Economics Update
Well, the ADP private employment survey is saying that the private sector lost 84,000 jobs in December, and the Institute for Supply Management’s non manufacturing index rose to 50.1, up from 48.7 in November, and not as good as forecast, but still showing a smidgen of growth.
Real estate was rather grim though, with mortgage applications hitting (seasonally adjusted) a 6 month low, and mortgage purchase applications (top pic) hitting a 12 year low.
Basically this means that people are not buying homes, they are just refinancing, though, with interest rates inching up, they aren’t doing that as much either.
Additionally, a feature of suburban blight, the strip mall, is taking a hit with vacancies hitting 10.6%, an 18 year high.
I keep saying it, but no one listens: we need some inflation here.
In energy, the cold weather drove both crude oil and natural gas higher, while in currency, the dollar fell slightly vs. the Euro, as traders make up their minds about whether to be optimists of pessimists.
Icelandic President Vetoes Bailout to British Investors
After receiving a petition containing signatures from almost ¼ of the registered voters in Iceland, Iceland’s President Ólafur Ragnar Grímsson vetoed the bailout bill. It appears that the original version, which would saddle every man, woman, and child in Iceland with a debt of €12,000, about $17,000.
The original bill which passed contained a provision allowing for renegotiation on any unpaid amount after 2024, but the British and Dutch threw a fit over that, so, like the debt slaves that they are on the way to becoming, the government promptly caved, and the Althingi passed a bill without any real prospect of ever getting the bankers’ boots off of their necks.
It has the effect of requiring the bill to be passed by referendum, which is an uphill road, when you consider the fact that 62,000 people out of a population of about 320,000 just signed a petition asking for a veto.
The President notes in his official statement, (PDF) that he believes that it is the right of the people to make such a decision:
It is the cornerstone of the constitutional structure of the Republic of Iceland that the people are the supreme judge of the validity of the law. Under the Constitution, which was passed on the foundation of the Republic in 1944, and which over 90% of the nation approved in a referendum, the power which formerly rested with the Althingi and the King was transferred to the people. It is then the responsibility of the President of the Republic to ensure that the nation can exercise this right.
In the comments of Calculated Risk.s post on the matter, a commenter nailed the absurdity of the deal for the Icelandic people:
They lose their IMF bailout money I think.
Am I right that the proposed IMF bailout is about $6 billion? And the bill from Britain is apparently for 3.4 billion pounds, or about $5.5 billion?
Funny coincidence, that.
Yes, funny that: Because a bunch of people invested in the Internet branches of a local bank, accounts that had were never guaranteed by the Icelandic government, because of the high amount of interest paid, the Icelandic people are supposed to take a loan from the IMF to pay off the people who made risky investments to get high returns.
High returns=high risk. This is not even investing 101, it’s investing, “remedial classes, because you spent high school stoned.”
The investors knew what they were getting into.
Basically, this is the US paying AIG counterparties, but in an amount that comes to ½ of GDP.
Basically, the deal with Iceland was as follows: put your population in debt slavery, and in return, you get, an IMF loan to pay the morons who invested in a dodgy bank.
Then, the IMF will demand that Iceland:
- Dismantle its social safety net
- Sell off its fishing rights, which is the major productive industry in Iceland, to foreigners who will rape the fisheries.
- Fire public employees.
- Privatize energy, water, and other utilities, so that foreigners can buy it and rape the citizenry.
In return, Iceland’s debt might not get downgraded to junk status.
I’m with Felix Salmon on standing up to bullies:
I’m quite ashamed of the bullying tactics being used here by the UK government. What happened was that an Icelandic bank, Landsbanki, started attracting UK depositors through its Icesave brand. When Landsbanki failed, the UK government bailed out those depositors in full. And now it wants that money back from the Icelandic government, which never guaranteed the Icesave deposits. If you thought the cod wars were bad, this is much worse.
(emphasis mine)
One of the flaws in the current finance system is that requirement that people be made whole when they chase high returns. It creates moral hazard, which leads to more stupidity.
Rinse, lather, repeat.
Burn in Hell, Dude
White supremacist scum bag James von Brunn has died in prison awaiting trial.