Month: March 2013

Oh Crap. NINJA Attack!

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I don’t mean the Japanese master of stealth and deception, I mean that no-documentation mortgages are back, NINJA stands for “No Income, No Job, (and) No Assets” loan.

Basically, all you had to do was fog a mirror.

The new twist is that all you have to do have a live insurance policy that equals the amount of a 10% down payment:

First we got GM subprime interest-free car loans,  then we got subprime ABS securitizations, then we got soaring student loan defaults and delinquencies, then we got the opportunity to sell and short student loan exposure, and now, finally, the credit bubble is complete as FastFunds Financial Corporation is proud to announce that it has acquired exclusive mortgage servicing rights for an “Innovative New Mortgage Product.” Why is it so innovative? Because it requires no credit verification, no credit history, no docs and needs no personal guarantees. In other words, it is the very worst of the worst lending practices we saw in 2006: the NINJA.

But there is a twist: “all that is required to qualify for a mortgage loan is qualifying for a life insurance policy, a down payment that usually amounts to 10% of the purchase price and verification that the borrower has the financial ability to pay the monthly payments.”

In other words: buy life insurance, get a subprime, no doc mortgage for free.

We are completely f%$#ed.

I Am a Racist

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And so are you.

We all are.

One of the conceits that many people have is that only bad people, with black hearts, are racists.

There is none among us who has not, at some point or another, experienced racist or bigoted feelings.

Ta-Nehisi Coates, writing an Op/Ed at the New York Times, muses on the fact that Oscar winning actor Forest Whitaker was stopped and frisked at a deli in Coates’ neighborhood:

Last month the actor Forest Whitaker was stopped in a Manhattan delicatessen by an employee. Whitaker is one of the pre-eminent actors of his generation, with a diverse and celebrated catalog ranging from “The Great Debaters” to “The Crying Game” to “Ghost Dog: The Way of the Samurai.” By now it is likely that he has adjusted to random strangers who can’t get his turn as Idi Amin out of their heads. But the man who approached the Oscar winner at the deli last month was in no mood for autographs. The employee stopped Whitaker, accused him of shoplifting and then promptly frisked him. The act of self-deputization was futile. Whitaker had stolen nothing. On the contrary, he’d been robbed.

………

 Since the Whitaker affair, I’ve read and listened to interviews with the owner of the establishment. He is apologetic to a fault and is sincerely mortified. He says that it was a “sincere mistake” made by a “decent man” who was “just doing his job.” I believe him. ………

 The idea that racism lives in the heart of particularly evil individuals, as opposed to the heart of a democratic society, is reinforcing to anyone who might, from time to time, find their tongue sprinting ahead of their discretion. We can forgive Whitaker’s assailant. Much harder to forgive is all that makes Whitaker stand out in the first place. New York is a city, like most in America, that bears the scars of redlining, blockbusting and urban renewal. The ghost of those policies haunts us in a wealth gap between blacks and whites that has actually gotten worse over the past 20 years.

………

 The other day I walked past this particular deli. I believe its owners to be good people. I felt ashamed at withholding business for something far beyond the merchant’s reach. I mentioned this to my wife. My wife is not like me. When she was 6, a little white boy called her cousin a nigger, and it has been war ever since. “What if they did that to your son?” she asked.

 And right then I knew that I was tired of good people, that I had had all the good people I could take.

I strongly you go and read the whole thing.

Bigotry is an evil thing, but it is in all of us.  It is a part of our Yetzer HaRa  (evil inclination).

By consigning racism to being the exclusive purview evil people, we have denied the racism inside ourselves, and inside our society.

Read the whole thing.

Un-Dirtyword-Believable

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Michael Winston was a high ranking executive who tried to blow the whistle at Countrywide Financial.

He was marginalized, and later fired by Bank of America after they took over the firm.

He filed suit, and was awarded $3.8 million dollars for wrongful termination.

Well, a few weeks after he described the rampant fraud and abuse on the Frontline piece, The Untouchables, the appeals court overturned the verdict based on the facts.

Now I’m an engineer, not a lawyer, dammit,* but even I know that appeals courts are to rule on issues of law, not issues of fact.

It smells to high heaven, as the great Matt Taibbi observes:

When I spoke to him last week, Winston was still as amazed and repulsed by what he saw at Angelo Mozilo’s crooked subprime mortgage company as he was when he worked there. Winston, who had worked for years at high-level positions at companies like Motorola and Lockheed before joining Countrywide in the 2000s, described a moment in his first months at the company, when he rolled into the parking lot at the company headquarters.

………

When Winston refused, he was essentially stripped of his normal responsibilities and had his corporate budget slashed. When Bank of America took over the company, Winston’s job was terminated. He sued, and in one of the few positive outcomes for any white-collar whistleblower anywhere in the post-financial-crisis universe, won a $3.8 million wrongful termination suit against Bank of America last February.

Well, just weeks after the PBS documentary aired, the Court of Appeals in the state of California suddenly took an interest in Winston’s case. Normally, a court of appeals can only overturn a jury verdict in a case like this if there is a legal error. It’s not supposed to relitigate the factual evidence.

Yet this is exactly what happened: The court decided that the evidence that Winston was wrongfully terminated was insufficient, and then from there determined that the “legal error” in the original Winston suit against Bank of America and Countrywide was that the judge in the case failed to throw out the jury’s verdict:

In short, having scoured the record for evidence supporting the jury’s verdict on the issue of causation, we have found none. It follows that the trial court erred in denying defendants’ motion for judgment notwithstanding the verdict.

The f%$#ing fix is f%$#ing in.

This is a deliberate attempt to chill the activities of any potential whistle blowers.

If this were an isolated incident, I might not assume corruption, but it is not an isolated case.

It seems to be an cultural imperative to punish whistle blowers, as was shown when the only person to go to jail in the UBS tax evasion case was the whistleblower.

I don’t know how this can be fixed, but it needs to be fixed.

*I LOVE IT when I get to go all Doctor McCoy!!!

Oh No He Didn’t!

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Bob Ney, former Congressman, and felon, wrote a book, and in it he claims that John Boehner promised him a well paying job if he were to end his reelection campaign in his new memoire:

The most inflammatory accusation against Boehner in the book is Ney’s contention that he ended his reelection campaign after winning the primary in 2006 only after Boehner, then the majority leader, summoned the cash-strapped and embattled congressman to his office and told him if he quit the race, Boehner would take care of him. “If you resign the next day, I will personally guarantee you a job comparable to what you are making, and raise legal defense money for you that should bury all this Justice Department problem for you,” Boehner said, according to Ney. He said he pressed Boehner, repeating the terms and getting assurance that the offer was “ironclad.” When Ney called back the next day to accept the deal, he wrote that he again repeated the terms to Boehner, who agreed. “Because of Boehner’s promise, I stepped aside,” he wrote. But Ney said Boehner did not keep his word. “I had been lied to and ditched,” Ney said.

I’m not sure that I can believe that. That would be like claiming that John Boehner was on the floor of the house handing out campaign cash from cigarette manufacturers as they voted on subsidies for tobacco. ……… Wait! ……… What? ……… He did do that?!?! ……… Never mind.

A note about the article: I’m not sure if it is the author, George Condon, or his editor, but what is arguably the most explosive allegation is 7 paragraphs down, under the title, “Disgraced Ex-Congressman Attacks John Boehner in New Book,” and a subhead of, “Bob Ney, who was imprisoned for his role in the Jack Abramoff scandal, has some scores to settle.”

I do understand why someone would hate Bob “Freedom Fries” Ney, (I do) he is/was a nasty piece of work, but burying the lede is not an appropriate response.

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The Obama administration is now claiming the right to assassinate citizens on US soil:

Yes, the president does have the authority to use military force against American citizens on US soil—but only in “an extraordinary circumstance,” Attorney General Eric Holder said in a letter to Sen. Rand Paul (R-Ky.) on Tuesday.

 “The US Attorney General’s refusal to rule out the possibility of drone strikes on American citizens and on American soil is more than frightening,” Paul said Tuesday. “It is an affront the constitutional due process rights of all Americans.”

 Last month, Paul threatened to filibuster the nomination of John Brennan, Obama’s pick to head the CIA, “until he answers the question of whether or not the president can kill American citizens through the drone strike program on US soil.” Tuesday, Brennan told Paul that “the agency I have been nominated to lead does not conduct lethal operations inside the United States—nor does it have any authority to do so.” Brennan said that the Justice Department would answer Paul’s question about whether Americans could be targeted for lethal strikes on US soil.

Worst ……… Constitutional ……… law ……… professor ……… ever.

You really should be horrified by this.

I am.

Hugo Chavez is Dead

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Certainly, he was never a friend of the United States, and this was exacerbated by the US tacit (and likely covert explicit) support of 2002 coup attempt against him.

As to how he was as the chief executive (and pretty much everything else) in Venezuela, I would not give him high marks, unless I were grading on the curve.

If I were grading on the curve though, he would get high marks against the previous ruling elites in Venezuela.

It is truly a shame that, when compared to the political elites who seemed primarily concerned with who got the loot, he was arguably a better leader.

Yes, This is to be Expected from a Story “Broken” by the Daily Caller

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It turns out that the escort who claimed that Senator Bob Menendez paid her for sex now says that she was paid to lie:

An escort who appeared on a video claiming that Sen. Robert Menendez (D-N.J.) paid her for sex has told Dominican authorities that she was instead paid to make up the claims and has never met or seen the senator, according to court documents and two people briefed on her claim.

The woman said a local lawyer had approached her and a fellow escort and asked them to help frame Menendez and a top donor, Salomon Melgen, according to affidavits obtained by The Washington Post.

That lawyer has in turn identified a second Dominican lawyer who he said gave the woman a script and paid her to read the claims aloud. The first lawyer said he found out only later that the remarks would be videotaped and used against Menendez, the affidavits say.

The claims of two women that they had had sex with Menendez seemed to confirm a tipster’s allegations that Menendez had patronized prostitutes while vacationing in the Dominican Republic. The tipster, who last spring began e-mailing allegations to a government watchdog group and the FBI, said he had evidence that Menendez had relations with underage prostitutes and participated in sex parties arranged by Melgen, his friend and political backer.

FBI agents conducting interviews in the Dominican Republic have found no evidence to back up the tipster’s allegations, according to two people briefed on their work.

Here’s the kicker:

The videotaped claims of two women, made with their faces obscured, were posted on the conservative Web site the Daily Caller. The site reported that “the two women said they met Menendez around Easter at Casa de Campo, an expensive 7,000-acre resort in the Dominican Republic. . . . They claimed Menendez agreed to pay them $500 for sex acts, but in the end they each received only $100.”

Daily Caller Editor Tucker Carlson did not reply to phone calls and e-mails requesting comment.

What a surprise.

He did not call back.

Kind of like when John Fund hid in the bathroom when police came in to talk to him a domestic violence beef.

Carlson is yet another product of the Republican nepotism machine, like Bill Kristol and Liz Cheney, and the results ain’t pretty.

We Have A New Best Definition for Chutzpah

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For those of you who are not aware of the classic definition, “That quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan,”

Well, Mark “Hiking the Appalachian Trail” Sanford has come up with a new and improved definition:

But Mark wanted more than just his ex-wife’s disavowal of interest. When he first ran for Congress in 1994, he installed Jenny as his campaign manager. He did this for reasons of economy—“You’re free,” he told her at the time—but she proved a natural at the job. She blossomed into a shrewd political strategist, running Mark’s subsequent campaigns and becoming his top adviser. Will Folks, a former Sanford press secretary, says, “There’s absolutely no way he would have ever won the congressional seat or been governor without her.”

According to Jenny, she had already told Mark she would be taking a pass on the race the day before, at the funeral of a mutual friend. So when Mark came to visit her, he arrived with a proposal. “Since you’re not running, I want to know if you’ll run my campaign,” he said. “We could put the team back together.”

Jenny told him, in so many words, that wasn’t going to happen. Mark made one last appeal.

“I could pay you this time,” he said.

Un-dirtyword-believable.

You leave her, you publicly humiliate her, and you want her to run her campaign?

If I were Mark Sanford’s parents, I’d worry.

H/t Talking Points Memo.

This Should Get Interesting………

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President Obama has nominated General Michelle Johnson as superintendent of the Air Force Academy:

The president of the United States nominated Maj. Gen. Michelle Johnson for the appointment to the rank of lieutenant general and for assignment to serve as Air Force Academy’s 19th superintendent.

If confirmed by the Senate, Johnson would become the first woman to hold the position.

Currently serving as NATO’s deputy chief of staff for operations and intelligence, Johnson is a 1981 distinguished graduate from the Academy where she earned a Bachelor of Science degree in operations research. She was the first female cadet wing commander and the first female Rhodes Scholar from the Academy.

There have been a lot of problems with Air Force Academy with regard to religious intolerance, even by the standards of an increasingly Evangelical officer corps in the US Military more generally.

Given that it’s located in the “Evangelical Mecca” of Colorado Springs, it’s the home of Focus on the Family, this is not surprising.

I’m wondering how the institution is going to handle a woman in charge, particularly when she has been appointed by the bogeyman of the religious right. 

What James Fallows Says

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He notes that with the exception of the Cuban Missile Crisis, every justification for war since 12945 has been way overblown:

5) Threat inflation. As I think about this war and others the U.S. has contemplated or entered during my conscious life, I realize how strong is the recurrent pattern of threat inflation. Exactly once in the post-WW II era has the real threat been more ominous than officially portrayed. That was during the Cuban Missile Crisis in 1962, when the world really came within moments of nuclear destruction.

 Otherwise: the “missile gap.” The Gulf of Tonkin. The overall scale of the Soviet menace. Iraq. In each case, the public soberly received official warnings about the imminent threat. In cold retrospect, those warnings were wrong — or contrived, or overblown, or misperceived. Official claims about the evils of these systems were many times justified. Claims about imminent threats were most of the times hyped.

He is talking about how Iran is the current Hitler of the week, and how the threat is almost certainly overblown.

As I would observe, even in the worst case, Iran is not going to give nukes to terrorists, for the same reason that the Soviets and the US never let nukes out of their direct control, and they are not going to launch a nuclear attack on Israel, Hezbollah does just fine in prosecuting their interests in that area, and Israel has a substantial nuclear arsenal (somewhere around the 6th largest nuclear power in the world) which would make an attack suicidal.

What a nuclear Iran would mean, however, is that the United States would be prevented from acting unilaterally against Iran, which is seen as a disaster for US military and foreign policy.

Oh, Now I Get It!

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Suddenly, I Understand

There has always been something about Antonin Scalia that seemed familiar, and now Rachel Maddow has his essence nailed, she was in the Supreme Court for the voting rights act, and she realized that Antonin Scalia is basically a garden variety troll (At about 2:40 in the vid):

It’s a racial entitlement now, voting is a racial entitlement — something that you are entitled to on the basis of your race. Wait a second, do you know how that sounds? But I think he does know how that sounds and that’s the neat thing about being there in person is you can see, actually he’s a troll. He’s saying this for effect. He knows it’s offensive and he knows he’s going to get a gasp from the courtroom, which he got, and he loves it. He’s like the guy on your blog comment thread who is using the n-word. ‘Oh, it made you mad? How about if I say this? Does it make you mad? Did it make you mad? Did it make you mad?’ He’s that guy! He’s that kind of guy! When we’re all shocked that he said something so blatantly racially offensive while talking about the cornerstone of the federal Civil Rights Act, he’s thinking, ‘Oh yeah!’

He’s Lauren “Uncle Meat” Bandler in judicial robes. 

I’m kind of surprised that Scalia doesn’t show up to court in his underwear with a bag of Cheetos.

Why am I not surprised that she revealed this to Jon Stewart?

That concentration of truth telling on one stage is a stunning level of awesome.

God Bless the Swiss People*

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The Swiss voters just overwhelmingly approved a referendum for executive compensation reform, including binding shareholder votes on executive pay, bans on golden parachutes, and merger bonuses:

Swiss voters have approved measures to curb executives’ pay and outlawed golden parachutes that can result on directors pocketing multimillion-pound payoffs.

Exit polls suggested almost 68% of those who turned out for Sunday’s referendum, and all of Switzerland’s 26 cantons, were in favour of the measures, which also include giving shareholders a binding vote on executive pay, banning golden hellos and banning bonuses that encourage buying or selling firms. Boards of directors that fail to comply face jail terms.

………

Minder says the massive sums demonstrate that company boards have lost control of pay and prefer to fork out “astronomical” salaries rather than pay dividends to shareholders.

Minder told the Swiss daily Le Temps that the only solution was to give shareholders the power to set pay. If his law is passed all compensation packages to board members and company heads would need their approval.

According to the proposed law, executives of listed companies who failed to abide by the new rules could face up to three years in jail and fines amounting to up to six years’ salary.

Needless to say, the elites are freaking out over this:

The Swiss government and the upper house of parliament opposed the initiative, warning it could provoke an exodus of big companies.

Minder rejected this, saying that the level of disquiet over executive pay and bonuses in other countries meant his initiative could become Switzerland’s “best export product”.

“It’s a great advantage for investors,” he said, suggesting that instead of chasing companies away, such a law would entice investors to set up firms in Switzerland.

I’m inclined to agree that this will make businesses more competitive, not less competitive.

The amount of capital that has been wasted on paying people about whom little is exceptional but their own sense of self-worth is staggering.

If the Swiss vote triggers a race to the bottom in executive compensation, the rest of us will benefit.

*I cannot f%$#ing believe that I f%$#ing said that.

Why Sweden, and Not Us?

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No, I am not talking about how they handled their own banking crisis back in the 1990s, I am talking about how they delivered the Gripen fighter on time and on budget:

Aug. 10, 1628: Vasa, first of a new class of ships intended to change the balance of power in Nordic waters, left her Stockholm yard for the first time. As she left the lee of the city, she heeled sharply, flooded and sank. The shipwrights blamed the sailors for demanding too many guns.

This is related to the news that full-scale development of the JAS 39E version of the Saab Gripen will cost 13.1 billion kronor ($2.1 billion) over five years. That is about 1 billion kronor less than Saab ‘s last major effort, the JAS 39C/D.

The precursor to the JAS 39E, the Gripen Demo program, has just been completed for 60% of its planned budget, company flight test director Ola Rignell told a conference audience at the Aero India show in Bengaluru. And if the JAS 39E program follows the established pattern, it will be executed under fixed-price contracts.

Clearly, this must be stopped. If this behavior was to become universal, it would result in soaring unemployment among executive vice presidents. Armageddocalypse!

………

Sweden was developing multinational programs, teaming with the U.S. and Britain on engines and avionics, while rivals were busting their budgets in pursuit of autarky. From swept wings to real supersonic speed, and automated interception to pulse-Doppler radar, Sweden took third place behind the superpowers, and led the world in networked operations.

Another ingredient in the secret sauce is a small, low-profile group of people who neither bear arms nor cut metal. Not tomtens, the little creatures who guard the farm when everyone is asleep, but the Swedish defense materiel administration, the FMV—which traces its ancestry directly to the Royal Military Board that King Gustavus Adolphus established after the loss of the Vasa .

The FMV is a civilian agency that reports to the Swedish government. The defense ministry and armed forces are its customer, not its boss. In turn, FMV is the industry’s customer.

………

FMV’s job is not to get the biggest and fastest kit for the services but to make sure that stuff is delivered on time and does what it says on the tin. It is the broker between industry and the military user, ensuring that requirements are achievable with manageable risks, and monitoring industry ‘s performance.

That is why only Sweden, out of a dozen nations writing fighter requirements in 1980-85, decided that the most important goal was lower operating cost .

Fixed-price is simply how things are done. Says an FMV history of the Gripen (contractors may wish to avert their eyes):

In this large project . . . it was obvious to FMV that it would be very hard for the companies to pay the money back to FMV in case of failure.

The contractors would do WHAT? Indeed, Saab did so when the Gripen C/D program came in under budget , writing the FMV a check for the underrun.

This system will be put to the test again on the JAS 39E, because the minefield of integration and software is the core of the program.

What is new is that the Saab system that ties the avionics together is based on Arinc 651 partition standards that keep mission systems separate from flight-critical functions on the same processors.

To be clear, the Swedes have an option not available to the US defense industry, which is they can credibly threaten to shut down the whole program, and the whole industry, and buy foreign arms.

That being said, they have started their programs with a focus on cost, both acquisition and operational, and they have delivered capabilities that are similar to those of rival programs (here I would say the Typhoon and Rafale) more quickly and more cheaply.

So, for some reason, we cannot follow the Swedish model in either defense of finance, despite the obvious advantages of these strategies.

Another Cherished Myth Shattered

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It turns out that gold shirt crew were statistically more likely to die that red shirts:

Yep, I know, you are wondering how it is safer to be a red shirt than a gold shirt.

The pretty picture seems to indicate otherwise, until you realize how many of the crew were red shirts:

A pie chart was created using Minitab to graphically view the data. It is obvious from the pie chart in Figure 1 that redshirts suffer most of the casualties. However, raw casualty figures are not very informative without knowing how many people were in each uniform. According to the Joseph’s Star Trek Blueprints, the only set of Enterprise blueprints endorsed by Paramount Pictures, the Enterprise’s 430 crew members consisted of 55 command and helm personnel, 136 science and medical personnel and 239 engineering, operations and security personnel. This means 16.4% of casualties were in command and helm, 5.4% were in science and medical and 10.0% were in operations, engineering and security. Of the remaining 27.3% of casualties, 12 were killed by contact with the galactic barrier or Rigelian fever, which could have affected personnel regardless of duty assignments.

It should be noted that the relative safety of red shirts varies with tasking though:

Based on an analysis of casualties that considers the overall total number of personnel in each color of uniform, wearing a redshirt may not be the automatic death sentence that it is popularly considered to be. On the other hand, 18 of the redshirt casualties were security personnel out of a total population of 90; 20% of the security department were casualties. Although wearing a redshirt may not of itself be particularly hazardous, personnel in a redshirt who are members of the security department should expect to pay a high premium on their life insurance.

So, engineering/operations, pretty safe.  Security, not so much.