Year: 2012

This is Huge

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A Judge in Australia has just found Standard and Poors liable for bad investments:

I’d never heard of Australian federal judge Jayne Jagot before today, but she’s my new favorite jurist, thanks to her decision in a recent court case which was brought against ABN Amro and Standard & Poors.

The coverage of the decision (Quartz, FT, WSJ, Bloomberg, Reuters) concentrates, as it should, on the hugely important precedent being set here: that a ratings agency — in this case, S&P — is being found liable for losses that an investor suffered after trusting that agency.

S&P is appealing the decision, which runs to an astonishing 635,500 words, or almost 1,500 pages: it’s literally longer than War and Peace. At this point, it’s fair to assume that Jagot is one of the world’s foremost experts on structuring and rating CPDOs — crazy derivative instruments which had a brief moment of glory at the end of 2006 before imploding spectacularly during the financial crisis. And helpfully, her decision begins with a 56-paragraph summary of her findings, which lays out exactly how culpable and incompetent S&P really was.

Needless to say, I have not read the whole opinion, though I did look at the summary, which was eye glazing on its own.

The substance of this ruling is that:

  • ABN Amro had a model of risks and return that was crap.
    • And S&P used it without any consideration as to the quality of the model.
  • The data that ABN Amro used in this model was complete crap.
    • And S&P used used it without any consideration as to the quality of the data.

Basically, we are talking about is willful blindness, which does not eliminate culpability, and willful blindness is at the core of the the ratings agencies business model.

Here is hoping that this survives appeal.

Some Navel Gazing on My Part

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I’ve been fairly clear on this blog that I think that various actions of Obama renders him unfit to be President.*

I also understand that there are people who make arguments that could be called compelling to vote for him, most notably the Rude Pundit’s, “In the End, Vote for Obama Because F%$# Romney,”† (%$# mine)  because Mitt Romney is unfit to be President as well.

While I was in Ashland, I talked with my dad about this, and explained to him my position, and further explained that, living in Maryland, I had no moral dilemma, because my vote for President had not consequence.

He asked me what I would do if I lived in a battleground state, and I responded, “That way madness lies.”

My was flip, and it was a cop out. 

I simply don’t know what I would do if I lived in Ohio, or Virginia, or Florida,‡ or New Hampshire, or Wisconsin, or Colorado, or Iowa, and any statement that I might make would be self serving and shallow, and ultimately meaningless.

What I’m saying here is that, on this matter, if you think that I’m full of sh%$, then I’m full of shit, and if you think that I have a f%$#ing point, then I have a f%$#ing point. 

There are any number of times where I make an argument that is fact based, and I try my best to supply links to those facts, but this is not one of those times.

I think that I’m right, but opinions are like assholes, everyone has one.

*Normalizing torture by refusing to prosecute, his war on whistle-blowing, his steadfast refusal to prosecute the malefactors of wealth, his assertions of a executive authority that makes Dick Cheney look mild, etc.
†H/t Cthulhu for the catch.
‡OK, I know what I would do if I lived in Florida, I would kill myself.

Cloud Computing, RIP

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The Department of Justice is now arguing that you have no property rights whatsoever to your data if you use cloud storage:

Yesterday, EFF, on behalf of its client Kyle Goodwin, filed a brief proposing a process for the Court in the Megaupload case to hold the government accountable for the actions it took (and failed to take) when it shut down Megaupload’s service and denied third parties like Mr. Goodwin access to their property. The government also filed a brief of its own, calling for a long, drawn-out process that would require third parties—often individuals or small companies—to travel to courts far away and engage in multiple hearings, just to get their own property back.

Even worse, the government admitted that it has accessed Mr. Goodwin’s Megaupload account and reviewed the content of his files. By doing so, the government has taken a significant and frightening step. It apparently searched through the data it seized for one purpose when its target was Megaupload in order to use it against Mr. Goodwin, someone who was hurt by its actions but who is plainly not the target of any criminal investigation, much less the one against Megaupload. This is, of course, a bald attempt to shift the focus to Mr. Goodwin, trying to distract both the press and the Court from the government’s failure to take any steps, much less the reasonable steps required by law, to protect the property rights of third parties either before a warrant was executed or afterward. And of course, if the government is so well positioned that it can search through Mr. Goodwin’s files and opine on their content—and it is not at all clear that this second search was authorized—presumably it can also find a way to return them. .

But in addition, the government’s approach should terrify any user of cloud computer services—not to mention the providers.  The government maintains that Mr. Goodwin lost his property rights in his data by storing it on a cloud computing service.  Specifically, the government argues that both the contract between Megaupload and Mr. Goodwin (a standard cloud computing contract) and the contract between Megaupload and the server host, Carpathia (also a standard agreement), “likely limit any property interest he may have” in his data.  (Page 4). If the government is right, no provider can both protect itself against sudden losses (like those due to a hurricane) and also promise its customers that their property rights will be maintained when they use the service. Nor can they promise that their property might not suddenly disappear, with no reasonable way to get it back if the government comes in with a warrant. Apparently your property rights “become severely limited” if you allow someone else to host your data under standard cloud computing arrangements. This argument isn’t limited in any way to Megaupload — it would apply if the third party host was Amazon’s S3 or Google Apps or or Apple iCloud.  

(emphasis original)

So basically, if a prosecutor decides to go after one person using a cloud service, then they could take down the entire service, and if you do not like it, tough, you have no property rights.

Having your property seized at the whim of a prosecutor is antithetical to the very idea of the rule of law.

Still bullish on cloud storage?

H/t Ecop at the Stellar Parthenon BBS.

Chinese Claim Confirmation of Propellantless Propulsion Breakthrough

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Click for full size


It looks like a steam punk’s wet dream

The thrust is very similar to that of ion, in the millinewton range, but if this works, the ISP (seconds of thrust per pound of propellant) for such a system is literally infinite (paid subscription required):

Chinese scientists appear to have validated a propellentless space propulsion technology previously branded as impossible. Based on earlier British research, it is averred that the EmDrive concept provides sustained thrust at low cost and weight, but this has yet to be accepted even as a workable theory by the wider propulsion community.

 The EmDrive story started in 2001 when engineer Roger Shawyer set up Satellite Propulsion Research (SPR) to exploit his new concept in electrical propulsion. He was helped by a modest grant from the U.K.’s now defunct Trade and Industry Department.

 Space propulsion relies on Newton’s laws of motion: propellant is ejected backward at high velocity, and the craft is pushed forward with equal and opposite momentum. Even with high exhaust velocity, such as ion drives ejecting particles at 30 km per second (more than 62,000 mph), the mass of propellant is a limiting factor.

 Shawyer’s EmDrive does not have any exhaust. It consists of a tuned cavity shaped like a truncated cone into which resonating microwaves are channeled. Like other radiation, these exert a tiny pressure when reflected off a surface. According to Shawyer, the pressure exerted on the large end of the cavity is greater than the pressure on the small end, producing a net thrust.

………

The result , 720 mN, is just 2.5 oz. of thrust, but satellites often work with less. Boeing’s advanced XIPS thruster , which fires out Xenon ions at high speed, achieves 165 mN of thrust from 4.5 lb. It weighs 35 lb., more than an equivalent EmDrive, and the propellant for prolonged operation can weigh much more.

XIPS and EmDrive can both run off solar electricity, but the EmDrive never runs out of propellant. Propellant to maintain satellite position is a major weight contribution; Shawyer suggests that the EmDrive could halve the cost of geostationary satellites .

Either this is a massive fraud, or it will have major impact on satellite launches.

For interplanetary probes, it could be revolutionary, cutting times and costs by something like an order of magnitude.

I’d wait for more independent verification though. The Chinese seem to be playing their results pretty close to the vest, which in and of itself is suspicious.

Romania Discovers that the Euro Sucks Wet Farts from Dead Pigeons………

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Romania is technically required to join the Euro at some point, but considering that they can set the date, my guess would be that date will be decades, if not centuries in the future:

………But as the euro crisis has deepened, it has also helped that Romania and the others have kept their own currencies.

That has given these still-developing countries a host of advantages, while many economists believe the euro zone’s one-size-fits-all monetary policy has hampered Ireland, Greece and Spain in restarting their moribund economies. Indeed, many of the post-Communist states are having strong second thoughts about their long-running goal of joining the euro.

Mugur Isarescu, the governor of the National Bank of Romania, said in an interview that maintaining its own currency had given Romania the flexibility to set interest rates, control liquidity and allow the currency to depreciate to help rein in the deficit. In the absence of control over monetary policy, he noted, euro zone countries like Greece are forced to rely primarily on fiscal policy: taxing and spending.

“Of course there is a backlash and disappointment because E.U. accession was seen as a panacea,” he said. “The dreams were too high.”

In Romania’s case, maintaining its cheaper currency, the lei, has made its exports — two-thirds of which go to the euro zone — more competitive and given it a lower cost of living that has made the country a sudden draw for highly qualified workers from struggling euro zone countries.

………

Seven of the 10 former Communist countries in the European Union have yet to adopt the euro. The Czech Republic, which uses the koruna, wants a referendum before joining and has cited 2020 as the earliest target date. Hungary has stuck with its currency, the forint, and said it would not adopt the euro before 2018. In Poland, Prime Minister Donald Tusk recently deemed the euro “completely unattractive.”

Romania’s previous target for joining the euro zone, in 2015, is now “out of the question,” is actually Mr. Isarescu said.………

The Czech Republic is potentially the most interesting case.

They have a very real possibility, both by virtue of their location and history, of becoming a manufacturing powerhouse that could be a very serious competitor to Germany.

If the Czech Republic drags its feet on Euro accession, and they start grabbing market share from the Germans, one wonders when the German politicians will start sounding more “Mediterranean”.

Greek Journalist Acquitted

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Costas Vaxevanis, who was persecuted prosecuted for publishing a list of Greeks with large Swiss bank accounts, has been acquitted:

A Greek journalist who published the names of more than 2,000 of his compatriots who held Swiss bank accounts was acquitted on Thursday in a case that touched a nerve over the role of tax evasion in the country’s debt crisis.

The trial of Costas Vaxevanis, editor of the weekly Hot Doc magazine, had aroused international concern and intense interest among Greeks hit by the impact of the country’s economic collapse and angry at the privileges of the elite.

He could have faced up to two year years in prison on charges of violating data privacy laws that Vaxevanis said were politically motivated and the result of politicians protecting an “untouchable” wealthy class.

His speedy arrest and trial following publication of the “Lagarde List” at the weekend – so named for Christine Lagarde, the head of the International Monetary Fund – touched a nerve in near-bankrupt Greece, where rampant tax evasion is undermining a struggle to cut public costs and raise revenue under an EU/IMF bailout deal.

It also enraged many who are already furious over the failure of consecutive governments to crack down on the rich while years of recession have wiped out a fifth of economic output and hammered middle-class living standards.

As the old saying goes, “A fish rots from the head.”

Former IMF chief economist Simon Johnson notes, in situations like this, the first priority really has to be breaking the grip of the corrupt elites has over society and over the economy.

That is not going to happen, because the Greek leadership is incapable of doing this, and the corrupt elites in the rest of the EU do not want someone telling regulators where the bodied are buried.

Krugman is On Fire

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His referring to the Republican Party as The Blackmail Caucus is prize:

But are we ready to become a country in which “Nice country you got here. Shame if something were to happen to it” becomes a winning political argument? I hope not. By all means, vote for Mr. Romney if you think he offers the better policies. But arguing for Mr. Romney on the grounds that he could get things done veers dangerously close to accepting protection-racket politics, which have no place in American life.

I prefer to think of them as hostage-taking terrorists, but Krugman is eloquent and to the point.

Go Read.

It’s Bank Failure Friday!!!

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It’s been a pretty busy week.

First, the FDIC insured institutions. Here they are, ordered, and numbered for the year so far.

  1. Heritage Bank of Florida, Lutz, FL
  2. Citizens First National Bank, Princeton, IL

Full FDIC list

Also, we had 3 credit union closings:

  1. ​U.S. Central Bridge Corporate Federal Credit Union, Lexana, KS
  2. El Paso Federal Credit Union, El Paso, TX
  3. Women’s Southwest Federal Credit Union, Dallas, TX

Note that the U.S. Central Bridge Corporate Federal Credit Union is a corporate credit union, which means that they are a credit union for the consumer credit unions, which serve the public, and provide services like account clearing and liquidity, so it’s kind of a big deal.

Full NCUA list

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

2¾ Hours………

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I did early voting today. The line was huge.

I, or more accurately my evil minion/cameraman/son Charlie, shot a video until my phone ran out of juice.

I will put this on the most boring Youtube Channel ever™ as soon as I finish editing it.

I wrote in Jon Stewart. (I am so glad that I live in Maryland)

Just in Time Inventory Gives Unions a Tool

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It appears that someone in the labor union movement has realized that with modern lean inventories, labor unions have another lever to use against recalcitrant management:

The recent Walmart strikes — beginning first among warehouse workers in California, then spreading to others in Elwood, Illinois, and finally to Walmart retail stores across the United States — raise the possibility that workers may be able to crack the anti-union wall at the country’s largest employer. The new momentum seems likely to spread among many more workplaces to come. But these wildcat strikes are a reminder that, if American workers are to have a better-organized future, they will have to better understand where their corporate opponents are vulnerable.

The Walmart strikes are part of a significant reevaluation of organizing strategy by labor unions and activists in the context of the continuing decline of unionism in the United States — where fewer than 7 percent of workers in the private sector belong to a union. As Nadine Bloch pointed out two weeks ago, such wildcat strikes on multiple levels of the supply chain at Walmart are unprecedented, and groups like OUR Walmart and Warehouse Workers for Justice are planning to escalate the campaign in the coming weeks.

………

Workers at key points in the supply chain can create massive disruptions in the process. A report conducted in 2002 found that a West Coast longshoremen lockout cost the U.S. economy $2 billion daily. And, in the recent strike of just two dozen subcontracted Walmart warehouse workers in Elwood, Illinois, the strikers heard reports from allies at Walmart retail stores in the region that there were already shortages of goods. This occurred less than 10 days into the strike, Elwood warehouse worker Mike Compton told me.

By focusing on key links in the supply chain, and by using a strike at the beginning of an organizing campaign instead of at the end, Walmart workers are not only taking advantage of the company’s 21st-century weaknesses. They’re also harkening back to an earlier form of union organization, which was far more common prior to the passage of the Wagner Act of 1935.

I’m not sure if I’m heartened, or alarmed that the union movement has to go back to the tactics of the early 1930s.

It’s Jobless Thursday!!!

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Initial jobless claims fell by 9K, and the 4-week moving average fell slightly too, though continuing claims and extended claims rose. (Half good, half “meh”)

Just be glad that we are not in the Euro zone, where the Euro zone unemployment rate hit a record high.

 In other news, consumer confidence hit a 5 year high, and the Institute for Supply Management’s manufacturing index rose to a 5 month high.

Of course, the big news will the the NFP numbers that drop at 8:30am EDT tomorrow.

Tucker Carlson, Your Kung Fu is Weak

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Yes, Tucker Carlson’s Daily Caller has announced what must be the least poorly sourced and lamest sex “scandal” of this election season (No direct link to his clown show, ever):

Tucker Carlson’s website The Daily Caller is taking a shot at the October Surprise game, accusing New Jersey Senator Robert Menendez of soliciting prostitutes while on a trip to the Dominican Republic. According to videotaped interviews with two anonymous women published on the website last night, Menendez agreed to pay the women $500 for sex during a visit to the country earlier this year. They identified the Senator from a picture, but said they were only given $100 after being brought to see him at a fancy resort on the island. A spokesperson for Menendez, who is up for re-election on Tuesday, calls the story “completely false.”

Why is this lame? Or, more accurately why is this lame for reasons onther than being “broken” by the Daily Caller?

How about this:

There are also a few other factors working against them in this story, like the fact that Menendez is not married (so there’s no infidelity angle), prostitution is technically legal in the Dominican Republic, and the solid Democratic state that he serves is a little distracted by other matters right now. However, Menendez was one of the Senators who called on Secret Service agents that reportedly hired prostitutes in Colombia to be fired.

So, in the worst case, he did not cheat on his wife, and he did not break the law.

What’s more, beyond the complaints of the two women, the Daily Caller did not even present evidence that Menendex was in the Dominican Republic at the time alleged.

Seriously, lame.

And This is Why Targeted Wildcat Strikes are Necessary

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Because just about every official institution at every level is virulently anti-union. Case in point, the World Bank:

The World Bank has taken the extremely dubious science of deregulation one step further by creating a guide, known as the Doing Business report, that quantifies the regulatory “burden” that investors may face in various countries. The 2013 report was released this week.

Echoing the corporate “job creator” mythology of the Washington consensus, Doing Business encourages financiers and governments to erode public-interest protections, including safeguards for unions and workers. Labor groups say the publication’s warped views on regulation and worker protections effectively gives a statistical justification for leveraging economic aid or investment to pressure countries to privatize, deregulate and undermine unions.

Labor advocates are particularly critical of the section of the report that crystallizes these views, the “Employing Workers Indicator” (EWI) which purports to measure labor policy “as it affects the hiring and redundancy of workers and the rigidity of working hours.” Despite the World Bank’s past assurances that its analysis of labor regulations won’t factor into the main rankings on business friendliness, critics fear that these data nonetheless filter into the report’s evaluations, and in turn imply labor laws essentially impede development.

This is not just the “technocrats” who have this opinion. It’s the overwhelming majority on the so-called “center-left”.

Whenever you hear a Democrat talking about “training” so that workers are ready for “the new economy”, they are saying that they think that labor unions are an anachronism, and they won’t do anything to support them.

We need a real Labo(u)r party in the United States, because the political establishment is hostile to unions.