Month: June 2007

Rampant Speculation Points to Crash

Another sign of the oncoming crash. Vast quantities of capital racing hither and yon looking for the next big “15 minutes of fame” thing.

It’s a sign that the market is over capitalized and over priced, and due for a major correction.

It’s a game of musical chairs, and it gets most frantic towards the end.

Here comes China 2.0

By Paul R. La Monica, editor at large
June 28 2007: 1:41 PM EDT

NEW YORK ( — As Google’s stock slouches toward $600 a share and Wall Street debates the future of Yahoo following the ouster of Terry Semel, it’s easy to forget that there are other Internet stocks out there competing for investor attention.

But for those who prefer to take a more worldly view of the World Wide Web, paying attention to areas outside of the U.S. has been incredibly rewarding, particularly for investors that have discovered the booming Internet sector in China.

Several Chinese Internet stocks trade in the U.S. on Nasdaq so investing in these companies is as easy as buying shares of Google (Charts, Fortune 500) and Yahoo (Charts, Fortune 500). And many Chinese Internet stocks have far outperformed America’s big two Net giants this year.

Shares of search engine Baidu, portals Sina and Sohu, online gaming companies The 9 Limited and Shanda Interactive and online travel site are each up at least 20 percent this year, compared to gains of 8 percent and 14 percent for Yahoo and Google respectively.


Cessna and Thielert collaborate on diesel aircraft programmes

I’ve always liked the aircraft diesel technology.

This is a VERY important development for Thielert.

Cessna and Thielert collaborate on diesel aircraft programmes

Cessna has reached and agreement with Germany’s Thielert Aircraft Engines (TAE) to collaborate on future programmes centred on the Thielert diesel engine.

Although both companies are remaining tight-lipped on specific developments, the first programme is likely to be a 135hp (100kW) Centurion 2.0-powered version of the 172 Skyhawk.The engine is already available as a retrofit on the piston single type, but the venture is the first time Cessna will offer a diesel version as standard.

PICTURES – Cirrus unveils single-engine personal jet

That plane is dirt cheap. Even assuming that the range drops by half with a full load of people and luggage, it’s a very good deal.

PICTURES – Cirrus unveils single-engine personal jet
Cirrus Design has taken the wraps off its first jet, and the manufacturer of the popular SR22 piston-single light aircraft is bracing for a major sales boost.

Seating up to seven people, “the-jet” has its single Williams FJ33-4 turbofan mounted above the fuselage and exhausting between the V-tail, in a similar arrangement to the Global Hawk unmanned aircraft.

“We’re not going to be a smaller business jet. We’re trying to be a bigger SR22,” said CEO and co-founder Alan Klapmeier at the 28 June event.

As for price, Klapmeier says: “Our goal is to have it be about $1 million”. The final price is uncertain, he cautions, since the certification date is unknown along with many other factors.

The fuel capacity will be “well over 1,000lb”, depending on the number of passengers, and range will be more than 1,000nm with only one pilot aboard and less than that when carrying seven people.”

Completely NO Surprise

Actually, I know people who work for the Redmond Borg, and there is a level of real stupidity there that drives them crazy.

Microsoft security engineer makes top-10 worst jobs list

By Lewis Page
Published Wednesday 27th June 2007 11:39 GMT

Summer’s here, and ’tis the season to be compiling lists. One of the most eagerly awaited is the Ten Worst Jobs in Science, issued by Popular Science magazine. This year the roster of horrible occupations has gained widespread attention because it includes “Microsoft Security Grunt”.

Working at the Microsoft Security Response Centre (MSRC), according to the PopSci writers, is “like wearing a big sign that says ‘hack me’… It’s tedious work… to most hackers, crippling Microsoft is the geek equivalent of taking down the Death Star, so the assault is relentless.”

PopSci places a job on the Redmond battlements at number five, worse than whale-dung analyst, corpse-maggot expert, Olympic drug tester and zero gee health-effects guinea pig.

The only things worse than standing between Windows users and the ravening haxor hordes were being a rubbish-dump researcher, elephant vasectomist, oceanographer – because the oceans are getting so polluted – and at number one, hazmat diver. (“They swim in sewage. Enough said.”)

Russia Tests 3M14 Bulava SS-N-30

Note that the name Akula is the Russian name for the Typhoon class mammoth SSBN. What the West calls the Akula is called the Bars class in Russia.

She SS-N-30 is basically a cut down Topol.

3M14 Bulava SS-N-30

On 28 June 2007 Russia successfully tested the new Bulava (SS-NX-30) sea-based ballistic missile after several previous failures. Capt. Igor Dygalo told The Associated Press that the Bulava missile hit its target on the Pacific peninsula of Kamchatka, about 6,700 kilometers (4,200 miles) east of Moscow, after being launched in northern Russia’s White Sea from the submarine Dmitry Donskoi, a 941 Akula / TYPHOON class submarine outfited in 2005 as the SS-N-30 Bulava test platform.

The Bulava (SS-NX-30) is the submarine-launched version of Russia’s most advanced missile, the Topol-M (SS-27) solid fuel ICBM. The SS-NX-30 is a derivative of the SS-27, except for a slight decrease in range due to conversion of the design for submarine launch. The SS-27 has is 21.9 meters long, far too large to fit in a typical submarine. The largest previously deployed Russian SLBM was the R-39 / SS-N-20 STURGEON, which was 16 meters long. Russian sources report that the Bulava SS-N-30 ballistic missile can carry ten warheads to a range of 8,000km. Other sources suggest that the Bulava probably might have a range of 10,000 km, and is reportedly features a 550 kT yield nuclear warhead. Apparently up to six MIRVs can be placed at the cost of offloading warhead shielding and decoys.

DARPA Wants A Few Good Men

These are the guys who invented the internet.



Request for Information
Routing Protocols and Management (RPM) for High Capacity Networks

– Request for Information Word Version 01 – Posted on Jun 22, 2007

General Information
Document Type: Special Notice
Solicitation Number: Reference-Number-SN07-39
Posted Date:
Original Response Date: 06 August 2007
Current Response Date:
Original Archive Date:
Current Archive Date:
Classification Code: A — Research & Development
Naics Code: 541710 — Research and Development in the Physical, Engineering, and Life Sciences

Contracting Office Address

Other Defense Agencies, Defense Advanced Research Projects Agency, Contracts Management Office, 3701 North Fairfax Drive, Arlington, VA, 22203-1714, United States


REQUEST FOR INFORMATION – Routing Protocols and Management (RPM) for High Capacity Networks

Defense Advanced Research Projects Agency’s (DARPA) Strategic Technology Office (STO) is requesting information on revolutionary ideas and approaches to map administrative, business, and war fighting mission requirements to the supporting networks and information systems. The requested information is sought to determine if industry has ideas that warrant specific project-oriented investment by DARPA in this area. No funding has currently been allocated to this effort. A Broad Agency Announcement (BAA) and/or other solicitation may or may not result from the findings of this Request for Information (RFI).


Modern communications networks were designed and developed when memory and processing power were limiting factors rather than plentiful and generally ubiquitous throughout the network. Today’s environment finds memory and processing power available even at the tactical edge of the Global Information Grid (GIG). Routing Protocols and Management (RPM) for High Capacity Networks is considering methods to re-think and potentially redesign some of the basic concepts that have shaped today’s Internet technology. The goal of any DARPA program in this area is to improve transfer speeds, network routing efficiency, reliability, simplify network configuration, and reduce cost.

Problem Definition

Modern communications networks were designed and developed when memory and processing power were limiting factors rather than plentiful and generally ubiquitous throughout the network. Today’s environment finds memory and processing power available even at the tactical edge of the Global Information Grid (GIG). Routing Protocols and Management (RPM) for High Capacity Networks is considering methods to re-think and potentially redesign some of the basic concepts that have shaped today’s Internet technology. The goal of any DARPA program in this area is to improve transfer speeds, network routing efficiency, reliability, simplify network configuration, and reduce cost.

Problem Definition

DARPA is interested in ideas that will lead to the development of new addressing schemes (e.g., a structured hierarchical addressing system) to supplement the current IP scheme. New addressing schemes should make the network faster, cheaper, or easier to administer. Additionally, we hope to implement a prioritization system to allow higher priority traffic faster service through the network, along with the authentication system such a system requires.

This RFI seeks ways to enhance network prioritization and authentication for priority users; create multipath route discovery and distribution; lower manpower requirements for network configuration; and efficiently connect Dense Wave Division Multiplex (DWDM) networks and conventional IP networks. The program assumes the existence of DWDM switched networks and seeks to make the connection between a normal IP network and a DWDM switched network as simple and efficient as possible.

The long-term goal is to develop new systems that use network capacity as efficiently and inexpensively as possible. Ideas that require modifications to addressing schemes (e.g., modifying IP), changes to the Domain Name Server (DNS), or other established Internet Standards are acceptable as long as these changes can be justified.

DARPA is interested in responses describing the solution with low granularity, at the device or process level, rather than at the macro or enterprise level. DARPA is interested in autonomic or semi-autonomic systems that require little manual intervention. Finally, simplicity and ability to transition a solution are of interest – large theoretical systems that require extensive training to operate would be of little value as a potential program.

DARPA is not interested in evolutionary improvements to existing fielded or commercial systems, nor funding requests or investment opportunities to bring existing work into production. This RFI seeks potential high-risk, high payoff research opportunities related to Routing Protocols and Management for High Capacity Networks that may provide revolutionary capabilities for the Department of Defense.

Request for Information Focus Areas

In an effort to shape future work on Routing Protocols and Management for High Capacity Networks, DARPA/STO is soliciting position papers addressing the following areas:
1. Concepts and ideas for novel methods to allow multipath route discovery and multipath route distribution; improve network routing efficiency and reliability; simplify network configuration and management; provide for different levels of priority and precedence; and improve authentication/attribution.

2. Technical methods to efficiently and inexpensively interconnect DWDM networks and conventional IP networks. These can be linked to, a part of, or separate from a submission for #1 above.
3. The impact of your proposed idea(s) on the personnel needed to operate networks
4. Potential metrics to measure the effectiveness of what you propose


DARPA will hold a workshop for selected RFI respondents in the vicinity of Arlington, VA in October 07. The workshop may include an overview of previous DARPA programs, historical assumptions, today’s requirements and challenges, invited presentations, submitter presentations, discussions, and Q&A. Respondents interested in attending should visit the registration website at

This announcement contains all information required to submit a position paper. No additional forms, kits or other materials are needed.

DARPA appreciates responses from all capable and qualified sources including but not limited to universities, university affiliated research centers, federally-funded research centers, private or public companies and Government research laboratories.

Position papers have the following formatting requirements:
a) A one page cover sheet that identifies the title, organization(s), responder’s technical and administrative points of contact – including names, addresses, phone and fax numbers, and email addresses of all co-authors;
b) An executive summary with a one page limit summarizing the key ideas;
c) A single overview briefing chart graphically depicting the key ideas;
d) A technical response to one or more of the 4 RFI Focused Areas posed above in question/answer format, with a 10 page limit in 10 point font;
e) An optional list of citations including URLs if available;
f) An optional briefing if the submitter wishes to be considered to present at the workshop;
g) The above should be submitted as MS Word, PDF, and/or MS PowerPoint documents.

Respondents are encouraged to be as succinct as possible while at the same time providing actionable insight.

Respondents must submit one original and one paper copy of the full response and one electronic copy of the full RFI response (in Microsoft Word, Adobe PDF, and/or Microsoft PowerPoint on a single CD ROM). Disks must be clearly labeled with RFI SN07-39 the offering organization, and points of contact. The full RFI response (original and designated number of hard and electronic copies) must be submitted to: DARPA/STO, Attn: Dr. Timothy Gibson, 3701 N. Fairfax Drive, Arlington, VA 22203-1714. Responses to this Request for Information (RFI) are due no later than 2:00pm, Local Time, Arlington, VA, on 06 August 2007. ANY INQUIRIES ON THIS REQUEST FOR INFORMATION AND/OR WORKSHOP MUST BE SUBMITTED TO NO TELEPHONIC INQUIRIES WILL BE ACCEPTED.

DARPA will host a web site in support of RFI SN07-39, Routing Protocols and Management (RPM). The web site will contain information supplementary to this document such as Question & Answer lists in the event that clarifications are needed. The URL for the web site is In the event of any discrepancies between material published on this web site and FedBizOps, FedBizOps takes precedence.


This is a Request for Information issued solely for information and new program planning purposes and does not constitute a solicitation. No proprietary or classified information should be submitted. Respondents are advised that DARPA is under no obligation to acknowledge receipt of the information received, or provide feedback to respondents with respect to any information submitted under this RFI. It is the respondent’s responsibility to ensure the material has been approved for public release by the organization that funded the research.

In accordance with FAR 15.201(e) responses to this notice are not offers and cannot be accepted glby the Government to form a binding contract. Responders are solely responsible for all expenses associated with responding to this RFI.

Submissions may be reviewed by: the Government (DARPA and partners including but not limited to AFRL and OSD-NII); Federally Funded R&D Centers (such as MITRE and Massachusetts Institute of Technology/Lincoln Laboratories); and Systems Engineering and Technical Assistance (SETA) contractors (Booz Allen Hamilton and SRS Technologies).

Point of Contact

Timothy Gibson, Ph.D., Program Manager, Email timothy.gibson (at)

Point of Contact
Timothy Gibson, DARPA Program Manager, Phone 000-000-0000, Fax null, Email

Rubber Ducky, You’re the one.


Thousands of rubber ducks to land on British shores after 15 year journey
Thousands of rubber ducks to land on British shores after 15 year journey
By BEN CLERKIN – More by this author » Last updated at 22:00pm on 27th June 2007

Comments Comments (9)
They were toys destined only to bob up and down in nothing bigger than a child’s bath – but so far they have floated halfway around the world.

The armada of 29,000 plastic yellow ducks, blue turtles and green frogs broke free from a cargo ship 15 years ago.

Since then they have travelled 17,000 miles, floating over the site where the Titanic sank, landing in Hawaii and even spending years frozen in an Arctic ice pack.

And now they are heading straight for Britain. At some point this summer they are expected to be spotted on beaches in South-West England.

While the ducks are undoubtedly a loss to the bath-time fun of thousands of children, their adventures at sea have proved an innvaluable aid to science”

The toys have helped researchers to chart the great ocean currents because when they are spotted bobbing on the waves they are much more likely to be reported to the authorities than the floats which scientists normally use.

Just When I Thought That They Could Not Get Any Stupider


This is so stupid, it shocks me, and I though I had become inured to stupidity flowing from Shrub’s mouth.

Bush cites Israel as model for Iraq

By JENNIFER LOVEN, Associated Press Writer1 hour, 3 minutes ago

President Bush held up Israel as a model for defining success in Iraq Thursday, saying the U.S. goal there is not to eliminate attacks but to enable a democracy that can function despite violence.

Still, he laid out in some of his plainest terms yet how to define when the U.S. presence in Iraq has achieved its goals.

“Our success in Iraq must not be measured by the enemy’s ability to get a car bombing in the evening news,” he said. “No matter how good the security, terrorists will always be able to explode a bomb on a crowded street.”

He suggested Israel as a model.

There, Bush said, “Terrorists have taken innocent human life for years in suicide attacks. The difference is that Israel is a functioning democracy and it’s not prevented from carrying out its responsibilities. And that’s a good indicator of success that we’re looking for in Iraq.”

It was likely to be controversial — and possibly even explosive — for Bush to set out Israel as a model for a Muslim Middle Eastern nation. Israel has been locked for decades in an intractable dispute with Palestinians in the neighboring occupied territories, a conflict that is viewed as a major recruiting tool for Islamic extremist groups like al-Qaida.

All-White Jury. Nope, no racism here.

Bet you haven’t heard about this in the news, but a European paper, the International Herald Tribune, did.
All-white jury likely to hear racial fight case in Louisiana

The Associated Press
Tuesday, June 26, 2007

JENA, Louisiana: An all-white jury was seated Tuesday to hear the case against the first of the “Jena Six” — a group of black youths accused of beating a white fellow student amid racial discord at a Louisiana school.

Five women and a man will hear opening arguments Wednesday morning at the courthouse in LaSalle Parish, Louisiana, where the black population is only about 12 percent.

The approaching trial had led to allegations of racism from parents of the accused, who said the original charges — attempted second-degree murder and conspiracy to commit second-degree murder — were out of proportion to the crime. The charges carry a combined sentence of 80 years.


The racial tension began in late August in Jena — a central Louisiana town of 2,900 with about 350 black residents — after a black student sat under a tree traditionally used as a gathering spot by white students. The next month, three nooses were hanging in the tree when students arrived on campus.


The school’s principal recommended the students who hung the nooses be expelled, but they served brief suspensions instead.

On Dec. 4, Justin Barker, who is white, was attacked at school by a small group of black students. He was treated at a hospital.

RIAA Victim Goes RICO On Their Asses.

Here’s hoping that the RIAA gets really shafted.

RIAA tried to shake down 10-year-old daughter, suit claims
By Dan Goodin in San Francisco
Published Wednesday 27th June 2007 18:45 GMT

An unemployed single mom with health problems has renewed her legal challenge of the Recording Industry Ass. of America (RIAA) with unseemly new details. They include accusations that the cartel’s goons tried to contact the woman’s 10-year-old daughter at school by impersonating the girl’s grandmother on the phone.

RIAA agents pursuing bogus copyright violations also called the apartment of Tanya Andersen looking for her daughter Kylee and demanded they take the girl’s deposition, according to a complaint filed last week in federal court in Portland, Oregon.

Later, during settlement discussions, the RIAA told Andersen she had to abandon all legal rights she may have in a countersuit or the association would once again demand to “interrogate and confront her little girl at the offices of the RIAA lawyers,” according to the suit.

This crosses so many lines, both ethically and legally.

“Defendants’ lawyer threatened persecution of Kylee in an effort to force Ms. Andersen to abandon her counterclaims against the defendant record companies,” Andersen’s complaint claims. “Their demand for face-to-face confrontation with Ms. Andersen’s then 10 year-old child in a deposition at the offices of RIAA lawyers were also intended to coerce and threaten her.”

She going RICO on all this. I hope that some goes Abu Ghraib on these bastards.

Careful readers will remember Andersen, now 44 years old, countersued the RIAA ( in late 2005 after being accused of illegally downloading gangster rap tunes such as “Shake that Ass Bitch,” “Bullet in the Head,” “I Stab People” and several with titles that even we cannot publish.

Her counterclaims equated the RIAA to thugs that knowingly employed illegal investigative methods and pursued factually flawed charges. Suing under state and federal Racketeer Influenced and Corrupt Organization laws designed to target organized crime rings, Andersen became something of a folk hero for her refusal to submit to the 800-pound gorilla.

Wanker of the Day: Patent Troll Edition.

Daniel Leckrone, the Chairman of TPL Group.

The TPL Group describes itself as:

TPL has been “purpose built” to deliver an array of services that are fundamental to streamlining the development and commercialization of proprietary products and technologies. By consistently delivering innovation and opportunity, TPL has earned a reputation of being a trusted partner that can enable constructive licensing programs as well as new product development programs that leverage the IP assets within its patent portfolios.

These folks are patent trolls, and Mr. Leckrone is their chief.

Misnamed Patent Reform Act would stifle innovation

By Daniel E. Leckrone
San Jose Mercury News
Article Launched:06/27/2007 01:31:51 AM PDT

While U.S. patent law has been effective in protecting the intellectual property of inventors, which has fueled productivity growth and the U.S. economy for more than two centuries, the so-called “Patent Reform Act” introduced in Congress this year proposes major changes to the law governing how patents are obtained and enforced. Ironically, these changes are being promoted by the most powerful and prosperous high-tech corporations – the “Patent Goliaths” – which came to power based on the patent system as it now stands.

In mounting their full-scale invasion of the territory protected by patent laws, the Goliaths continue to amass political support which, if not effectively challenged, will lead to an unwarranted degradation of the legendary patent system established by the U.S. Constitution. Even the lethargic Department of Commerce has vigorously opposed most of the sweeping changes proposed by this act, as the Department of Commerce explained in its recent 11-page letter to House Judiciary Subcommittee Chairman Howard Berman, a lead sponsor of this misguided legislative effort.


The author is a patent troll, and he has an interest in keeping his “automatic injunction” shakedown legal.

The rise of patent trolls, in mobile phones, internet connectivity, etc. the Euros and Japanese are increasingly eating out lunch. You can’t make a move in the US these days without getting approval from lawyers.

It not only prevents innovation generally, it makes it prohibitively expensive for the small inventor to actually bring a product to market, because of fears that it might violate a undeveloped, and frequently completely obvious, patent held by the parasites.

There is no need for an injunction with patent trolls. They have no intention of developing a market, they are just getting money for someone else’s work.

This means that they can be made whole at any time by damages with interest.

There is no irreparable damage, so no need for an injunction.

Of course, this means that any company can tell the patent troll to take it to court rather than paying their blackmail, and this is what he fears.

This is NOT Piracy

I understand that people like to call ANY threat to profits “Piracy”, but this ain’t it.

This is like GM chipping cans of motor oil so that only Delco cans work in your car.

Can cryptography prevent printer-ink piracy?

By Erica Ogg

Story last modified Wed Jun 27 10:37:34 PDT 2007

In the computer printer business, everyone knows the big money comes from the sale of ink cartridges.

Most of these cartridges are made by printer manufacturers and sell for a substantial premium. Some come from unauthorized sources, sell for substantially less and attract the attention of antipiracy lawyers.

Cryptography Research Inc. (CRI), a San Francisco company, is developing chip technology aimed at helping printer manufacturers protect this primary source of profit. The company’s chips use cryptography designed to make it harder for printers to use off-brand and counterfeit cartridges.

“We’re not saying we can end piracy, but our system is designed to recover from failure,” said Kit Rodgers, CRI’s vice president of business development.

Not all ink-cartridge remanufacturing is illegal–much of it is, in fact, legitimate–but pirated ink-cartridge technology cuts substantially into original manufacturers’ profits.

There are three main ways the $60 billion-a-year worldwide printing industry loses money:

• Used cartridges get refilled and sold as “new”– instead of as remanufactured.

You will note here that this will potentially block ALL non OEM cartridge remanufacturing. In fact, most non OEM remanufactured cartridges are sold as remanufactured such and are legal.

There are already laws against fraud.

• Cartridges get illegally replicated through reverse engineering.

You need to explain to me how it’s illegal. Every non OEM ink manufacturer has to reverse-engineer the cartridges, and I don’t see court cases, except in the case of fraudulent labeling.

• Printers get hacked or physically altered to use any type of ink.

Umm…You’re telling me that my use of an ink refiller on my machine is piracy?

And here is the kicker:

In a high-profile 2003 case, Lexmark International, the company that makes printers for Dell, took printer-supplies specialist Static Control Components to court for selling a chip that allowed Lexmark printers to accept any kind of ink cartridge. Lexmark ultimately lost the case, but it hasn’t stopped others from trying fiercely to protect their business.

What they are trying to do is block legal competitors to their markets.


The problem is very simple. We are having meltdowns in instruments that do not trade in the normal way.

If one of these funds go under, there is no way on knowing what, if anything the holders of the loan will get from selling these assets.

That’s why everyone freaked when Merril Lynch said that it would be selling off those assets from the Bear Sterns fund.

They are rated on face value, and the bids were coming in at far less than that.

When these sales occur, the assets necessarily get revalued at the auction price (willing sale, willing buyer), and suddenly hundreds of billions, if not trillions of dollars of funds become insolvent.

When hedge funds implode

By Axel Merk

The US trade deficit with the rest of the world leapfrogged in recent days. Aside from goods and services, the United States is now importing “consensus-based crisis management” from Japan.

Out of fear that a cleanup of bad loans would trigger widespread defaults, Japanese banks got themselves deeper and deeper into trouble by hushing up the problems. We are talking about the crisis at Bear Sterns’ subprime hedge fund. The crisis shows that major adjustments on how the market prices risks are overdue; this may have negative implications for stocks, bonds, and commodities, as well as the US dollar.

Bear Sterns is a leading provider of services to hedge funds; it is also one of the largest originators of subprime-backed collateralized debt obligations. CDOs are what their name implies: a security backed by collateral. CDOs are created when mortgages with various risk profiles are grouped into different tranches or segments. Among others, Bear Sterns would create a CDO in a bundle according to a client’s specifications. Indeed, Bear Sterns would work with a rating agency, such as Moody’s, to obtain the desired rating (a practice likely to face more scrutiny as some allege that Moody’s no longer acts as an independent rating agency, but as a syndicator in the offering).

The explosive demand in this sector has attracted ever more creative structures. Investors should have grown concerned when dealmakers started suggesting that one can create a higher-grade security by grouping together a couple of lower-grade securities; it is rare that 1 + 1 = 3. As these instruments have grown more complex, the clients buying these instruments often do not have a full understanding of what they buy.

How do you make a best-seller better? You introduce leverage. Not only can leverage be introduced in the credit derivatives that define some of these securities, but brokers eager to attract hedge-fund business may also accept CDOs as collateral to lend money. The hedge fund now attracting so much attention is Bear Sterns’ High Grade Structured Credit Strategies Enhanced Leverage Fund, launched only 10 months ago. It shall be noted that Bear Sterns did not put much of its own money into the fund, but supplied many of the CDOs. A total of US$600 million in invested capital was boosted with borrowings of about $6 billion.

In the brokerage industry, when a margin call is not met (when the borrower cannot provide sufficient collateral), the broker may seize the collateral and liquidate open positions. While a forced sale of the collateral may be painful for the borrower, it protects the system as a whole. Such forced sales happen all the time in the futures market, where positions are “marked to market” every day to evaluate the profitability and risk of open positions.

But the CDO market is not a regulated futures market; there is no daily market price that would allow one to assess the value of the collateral. The primary methods used to value CDOs are called “mark to market” and “mark to model”. In the more conservative “mark to market” approach, independent parties are asked to value the securities; as the name implies, the “mark to model” approach is more aggressive and uses a computed, theoretical value.

But because these instruments are sold in privately negotiated transactions, rather than a regulated and liquid market, neither valuation method is suitable in case of a forced liquidation.

I’m not sure why, perhaps because it is not dependent on US realtors for ad revenues, the Asia times has been ahead of the game on this.

Banks ‘set to call in a swathe of loans

The United States faces a severe credit crunch as mounting losses on risky forms of debt catch up with the banks and force them to curb lending and call in existing loans, according to a report by Lombard Street Research.

Bear Stearns headquarters: Banks ‘set to call in a swathe of loans’
Bear Stearns headquarters in New York

The group said the fast-moving crisis at two Bear Stearns hedge funds had exposed the underlying rot in the US sub-prime mortgage market, and the vast nexus of collateralised debt obligations known as CDOs.

“Excess liquidity in the global system will be slashed,” it said. “Banks’ capital is about to be decimated, which will require calling in a swathe of loans. This is going to aggravate the US hard landing.”

Charles Dumas, the group’s global strategist, said the failed auction of assets seized from one of the Bear Stearns funds by Merrill Lynch had revealed the dark secret of the CDO debt market. The sale had to be called off after buyers took just $200m of the $850m mix.

The banks were not prepared to bid over 85pc of face value for CDOs rated “A” or better,” he said.

“God knows how low the price would have dropped if they had kept on going. We hear buyers were lobbing bids at just 30pc.

“We don’t know what the value of this debt is because the investment banks shut down the market in a cover-up so that nobody would know. There is $750bn of dubious paper out there in the form of CDOs held by banks that have a total capitalisation of $850bn.”

US property writer Paul Muolo described the Bearn Stearns crisis as the “subprime Chernobyl”, saying the bank had created a “cone of silence”.

Abandoned by fellow banks, Bear Stearns has now put up $3.2bn of its own money to rescue one of the funds, a quarter of its capital.

The Mortgage Lender Implode-Meter that tracks the US housing markets claims that 86 major lenders have gone bankrupt or shut their doors since the crash began.

The latest are Aegis Lending, Oak Street Mortgage and The Mortgage Warehouse.


Nouriel Roubini, economics professor at New York University, said there were now concerns about “systemic risk fall-out” from the Bear Stearns debacle as investors look more closely at the real value of CDOs.

FWIW, Roubini is a VERY sharp guy. He’s been well ahead of the market and the conventional wisdom again and again.

Goldman-issued subprime bonds lead downgrades-Citi
Mon Jun 25, 2007 1:50 PM ET

NEW YORK, June 25 (Reuters) – Goldman Sachs Group Inc. subprime mortgage bonds issued last year are being downgraded by rating companies at the fastest rate of any issuer, according to Citigroup Inc. research dated June 22.

Nearly 70 of Goldman’s GSAMP-issued bonds, which include subprime loans from a variety of lenders, have been downgraded by Standard & Poor’s and Moody’s Investors Service in the year through June 15, with 60 of those issued in 2006, analysts at Citigroup Global Markets said in a weekly note.

Downgrades are accelerating on mortgage bonds backed by loans to the riskiest borrowers following an ongoing surge in delinquencies and foreclosures. Lenders loosened underwriting standards in the years through 2006, creating loans whose poor quality became apparent as the U.S. housing slump began.

Goldman Sachs?

Seriously when these funds actually get a fair assessment, a lot of these banks will be insolvent.

ES&S Gives Up Source Code In California

These machines are expensive, slow, and not trusted. Just dump them.

E-voting vendor succumbs to California source code demands

By Dan Goodin in San Francisco
Published Thursday 28th June 2007 01:50 GMT

Electronic voting machines vendor Election Systems & Software Inc. has finally given in to demands by California’s Secretary of State office that it submit the source code used in one of its products. But it made it abundantly clear it is unhappy about the requirement.

ES&S complied with the demand in an overnight package that was received yesterday by the office of Secretary of State (SOS) Debra Bowen, about three months past due date. Of the four e-voting firms selling products to California counties, only ES&S failed to meet the deadline.


That’s Lewis I. “Scooter” Libby.

Libby, Libby who can I turn to
You give me something I can hold on to
I know you’ll think I’m like the others before
Who saw your name and number on the wall
Libby I’ve got your number
I need to make you mine
Libby don’t change your number
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
Libby, Libby you’re the bitch for me
You don’t know me but you make me so happy
I tried to call you before
But I lost my nerve
I tried my imagination
But I was disturbed
Libby I’ve got your number
I need to make you mine
Libby don’t change your number
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
I got it (I got it), I got it
I got your number on the wall
I got it (I got it), I got it
For a good time call
Libby don’t change your number
I need to make you mine
Libby I’ve got your number
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)


Libby don’t change your number
I need to make you mine
Libby I call your number
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
Next two lines sung over
background refrain of “28301-016”
Libby, Libby who can I turn to
For the price of a dime
I can always turn to you
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
2 8 3 0 1-0 1 6 (2 8 3 0 1-0 1 6)
Fade out repeating “1016”

Meanwhile The Surge Continues

Yes, our presence is helping the Iraqi people, in the same way that John Wilkes Booth helped people enjoy their time in the theater.

New Level of Horror in Iraq: 20 Beheaded, Bound Corpses Discovered in Baghdad
20 Beheaded Bodies Found on Banks of the Tigris River Southeast of Baghdad, Iraqi Police Say
The Associated Press


Twenty beheaded bodies were discovered Thursday on the banks of the Tigris River southeast of Baghdad, while a parked car bomb killed another 20 people in one of the capital’s busy outdoor bus stations, police said.

The beheaded remains were found in the Sunni Muslim village of Um al-Abeed, near the city of Salman Pak, which lies 14 miles southeast of Baghdad.

The bodies all men aged 20 to 40 years old had their hands and legs bound, and some of the heads were found next to the bodies, two officers said on condition of anonymity because they were not authorized to release the information.

Meanwhile, a parked car bomb ripped through a crowded transport hub in southwest Baghdad’s Baiyaa neighborhood at morning rush hour, killing at least 20 people and wounding more than 50, another officer said on the same condition.

Many of the victims had been lining up for buses, awaiting a ride to work. Some 40 minibuses were incinerated in the explosion, police said.

Associated Press Television News video showed an open square strewn with smoldering car parts and charred bodies with clothes in tatters. Bystanders, some weeping, gingerly loaded human remains into ambulances.

A pickup truck rumbled slowly away from the scene, with two pairs of legs the dead bodies of victims dangling out of the back.

One of the police officers who gave information about the ghastly discovery of bodies southeast of Baghdad is based at Interior Ministry headquarters in the capital, and the other is based in Kut, 100 miles southeast of Baghdad.