Month: January 2012

In the Interest of Fairness

And because I respect Yves Smith a lot, I have to note that she takes issue with the Pro Publica report about Freddie Mac betting against homeowners:

A new ProPublica story, “Freddie Mac Betting Against Struggling Homeowners,” treats the fact that Freddie Mac retains the riskiest tranche of its mortgage bond offering, known as inverse floaters, as heinous and evidence of scheming against suffering borrowers.

The storyline in this piece is neat, plausible, and utterly wrong. And my e-mail traffic indicates that people who are reasonably finance savvy but don’t know the mortgage bond space have bought the uninformed and conspiratorial ProPublica thesis hook, line, and sinker.

Basically, she says that what we are looking at are normal hedges against interest rate fluctuations, and this was one part of this strategy, and, “Looking at one position in isolation is meaningless.”

Additionally, she implies that this might be a hit job from the Obama administration, because FHFA head Edward DeMarco, who supervises the GSEs in receivership, is not moving aggressively to refinance troubled mortgages, and he’s signed off on some of the big paydays for officials at Fannie Mae and Freddie Mac.

Additionally, FHFA has become increasingly aggressive about forcing banks to take back fraudulent mortgages (Put-backs), which opens a multi-billion dollar can of whup ass on the big Wall Street banks, which almost certainly puts DeMarco on Timothy “Eddie Haskell” Geithner’s naughty list, and leaking this to the press is very much the Treasury Secretary’s style.

Truth be told, I don’t know who is right, though if I were betting, I would take wrong and evil for both DeMarco and Geithner, but I’m a cynic.

It’s Romney in Florida

And it’s looking to be a blowout, with a 15%+ margin, and nearly half of all the votes.

It comes down to a few things:

  • Money & organization.
  • He rest on inevitability and let Gingrich beat him up.
  • Money & organization.
  • People realized that Newt was that obnoxious asshole from the 1990s.
  • Money & organization.
  • Seriously, Moonbase Gingrich?
  • Money & organization.

And, of course, he had a money and organization advantage.

The only question now is just how crazy this makes Newt.

I fully expect Newt’s head explode in the next few debates.


Just when you thought that New Jersey could not get any more pathetic, New Jersey Governor Chris Christie said that civil rights leaders in the 1950s and 1960s would have been cool with a referendum to give civil rights without regard to race:

The verbal feud over gay marriage in New Jersey got more personal Monday with Gov. Chris Christie firing a slang term [numb nuts] at a lawmaker, and a hero of the Civil Rights movement chastising the governor for a separate remark.

The issue also brought U.S. Rep. John Lewis of Georgia to Trenton on Monday to take Christie to task for comments linking gay marriage to the civil rights struggle of the 1960s.
Christie last week vowed to veto any gay marriage bill that reaches his desk. He instead called for the question to be put to voters in November.
“I think people would have been happy to have a referendum on civil rights, rather than fighting and dying in the streets in the South,” Christie said after an event in Central Jersey.
Black leaders pounced. Newark Mayor Cory Booker said baseball great Jackie Robinson would not have had the opportunity to break the sport’s color barrier had the matter been put to a vote, and the mayor himself would not have had the opportunity, years later, to be elected to lead New Jersey’s largest city. Assembly Speaker Sheila Oliver said many felt the sting of Christie’s comment.
Gusciora, who is white, said Christie would have found allies in late Alabama Gov. George Wallace and late Georgia Gov. Lester Maddox, both segregationists.

This is what qualifies as a deep thought by the ‘Phants.

God, what a repulsive person.

That’ll Teach Him

The British are finally cracking down on the Banksters.

What are they doing? They are rescinding knighthoods:

The former chief executive of the Royal Bank of Scotland, Fred Goodwin, has been stripped of his knighthood by the Queen for his role in the creation of the biggest recession since the second world war.

With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking.

The chancellor, George Osborne, welcoming the move, said: “RBS came to symbolise everything that went wrong in the British economy over the past decade.”

The move provoked a cacophony of calls for honours to be stripped from other miscreant bankers, politicians and regulators. The campaign to humble Goodwin was reignited by the Daily Mail a fortnight ago and then hastily backed in a highly political move by David Cameron as he sought to show he will side with the public against crony capitalists and bonus-seeking bankers.

You know, I thought that Geithner’s charades about supporting ordinary homeowners were lame, but the Brits have taken lame to a while new level.

Marketplace Gets It Wrong

I was listening to marketplace, and they noted the good news that incomes rose in December rose at the fastest rate in months, and that people saved more too.

They said that this is good, but what it really means is that consumer spending fell in December:

U.S. consumer spending was flat in December as households put the largest rise in income in nine months into their savings, potentially signaling slower consumption early in 2012.

It was the weakest reading on spending since June, the Commerce Department said on Monday, and it followed two tepid gains in October and November.

Still, economists were cautiously optimistic that rising wages as labor markets improve will keep demand supported.

“I do believe there is some underlying trend that gives us some reason to feel a little bit better about what lies ahead regarding spending, and the main reason is the labor market,” said Anthony Karydakis, chief economist at Commerzbank in New York.

U.S. economic growth quickened in the fourth quarter and hiring picked up, but activity is expected to soften early this year. Federal Reserve Chairman Ben Bernanke said last week that the central bank was considering a further easing of monetary policy to support growth.

Reuters gets it. This is not good news.

This is deleveraging in  a depressed economy. 

More Change We Cannot Believe In

It turns out that while under federal receivership, and under the direction of the FHFA, Freddie Mac has simultaneously made it more difficult to refinance your mortgage and invested in risking and hard to sell financial instruments that profit from you not being able to refinance:

Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.

Yeah, there was no coordination here.

Just aggressive tightening of refinancing standards (further down in the story) that have put people, “in financial jail,”  and as it was ramping up on its risky bets, it also, “quietly announced that it was raising charges, called post-settlement delivery fees, for refinancing.”

But we aren’t going to see a recess appointment to replace the acting head of FHFA, Edward DeMarco, with someone who might reign in executive bonuses or work for home owners.

Yes, ML Global is allowed to steal

The point about the “loss” of ML Global customer accounts is not that it was lost, but that it was looted as the company collapsed, but it’s all “no harm, no foul,” and there are no criminal investigations:

Federal officials looking for an estimated $1.2 billion missing from customers of MF Global Holdings Ltd. feel more and more that a lot of it may never be located, according to a report citing sources familiar with the probe.

What’s been learned so far suggests that a good deal of the money may have “vaporized” because of scrambling in trading in the week before MF Global filed for bankruptcy protection Oct. 31, the Wall Street Journal reported, citing “a person close to the investigation.”

This money was stolen, most likely by Jamie Dimon’s peeps at JPMorgan.

Even if you cannot prove criminal intent, you can get back this money, if you are willing to actually pursue it.

Still, Jon Corzine being frog marched out of his offices in hand cuffs would be a good thing.

H/t Atrios.

No, This is Not The Onion

Simply because The Smew is giving its American counterpart a run for its money:

Flush With Oil From Alberta, Canada Prepares For Inevitable U.S. Invasion

OTTAWA, ON—It’s a subject the Canadian military high command doesn’t like to discuss, but one that’s taken on an increasing sense of urgency since the discovery of massive oil reserves in the Alberta tar sands: how to defend Canada from imminent U.S. invasion.

A highly-placed military source in the Harper government, speaking off the record, confirmed that Canada is actively preparing for an American attack. “Look, we can all see the pattern here: if a country has significant oil reserves, the United States will find a pretext to invade. Iraq, Libya—frankly, it’s either us or Iran next,” he said.


Europe is F%$#ed

Because the Germans have been allowed to force their self delusions on the rest of Europe:

Chancellor Angela Merkel cemented her political ascendancy in Europe on Monday when 25 out of 27 EU states agreed to a German-inspired pact for stricter budget discipline, even as they struggled to rekindle growth from the ashes of austerity.

Only Britain and the Czech Republic refused to sign a fiscal compact in March that will impose quasi-automatic sanctions on countries that breach European Union budget deficit limits and will enshrine balanced budget rules in national law.

The accord was eagerly greeted by the European Central Bank which has long pressed euro zone governments to put their houses in order.

The solution to problems caused austerity and overly aggressive efforts at European integration will be more austerity and overly aggressive efforts at European integration.

Yes, These Are Members of the Polish Parliament

And they are protesting Poland’s signing onto the Anti-Counterfeiting Trade Agreement (ACTA):

Poland on Thursday signed an international copyright agreement, sparking more demonstrations by Internet users who have protested for days over fear it will lead to online censorship.

After the signing, protesters rallied in the Polish cities of Poznan and Lublin to express their anger over the treaty. Lawmakers for the left-wing Palikot’s Movement wore masks in parliament to show their dissatisfaction, while the largest opposition party — the right-wing Law and Justice party — called for a referendum on the matter.

Controversy in Poland has been deepening over the Anti-Counterfeiting Trade Agreement, or ACTA. Though many other industrialized countries have signed it, popular outrage appears to be greater in Poland than anywhere else.

This is actually significant.

It’s been growing slowly, but the almost universal consensus about the ability of IP holders to rent seek is now showing cracks, as more and more people start to see it as a drain upon society, rather than a benefit.

We are seeing this in the media, where we are seeing increasing coverage of patent trolls like Nathan Myhrvold.  (Here’s hoping that his f%$#ing cookbook is followed by people protesting his ass)

With a little bit of luck, we may eventually see the worm turn on all of this, and see the protections on IP seen through the lens of public benefit, and not the interest of the rentiers.

And He Will Name it Gingrich Base

Seriously, promising a permanent moon base in the next 8 years?

Who but Newt could be so full of themselves that they would dare to make it a campaign pitch.

You know, I’m beginning to think that being a science fiction fan might be a disqualifier for holding executive office.

Newt claims influence from Asimov’s Foundation series, while Romney says that his favorite bit of sci-fi is Battlefield Earth.

Well, at least Newt has better taste in literature.


The Republicans have discovered the downside to the Citizens United ruling in the person of one Newton Leroy Gingrich.

It appears that Newt’s bit of scorched earth insanity is almost completely funded by an equally unhinged, and very rich patron, one Sheldon Adelson, who had contributed millions to the “totally not coordinating” Gingrich super-PAC.

It still does not make Citizens United a good ruling. It’s and awful, corrupt, and politically motivated decision by the conservative bloc of the Court, but I am amused by how it’s biting the ‘Phants in their flabby white asses.

It’s Bank Failure Friday!!!! (on Saturday)

Huh, 4 closings this Friday.  After a lull at the beginning of the year, we’ve had a bit of a spike.

Still, it’s better than the past two years.

  1. First Guaranty Bank and Trust Company of Jacksonville, Jacksonville, FL
  2. Tennessee Commerce Bank, Franklin, TN
  3. Patriot Bank Minnesota, Forest Lake, MN
  4. BankEast, Knoxville, TN

Full FDIC list

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

And here is the detail, since it is early in the year:

Someone Flipped on the Scott Walker Prosecutions

It has been announced that former Scott Walker aide Darlene Wink is cooperating with prosecutor:

Two staffers who worked directly for Gov. Scott Walker while he was county executive were charged Thursday with illegally doing extensive political work while being paid by taxpayers to do county jobs.

One of the two, Darlene Wink, cut a deal with prosecutors under which she agreed to provide information in a related investigation about the destruction of digital evidence and to aid in further prosecutions. This is the first indication that the multifaceted John Doe investigation may be pursuing charges of evidence tampering.

Milwaukee County prosecutors also made the surprising disclosure that top Walker aides set up a private Internet network to allow them to communicate with one another by email about campaign as well as county government work without the public or co-workers’ knowledge.

They set up a VPN to break the law? 

This is pretty f%$#ing brazen, and it has the advantage locating all the offending communications in one place, which might, as the article says, provide investigators with a trove of information as they pursue other angles in the case.”

It gets better, because it looks like it wasn’t just politicking on the job, but they are also looking things like bid rigging as well.

Of course, Scotty Walker is saying that it isn’t his fault, “Walker’s campaign said he had a policy against county employees using government resources to do campaign work.”

Dude, your guys set up a private network.  It simply does not get any more official policy than that.

I am smelling burnt bread in Wisconsin, because Scott Walker is toast.

H/t Susie Madrak.