This is brilliant.
H/t The Big Picture.
Month: February 2010
More Bad News For the Gold Bugs
China is sending signals that they will not be buying gold that the IMF is selling:
Contrary to much speculation China may not buy the International Monetary Fund’s (IMF) remaining 191.3 tons of gold which is up for sale as it does not want to upset the market, a top industry official told China Daily yesterday.
“It is not feasible for China to buy the IMF bullion, as any purchase or even intent to do so would trigger market speculation and volatility,” said the official from the China Gold Association, on condition of anonymity.
I still think that gold is not a place to be, because everyone is talking about how it is the place to be, which reminds me of dotcoms in 1999 and housing in 2006.
Update on GM’s Soon to Be Former Brands
It looks like GM’s sale of Saab to the Dutch sports car manufacturer will close in the next week or so, and the Hummer sale to as Sichuan Tengzhong has fallen through.
This is good, Saab has always been an innovative, safe, and slightly oddball auto make, and Hummer, has been, well Hummer.
The Chinese government has a small car policy, and they shot down Hummer.
Economics Update
Well, Ben Bernanke went before Congress, and said that there needs to be an extended period of low rates to ensure that the recovery.
Of course, in terms of real estate, the question is whether or not the Fed continues its policies to keep mortgage rates low, and considering the fact that new home sales fell to the lowest level on record in January, and mortgage applications fell this week, with the purchase index hitting its lowest level since 1997, housing is still on life support.
For that matter, so is commercial real estate, with the architecture billings index falling in January.
In any case, Bernanke’s talk about continued low rates drove the dollar down, which in turn drove oil up.
Anthopny Weiner Calls Republicans “A Wholly Owned Subsidiary of the Insurance Industry.”
Some Republican objects. He no likeee to be called a whore….
More of this from Congress, please.
House Passes Bill To Repeal Antitrust Exemption For Health Insurance Companies
The vote was 406 to 19, because even the Republicans know just how toxic it would be to allow insurance companies to keep their antitrust exemption.
Now, it goes to the Senate, where it will, of course, die ignominiously.
This is Not Your Father’s CSPAN
Brilliant!
From the folks at Second City.
Mass Arrest of Senior Turkish Military Figures Over Coup Plot
The military coup as an instrument of politics has been a fixture in Turkey, with coups in 1960, 1971, and 1980, as well as a de facto coup in 1997.
In any case, about 40 people were arrested:
Police in Turkey today detained more than 40 high-ranking military commanders for allegedly plotting to overthrow the Islamic-rooted government.
The arrests highlighted the ongoing struggle between the secular establishment and the government and leaves question marks over the traditional role of the military as the pillar of the secular state.
The detention of several senior military officers – including members of the elite class known as Pashas, a title of respect harking back to Ottoman times – underlines that such officials are no longer untouchable.
What is interesting is that this appears to be driven by the judiciary, specifically the prosecutor’s office, and not from Turkish PM Recep Erdogan, whose very public religiousity has been viewed with no small amount of distrust by the military, which sees itself as the defender of Attaturk’s secular initiatives.
On the other hand, this:
In total prosecutors have charged more than 400 people, including soldiers, academics, journalists and politicians. No one has yet been convicted.
Is concerning.
I can see the military and politicians colluding on a coup, but the academics and journalists makes me wonder if this might not just be an attempt by Erdogan to secure his political power.
Make it Stop!!!! Please!!! Make it Stop!!!
More snow….Aieeeee!!!!
Statement as of 6:14 PM EST on February 24, 2010
… Winter Weather Advisory remains in effect from 10 PM this
evening to 11 am EST Thursday…
… Winter Storm Watch remains in effect from Thursday evening
through Friday morning…A Winter Weather Advisory remains in effect from 10 PM this
evening to 11 am EST Thursday. A Winter Storm Watch remains in
effect from Thursday evening through Friday morning.* Precipitation type… snow.
* Accumulations… 1 to 3 inches through Thursday morning.
Potential for snow accumulations of 5 or more inches from
Thursday evening through Friday morning.* Timing… a mix of rain and snow will develop during the mid-
evening hours. Precipitation will become all snow late this evening
and will continue through early Thursday morning. After a break
in snowfall Thursday afternoon… snow is expected to return
Thursday evening through Friday morning.* Temperatures… will be above freezing until after midnight.
Lows near 30 overnight. Highs in the lower to mid 30s
Thursday. Lows in the mid to upper 20s Thursday night.* Winds… northwest winds 10 to 15 mph tonight… increasing to
15 to 25 mph Thursday with gusts around 45 mph late Thursday
afternoon and Thursday night.Precautionary/preparedness actions…
A Winter Storm Watch means there is a potential for significant
snow that may impact travel. Continue to monitor the latest
forecasts.A Winter Weather Advisory means that periods of snow will cause
travel difficulties. Be prepared for slippery roads and limited
visibilities… and use caution while driving.
Yes, This is About the “War on Terror” Eviscerating Our Civil Rights
One of the worst of the anti-terror laws, adopted under Clinton, not Bush II, is the “material support law,” which makes it a crime to provide “material support” to any organization that is deemed a “terrorist organization” by the President (actually the Secretary of State).
The cases, Holder v. Humanitarian Law Project (08-1498) and Humanitarian Law Project v. Holder, are about what is a legitimate use of the law.
The case here is interesting because it appears that the law is criminalizing purely political speech:
CCR contends that the challenged provisions violate the First Amendment insofar as they criminalize the provision of forms of support such as the distribution of literature, engaging in political advocacy, participating in peace conferences, training in human rights advocacy, and donating cash and humanitarian assistance, even when such support is intended solely to promote the lawful and non-violent activities of a designated organization. Plaintiffs’ principal complaint is that the statute imposes guilt by association by punishing moral innocents not for their own culpable acts, but for the culpable acts of the groups they have supported. The statute does not require any showing of intent to further terrorist or other illegal activity. We also claimed that the statute was unconstitutionally vague, and that the Secretary of State’s power to designate groups was too broad, giving the executive too much discretionary power to label groups as “terrorist” and turn their supporters into outlaws.
As I see it, if a group sees the designation of another group as a “terrorist entity” as in error, the way that the current law is written, or at least enforced, actually publicly advocating for a change in that designation would be offering “material support.”
In this case, the Human Rights Project wants to train the PKK, the Kurdish Workers Party, designated a terrorist group, in, “human rights enforcement and peaceful conflict resolution,” but the material support law forbids this.
So this law is preventing the provision of training in how not to be a terrorist.
As with most of the anti-terror laws out there, it invokes Joseph Heller’s most famous work.
A good description of the oral arguments is here.
Monopolies Are Strangling Our Economy
Click for full size
Graphic Courtesy of the WaPo
In Washington Monthly, Barry C. Lynn and Phillip Longman argue that the increase in jobless recovery and stagnation is an artifact of the increasingly monopolistic marketplace that we encounter:
If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.
…………
But while the mystery of what killed the great American jobs machine has yielded no shortage of debatable answers, one of the more compelling potential explanations has been conspicuously absent from the national conversation: monopolization. The word itself feels anachronistic, a relic from the age of the Rockefellers and Carnegies. But the fact that the term has faded from our daily discourse doesn’t mean the thing itself has vanished—in fact, the opposite is true. In nearly every sector of our economy, far fewer firms control far greater shares of their markets than they did a generation ago.
Indeed, in the years after officials in the Reagan administration radically altered how our government enforces our antimonopoly laws, the American economy underwent a truly revolutionary restructuring. Four great waves of mergers and acquisitions—in the mid-1980s, early ’90s, late ’90s, and between 2003 and 2007—transformed America’s industrial landscape at least as much as globalization. Over the same two decades, meanwhile, the spread of mega-retailers like Wal-Mart and Home Depot and agricultural behemoths like Smithfield and Tyson’s resulted in a more piecemeal approach to consolidation, through the destruction or displacement of countless independent family-owned businesses.
It is now widely accepted among scholars that small businesses are responsible for most of the net job creation in the United States. It is also widely agreed that small businesses tend to be more inventive, producing more patents per employee, for example, than do larger firms. Less well established is what role concentration plays in suppressing new business formation and the expansion of existing businesses, along with the jobs and innovation that go with such growth. Evidence is growing, however, that the radical, wide-ranging consolidation of recent years has reduced job creation at both big and small firms simultaneously. At one extreme, ever more dominant Goliaths increasingly lack any real incentive to create new jobs; after all, many can increase their earnings merely by using their power to charge customers more or pay suppliers less. At the other extreme, the people who run our small enterprises enjoy fewer opportunities than in the past to grow their businesses. The Goliaths of today are so big and so adept at protecting their turf that they leave few niches open to exploit.
One of the points that I have made when I discuss the role of the large monopoly Telcos and how this effects the availability and price of broadband is that when a company gets large enough, it’s more profitable to keep out competitors than it is to improve the quality and efficiency of its process.
If one understands the nature of any corporation, which is that they are short-sighted sociopaths by design, this makes perfect sense: You can spend billions on innovation, or millions on locking out and/or buying up competitors.
Even Sci-Fi author Jerry Pournelle, who describes himself as being somewhere to the right of Attila the Hun, says that for the free market to function, aggressive anti-trust activities are essential. (No link, it was from his “Chaos Manor” column in Byte about 20 years ago)
H/t Kevin Drum.
Yes, This Pretty Much Nails It
In discussions of the White House’s complete capitulation on the public option (to say nothing of their taking single payer off the table), a progressive activist, nails the problem:
But the Progressive Change Campaign Committee, the group that’s behind a letter being circulated among Senate Democrats to push the plan, isn’t giving up. “The White House obviously has a loser mentality — but America rallies around winners,” co-founder Adam Green e-mailed reporters shortly after Gibbs’s remark. “Polls show that in state after state, voters hate the Senate bill and overwhelmingly want a public option, even if passed with zero Republican votes. More than 50 Senate Democrats and 218 House Democrats were willing to vote for the public option before, and the only way to lose in reconciliation is if losers are leading the fight. That’s why Democrats in Congress should ignore the White House and follow those like Chuck Schumer and Robert Menendez, who know that the public option is a political and policy winner.”
(emphasis mine)
I’m not sure why Barack Obama and His Stupid Minions™ are so eager to play to lose, it could be that they are so risk averse that they are paralyzed with fear, it could be that they are closet Republicans, or it could be that they believe that Republicans can be successfully courted on this.
I hope that it’s not the 3rd option, because if they believe that, it means that the man with his finger on the button to destroy the world is completely delusional.
Geithner Knifes Volker Rule
Surprise, Geithner and his Treasury Department is giving the green light for Congress to gut the Volker rule, and allow federally insured institutions to gamble with our money.
Well, he never like Volker anyway:
The Obama administration lowered expectations Tuesday for the “Volcker rule” to curb risky trading by banks, emphasizing “limits” rather than an outright ban, as Congress shied from the original proposal.
The Treasury Department said in a statement that it supports “mandatory limits” on banks’ proprietary trading, in which they trade for their own accounts. The administration last month had called for an outright ban on such trading.
Seriously, the combination or regulatory capture and cowardice by the Obama administration is beginning to get to me.
Greenspan Calls Meltdown “Greatest Financial Crisis”
Normally, I don’t listen to Alan Greenspan, but when he says the the financial meltdown is worse than the Great Depression, it bears noting:
Former Federal Reserve Chairman Alan Greenspan said on Tuesday the U.S. economic recovery was ‘extremely unbalanced,’ driven largely by high earners benefiting from recovering stock markets and large corporations.
Small businesses and the jobless are still suffering from the aftermath of a credit crunch that was ‘by far the greatest financial crisis, globally, ever’ — including the 1930s Great Depression, said Greenspan in an address to a Credit Union National Association conference.
(emphasis mine)
While I have very little confidence in judgment of Andrea Mitchell’s husband, the time that any economist of any note says “worse than the Great Depression,” it’s time to think about why we aren’t fixing this.
It’s Like They are Trying to Demoralize the Democratic Base
Because it looks like they are going to delay the Iraq withdrawal:
The U.S. military has prepared contingency plans to delay the planned withdrawal of all combat forces in Iraq, citing the prospects for political instability and increased violence as Iraqis hold national elections next month.
Under a deadline set by President Obama, all combat forces are slated to withdraw from Iraq by the end of August, and there remains heavy political pressure in Washington and Baghdad to stick to that schedule. But Army Gen. Ray Odierno, the top U.S. commander in Iraq, said Monday that he had briefed officials in Washington in the past week about possible contingency plans.
I understand that there need to be contingency plans, but the fact that this gets leaked to the Washington Posts means that they are looking to see if a delay is politically feasible for them to further extend Operation Useless Dirt 1.*
So in August, 3 months before the election, they are going to push back the withdrawal, and they expect the base to be enthused about working for the Democratic party.
The Obama administration is beginning to make the Carter administration look like Niccolò Machiavelli.
A few more months of this, and I might be ready to vote green.†
The equation here is very clear: Military operations are very good for careerist military officers, so you will always have a significant portion of the military arguing for these operations, since it benefits them personally.
You need to ignore them.
*H/t Eric Palmer for this bon mot describing Operation (insert name here).
†Not really, pulling the lever for the Greens would have vomiting in the voting booth.‡
‡But yes, actually vomiting in the voting booth might be a real possibility.
John Stewart is a F%$#ing Genius: Conservative Woodstock Edition
So, this thing seems to be the opposite of Woodstock, but at least it’s not Altamont…………
Oh my God it’s Altamont!!!!
Heh
Economics Update
The lede today is that consumer confidence fell much more than expected, down to 46.0, when the consensus forecast was 55.0, a 10 month low.
Additionally, home prices fell in the 4th quarter, though the housing optimists are noting that the year over year drop is “only” 2½%.
When one considers the fact that the 4th quarter was juiced by tax credits, it’s worse than it looks.
Japan, on the other hand, Japan’s exports grew sharply in the 4th quarter, with a 40.9% year over year, the biggest jump since 1980, largely on increases in exports to China.
Still the dismal consumer confidence numbers put the market in a mind to doubt that there will soon be a robust recovery, which drove oil prices down, and led to a flight to safety which pushed the Yen and the dollar up.
5 Republicans Vote for Cloture on Jobs Bill
The one where Harry Reid stripped out all the tax breaks for special interests that Max Baucus put in to make nice with the terrorists Republicans.
Republicans voting for cloture were Scott Brown, Olympia Snowe, Susan Collins, George Voinovich, and Christopher “Kit” Bond.
Notably, Ben Nelson, who is nominally a Democrat voted against cloture.
There should be consequences for him. He has a leadership position, and he is voting for cloture.
Instead, Reid and Obama will find some other way to suck up to him.
Not Enough Bullets
The numbers are in, and Wall Street bonuses rose 17% in 2009.
The reason that they did not fold like overcooked broccoli in 2009 is because the Congress, the Treasury Department, and the Federal Reserve were shoveling money into them at a ferocious pace, but still they paid themselves bigger bonuses.
Quote of the Day
Roger Ehrenberg, looks at a number of financial transactions, including the rather mundane one known as leasing nails what should be the core of any reform of the financial markets:
Both cash-market and derivative instruments should be put to the “business purpose” test. Accounting rule-makers, with support of the SEC, should move towards a “principles-based” system where common sense, and not black-and-white rules around which myriad loopholes can be found, should become the new paradigm. But let’s be clear. The issue isn’t derivatives; it’s all financial transactions whose objective is to deceive or to weaken financial transparency.
(emphasis mine)
He notes that a very old transaction, leasing, has been used for the same purpose for years:
Consider leasing, a transaction that has been popular for over 50 years. As the industry has evolved, transactions such as sale/leasebacks and “asset defeasance” have been used to synthetically borrow money without the obligation being reflected as debt on the balance sheet. The form of the transaction: a lease. The substance of the transaction: a borrowing. The multi-trillion dollar securitization industry has the same motivation: moving assets (and liabilities) off the balance sheet, while economic recourse still exists should asset values and/or debt ratings drop. This is what the market discovered when Citigroup’s multi-billion structured investment vehicles (SIVs) began to fail and the assets and liabilities came back onto its financial statements. What is the proper characterization of a contractually obligated stream of payments? Debt. How should a portfolio of assets and associated liabilities be treated if the risks and rewards of ownership haven’t been completely transferred? As never having left the balance sheet. Yet the accounting profession, with the SEC’s support, has enabled this charade to continue.
The idea of a business purpose rule is a very good one.