Month: November 2010

FDIC Moves to Boost Assessments on Large Banks

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This is a good thing. If banks are too big to fail, then their insurance costs should reflect this:

The Federal Deposit Insurance Corp. proposed shifting the burden for protecting depositors against bank failures toward larger lenders whose reliance on riskier funding sources may pose a greater threat to the financial system.

The FDIC board today approved two proposals for overhauling assessments for its deposit insurance fund, including one that would base the fees on banks’ liabilities rather than their domestic deposits. The fee proposal, a response to the Dodd- Frank financial-regulation law, would increase assessments on banks with more than $10 billion in assets.

“This proposal achieves the goals of the Dodd-Frank Act to change the assessment base to better reflect risks to the deposit insurance fund,” said FDIC Chairman Sheila Bair. The measure is subject to a 45-day comment period.

If we make too big to fail too expensive to exist, I can live with that.

One Less Bigot With Power

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Andrew Shirvell has been fired as assistant Michigan Attorney General for stalking University of Michigan student Chris Armstrong.

Armstrong was the first openly gay president of the Michigan Student Assembly, and this sent the already right-wing Shirvell into a delusional hissy fit.

As a private citizen, it would be creepy, but as a supporter and confidant of Michigan’s right wing Attorney General, it took on some rather disturbing overtones.

Background here.

A Very Nice Take-Down of Treasury View Economic Blather

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The Numbers Do Not lie


But David Henderson Does

Economist Mike Kimel does a masterful job of taking down another right wing economist, one David Henderson, who asserts that the government spending actually suppressed economic activity during WW II, and when reduced, we experienced an unprecedented boom in GDP.

Only we didn’t.

Henderson also claims that the relaxation of economic controls under Truman lead to a much larger increase in private investment.

Only it didn’t.

The giveaway that Henderson is writing to reflect his opinions, rather than the facts is that he published his article at the Geroge Mason University Mercatus Center, which is another one of those right wing “think” tanks.

In any case, both of Kimels articles are worth a good read.

It is a very well done, and very well deserved, “Fisking” of a charlatan.

H/t Angry Bear.

Economics Update

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Generally, this has not been a good day for economic news.

We have seen a a spike in inventories, they rose 1.5% in September, following a 1.2% increase in August, which indicates that recent increases in manufacturing activity, which were largely driven by businesses rebuilding inventories, may now be running to the wall of weak consumer demand.

The fact that job openings fell again in September, indicating that there is simply not a an opportunity for people to find their way back into the job market, might be a part of this, as would the continued increase in personal bankruptcies.

On the brighter side, the National Federation of Independent Business’s optimism index rose to a 5 month high in October.

Not Enough Bullets

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The high frequency trading firms are ramping up their lobbying efforts to keep their front-running of markets legal:

The high-frequency trading industry is stepping out of the shadows in Washington.

Closely held companies with undisclosed profits and obscure names like Getco LLC, Hard Eight Futures LLC and Quantlab Financial LLC, are beginning to act more like Wall Street banks, cutting checks to politicians, forming trade groups and hiring lobbyists and ex-regulators. They’re looking to fend off tighter rules and appease lawmakers who say the firms disadvantage small investors and contribute to wild swings in stock prices.

While the companies, which use high-powered computers to execute thousands of trades in milliseconds, aren’t approaching the big banks in Washington spending, they have more than quadrupled their political giving over the last four years, a Bloomberg News analysis shows. The top recipients include Eric Cantor, set to become House majority leader, and several incoming senators who won in last week’s Republican rout.

Among other things, they are worried that the SEC will limit their ability to manipulate stocks by doing things like submitting large number of orders and then canceling them.

But Eric “Place” Holder Remains True to Form

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The Obama Department of Justice has elected not to prosecute CIA officials who obstructed justice by erasing torture tapes:

Central Intelligence Agency officials will not face criminal charges for the destruction of dozens of videotapes depicting the brutal interrogation of terrorism suspects, the Justice Department said Tuesday.

After a closely watched investigation of nearly three years, the decision by a special federal prosecutor is the latest example of Justice Department officials’ declining to seek criminal penalties for some of the controversial episodes in the C.I.A.’s now defunct detention and interrogation program. The destruction of the tapes, in particular, was seen as so striking that the Bush administration itself launched the special investigation after the action was publicly disclosed.

Government officials said Tuesday that the special prosecutor, John H. Durham, could still decide to charge current and former C.I.A. officers and lawyers with making false statements to a grand jury over the course of the investigation, which began in January 2008.

Yes, they could, “Charge current and former C.I.A. officers and lawyers with making false statements,” but they won’t because they want to cover this up because Obama and Holder fear a future prosecution by a future Republican administration want to “look forward, not backward.”

Respect for the rule of law, my ass.

Finally, Someone In the Obama Administration With Guts

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Unfortunately, it’s just Transportation Secretary Ray LaHood:

The Obama administration is urging Wisconsin’s incoming Republican governor, Scott Walker, to reconsider his opposition to high-speed rail in his state and threatened to rescind $810 million in federal stimulus grants for the project if the venture is killed.

In a letter (pdf) to Walker yesterday, Transportation Secretary Ray LaHood discussed what he called a “difference of opinion about the value of a Midwest high-speed rail network” between the Obama administration and the incoming governor, emphasizing economic benefits that high-speed rail could bring to the region.

Walker, who is currently the county executive of Milwaukee County, campaigned heavily against a proposed high-speed line to link Milwaukee and Madison that would eventually be part of a Midwest network. Decrying the project as a waste of tax dollars, he has called for the cash to be redistributed to highway and bridge repairs in his state.

But LaHood said the stimulus grants must be spent on rail projects.

Additionally, LaHood is demanding $271 million back from New Jersey Transit for Governor Christie’s cancellation of the rail tunnel under the Hudson, and there are indications that the Feds will be demanding money back from Ohio when the new Republican governor there cancels their rail program.

Even more amusing is that Illinois is already applying for the money that the ‘Phant governors don’t want.

Good for Secretary LaHood, but I expect Obama to overrule him and give the money to Wisconsin, Ohio, and New Jersey anyway, because he wants these loony tunes to like him.

It is interesting that the only one in Obama’s administration to do the right thing because it is the right thing is a Republican.

What the Dickens??!?!?

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And yes, I mean the author, as in in the Scrooge quote, “Are There No Prisons? Are There No Workhouses?”

The new Conservative government in the UK is going Charles Dickens on the unemployed:

Ministers have defended their plans to force the long-term unemployed to do manual work or lose benefits.

Chief Secretary to the Treasury Danny Alexander told the BBC the idea was not to “punish or humiliate” but to get people back into the habit of working.

But the Archbishop of Canterbury Rowan Williams said the changes could drive people “into a downward spiral of uncertainty, even despair”.

Work and Pensions Secretary Iain Duncan Smith is to unveil the plans this week.

Under the plan, claimants thought to need “experience of the habits and routines of working life” could be put on 30-hour-a-week placements.

Anyone refusing to take part or failing to turn up on time could have their £65 Jobseekers’ Allowance stopped for at least three months.

Of course, the Tories like this because they hate poor people, and their coalition partners, the Lib-Dems love this, because it hearkens back to a time when they had political relevance, those halcyon days before World War I.

With unemployment at the highest levels since the great depression, and unemployment in the UK among the highest in western Europe.

As Deputy Labour leader Harriet Harman notes, “But she said the government needed to understand that to get people back into work, there had to be jobs for them to go to – and at the moment there were five people chasing each vacancy.”

I think that Labour doesn’t get it. The Conservatives plan to destroy enough so that people will be ready to dismantle the National Health Service for something more disastrously like the US system.

The barbarians are not at the gates, the barbarians are in the gate.

Economics Update

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We have two different data points, first mortgage delinquencies were up in the 3rd quarter, but we also saw that U.S. household debt shrunk by 0.9% over the same period.

So, are people paying down their debts, or are they having their debts written down by banks that realize that they will never get the money?

Coupled with this, crude oil is getting close to $90/bbl again, which may put another crimp in the economy.

Finally, the other shoe has dropped for monoliner bond insurer Ambac, and it has filed for bankruptcy, chapter 11 reorg, not chapter 7 liquidation.

Excuse Me While My Head Explodes

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So, someone in the Obama administration is floating the idea that it would be a good to make (likely soon to be former her election is still to close to call) Congress woman Melissa Bean head of the Consumer Financial Protection Bureau? (CFPB)

Yes, the Democrat most hostile to both to banking regulations in general and to the CFPB in general, is being mooted by some idiot in the Obama administration economic team *cough* Timothy “Eddie Haskell” Geithner *cough* being the first official head of a bureau dedicated to protecting consumers from predatory lenders.

If Elizabeth Warren played the role of Martin Luther, protesting the corruption in the system by nailing her 95 theses to the door of the church, then Melissa Bean is the Church of Wall Street’s Temple Prostitute, selling indulgences.*

And someone in the Obama white house wants her to head the CFPB.

Never heard of Melissa Bean? Well Jane Hamshire has the bill of particulars: (quoting)

Seriously, if Barack Obama nominates her for this post, it will show that he is completely in the pocket of the banking industry.

To be fair, this could be an administration official, *cough* Timothy “Eddie Haskell” Geithner *cough*, free lancing, but I am inclined to see this as deliberate and calculated. This administration revels in message control.

*Yes, I know, this is a badly mixed metaphor.

What Bill Maher Said

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True Dat

there are way too many people who think that reasoned discourse is about equating the two sides.

It’s not. Reasoned discourse is about the truth, and as Bill Maher notes, “Keith Olbermann is right when he says he’s not the equivalent of Glenn Beck. One reports facts the other one is very close to playing with his poop.”

That is the problem with the Stewart/Colbert March for Sanity/Fear.

At the core of this discussion, there are people who are just lying or delusional, and they should not be considered equivalent to those who are merely partisan.

As the noted tippler Daniel Patrick Moynihan once noted, “People are entitled to their own opinions, not to their own facts.”

And Stewart and Colbert did not make that distinction at the rally, though, ironically enough, Stewart does so regularly on his show.

Olbermann Is Back on the Air Tomorrow

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And there was much rejoicing:

STATEMENT REGARDING KEITH OLBERMANN – SUNDAY, NOV. 7

From Phil Griffin, President of MSNBC:

After several days of deliberation and discussion, I have determined that suspending Keith through and including Monday night’s program is an appropriate punishment for his violation of our policy. We look forward to having him back on the air Tuesday night.

I imagine that Keith’s ratings will be through the roof for the next few days.

We Know Who is Going to Win This War

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Killing each Taliban soldier costs $50 Million; Killing each NATO soldier costs $50 Thousand:

Kabul Press, on September 30, 2010, published an article by this author detailing the best estimate of Taliban killed per year (2,000) divided by a portion of the direct costs that the Pentagon is spending each year in Afghanistan ($100 billion). The resulting statistic suggests that it costs $50 million to kill each Taliban soldier. This number is very conservative. If all NATO and American costs (direct and indirect) were included, the analysis would reveal that it actually costs about $150 million.

The present article examines spending from the Taliban side in order to comparatively determine what it costs to kill each NATO soldier. The Brookings Institution is the consulting firm with the best political access to the Obama Administration and the U.S. State Department. In September 2009, it published a report on Taliban annual revenue, based in part on data gathered by the Congressional Research Service. Brookings estimated Taliban annual income at between $140 and $200 million. The Taliban have already inflicted over 600 deaths on NATO soldiers and more than twice that number of fatalities on Afghan army and police personnel. By the end of the year, total Coalition deaths are expected to reach 3,000. The math is unfortunately easy. Assuming Taliban revenue of $150 million divided by 3,000 = $50,000 to kill a NATO, American or Afghan soldier.

The military says that this is the product of an over simplified analysis, which is true, but the trend reflected here is correct, and we are not winning “hearts and minds” and cannot win “hearts and minds” because the populace opposes occupying forces, and our man in Afghanistan, Hamid Karzai is so indescribably incompetent and corrupt.

Oklamoma, Where the Dumb Comes Sweeping Down the Plains

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So, someone decides to ban “Sharia Law,” in Oklahoma, which will almost certainly be overturned, someone already has a claim that it invalidates his will in violation of the First Amendment, but the constitutional amendment, which intends to, “prohibit state courts from considering international law or Islamic law when deciding cases,” also has the effect of banning the 10 commandments:

[U of OK Law Professor Joseph] Thai said the ballot measure “raises thorny church-state problems as well” and could even affect a state judge’s ability to consider the Ten Commandments.

“The Ten Commandments, of course, is international law. It did not originate in Oklahoma or the United States,” Thai said.

Morons.

Both the politicians who place demagoguery above observing their oaths of office, and the voters who pulled the lever for this crap.

So, the NFP Numbers Came Out Yesterday

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The Non-Farm Payroll report for October came out Friday, and it was much better than expected, growing by 151,000 jobs, much better than the forecast of 70,000 with unemployment (U-3) remaining at 9.6%, while the broader U-6* fell by 1⁄10 of a percent to 17%.

Even more significantly, it is more than the 125-150 thousand required to meet the natural increase in the workforce, meaning that at current rates, using the lower growth number, it would only take 26⅔ years for us to recover our job losses since Wall Street imploded.

By my math, this still qualifies as a jobless recovery, particularly since the total labor force has been shrinking as workers have become discouraged or otherwise left.

* “Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.”

The F-35 JSF Clusterf%$# Gets Even Clusterf%$#ier

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Yes, everyone’s favorite too big to fail defense program fails once again, with reports that SecDef Robert Gates has been briefed that costs will further escalate, and there will be an additional 3 year delay:

Lockheed Martin Corp.’s F-35 Joint Strike Fighter, the Pentagon’s costliest program, may see more price increases and new schedule delays of as much as three years, two government officials familiar with the matter said.

Defense Secretary Robert Gates is scheduled to be briefed tomorrow on new cost and schedule assessments for the F-35 and other aircraft, said the officials, who requested anonymity because details aren’t public. Software, engineering and flight difficulties are greater than expected, the officials said.

……

Slippage in the JSF’s timetable may be as much as one year for the Air Force and Navy versions and two to three years for development of the Marine Corps model capable of short takeoffs and landings, the officials said.

It should be noted that these delays were forecast by the Pentagon’s Joint Estimating Team (JET) over two years ago, and much of the delays are software issues.

Even Lockheed’s CEO admits this, while asking for more money (big surprise).

What’s more, not only will it be delayed and not only will the acquisition costs rise, but direct operating costs are jumping as well:

Gates also was advised in a Nov. 2 briefing that operations and support costs for the F-35 will be re-budgeted at 1.5 times the aircraft it replaces, more than twice the original goal and 50% more than more recent projections, according to reports.

Eric Palmer runs some numbers and shows that there has been about a 3 year of push-back on the schedule over the past 3 years, so basically the program is running in place.

What a damn mess.

It’s Bank Failure Friday!!!!

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And here they are, ordered, and numbered for the year so far.

  1. K Bank, Randallstown, MD
  2. Western Commercial Bank, Woodland Hills, CA
  3. Pierce Commercial Bank, Tacoma, WA
  4. First Vietnamese American Bank, Westminster, CA

A ordinary run, so far we have averaged 3¼ bank failures a week, though K Bank is very local. My chiropractor is in Randallstown.

Also, I neglected to mention that 2010 passed 2009’s total of 134 on 22 October.

Full FDIC list

So, here is the graph pr0n with trendline (FDIC only):

I would note that are now at the point where the utility of the least squares trendline is diminishing, but I’m keeping it here for historical purposes.

Well, This is Shaping Up to Be a Crappy Day

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First, I have to put my cat to sleep, and now Keith Olbermann has been suspended by MSNBC for making campaign contributions:

Keith Olbermann, the pre-eminent liberal voice on American television, was suspended Friday after his employer, MSNBC, discovered that he made campaign contributions to three Democrats last month.

The indefinite suspension was a stark display of the clash between objective journalism and opinion journalism on television.

Many prominent liberals and conservatives immediately called on MSNBC to reinstate Mr. Olbermann, who is usually outspoken but who had no comment on his suspension Friday.

The contributions came to light in an article by Politico Friday morning. Mr. Olbermann acknowledged in a statement that last month he donated $2,400 to the campaigns of Representatives Raul Grijalva and Gabrielle Giffords of Arizona and Attorney General Jack Conway of Kentucky, who lost his Senate race to Rand Paul.

I think that this is a stupid standard to hold straight journalists to, much less someone who is clearly an talking-head opinion type.

In the article, there is a suggestion that this is an attempt to make brand differentiation with Fox, where, for example, Hannity gave to Michelle “I used to be the nuttiest person in Congress, but the elections moved the bar” Bachmann, but I don’t live in media executives heads, nor would I ever want to.

It does appear that Keith will be back at some point in the not to distant future, though.

H/t DC at the by invitation only Stellar Parthenon BBS.

We Had to Put Lavi to Sleep Today

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Lavi, June 2003 – November 5, 2010
You will be missed

As I mentioned a month ago, we took her in for what looked like a bad tooth, and it turned out to be an aggressive malignant tumor.

She had stopped eating, is in pain, and is exhibiting difficulty moving, so we had to put her to sleep today.

In the pictures, you can notice the swelling on the side of her head, and the unequal pupils from the effect of the tumor on her right eye.

We buried her in the back yard, in the corner where the hill starts.

I found her in July of 1993.

I was driving from Orrville, OH, to Akron, and was sick and tired of the bottle of windshield washer fluid banging around in my trunk, so I pulled over to the side of the road, and grabbed the bottle, and popped the hood.

Under the hood, I saw something furry, and moving.

At first, I thought that it was a rat, but then I saw the ears and whiskers, so I picked her up, she fit in the palm of my hand, and she proceeded to puff herself up and hiss and spit in an attempt to intimidate me.

I took her home, and gave her a saucer of milk, and went and got some cat food.

The next day, I caught her brother, Tudza, who survives her, as they were crying to each other through the door.

She is older than my marriage, and she outlived the car under whose hood I found her so it was a good run, particularly since she survived a bout of hepatic lipidosis (fatty liver) 5½ years ago.

Both she and Tudza imprinted on me, so I guess that I am their “mommy”, though she was also my daughter Natalie’s cat.

Tudza is still alive and active, having never left his 1st kitten hood.