Author: Matthew G. Saroff

I Agree, the Major Political Reporters Covering the Primaries are Useless

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Would that this would happen.

Some reporters should drop out of the campaign

By Martin Schram –
Published 12:00 am PST Sunday, January 13, 2008

The verdicts of Iowa and New Hampshire prompted a handful of the 2008 political players to depart from the presidential campaign trail.

But far too many remain for our own good.

Along with the handful of presidential candidates who dropped out so far, voters might be better served if a hundred or so of my political-reporter and pundit colleagues dropped out as well – and were replaced by journalists whose beats are about national security, economics, environment and health care.

For our coverage has not been serving the public interest by providing the sort of information voters really need to know – especially in the last weeks when many voters make their decisions.

I would add something more significant. That among top tier political reporters, not only is there a lack of understanding about the political issues of the day, there is actually an active disdain for knowing these issues.

It’s all about the game, not what it means to win or lose.

The coverage is cynical and juvenile.

Blair Unfit to Hold EU Position

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Honestly, I would not trust him as my pastry chef, but the statements by former French president Valéry Giscard d’Estaing and the former prime minister Edouard Balladur thatTony Blair is unfit to be the next EU president is rather refreshing.

One of their arguments is technical, they feel that the First EU president (the treaty is going the rounds) should go to a country that is a part of the Euro zone, but the other is that, “Both men [d’Estang and Balladur] say Europe’s first president must come from a country which is fully committed to all EU policies, including the euro. Mr Balladur – breaking publicly with President Sarkozy – also says Mr Blair is too close to the United States to be chosen as a “fitting spokesman for Europe”. Their views are echoed, off the record, by senior officials in Belgium and Italy.”

In other words, for this high profile, if largely ceremonial position, he’s simply Bush’s Poodle, and nothing can fix that.

Sympathy for The Devil Willard “Mitt” Romney

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Let’s be clear. This was not tough questioning. It was heckling.

Of course, wankers like Ana Marie Cox approve of this behavior and see it as laudable.

Mitt Romney has volunteers who are lobbiests, but they are not paid staff, like a number of other candidates, including McCain.

In fact, McCain got stenography when he said that tathat tax cuts always raise revenues (not true since Kennedy lowered the max marginal rate from over 90% to 70%), but The New Republic, that bastion of fabulists from Glass to Shalit to Siegel, has to call out the New York Times on its stenography.

It will be very interesting to see what will happen if Hillary and Mitt win, how on earth will the kule kidz make up their minds when they hate both candidates?

Maybe they’ll all become cheerleaders for Mr. Bloomberg.

Nevada Caucus News

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Romney was won on the Republican side, getting an absolute majority of the Republican votes. It looks like Ron Paul may get second, though it’s close.

On the Democratic side Clinton has beaten Obama:

  • Hillary 50%
  • Obama 45%
  • Edwards 4%

(numbers reflect delegates to state convention, not total votes)
It’s pretty much, “put a fork in Edwards, he’s done”, which if you look at the polls, benefits Clinton (Edwards voters, as strange as it sounds go to Hillary with him out of the race).

A Question on Blog Layout

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Here’s a question: I make about 10-15 posts a day, how far back should I go on the front page of the blog?

Right now, I’m at 4 days, or about 60 posts.

I could set it at a number of posts, or a number of days, but at what point does it get unwieldy for you guys.

Please, when giving your comments, give your bandwidth at least. (Browser, OS, and Machine speed, memory, etc, would be useful too)

I’m off till Saturday evening, consider this an open thread.

Don’t think about the white bear.

Keith Olbermann is a Mensch

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Last night Olbermann brought on Lawrence O’Donnell to discuss issues with regard to Nevada, and the Obama’s whole “I loveReagan” crap.

What he was unaware of was the fact that Lawrence O’Donnell wrote a truly stupid article on HuffPo a few days earlier titled “John Edwards is a Loser.

His thesis was that John Edwards should get out of the race, because he was in Obama’s way, and because Obama was black, it was borderline racist for him to run against him and strengthen Hillary.

The article was stupid for the following reasons:

Well, a number of folks (not me) took the time to drop a line (hopefully a polite one) on Olbermann, and he responded on Daily Kos about 18 hours later.

He did the unthinkable, he apologized, and he says that he will be addressing it tonight.

Lawrence O’Donnell Hotlist
by Keith Olbermann [Subscribe]
Fri Jan 18, 2008 at 02:00:01 PM EST

Forgive the fairly minor focus here but I spot at least three diaries on his appearance on Countdown last night to discuss Obama, Reagan, and Edwards.

Those of you complaining about it are right.

His HuffPo piece was news to me.

Shouldn’t have been, obviously, but it was.

I don’t read every blog, nor everything written by my guests. I often don’t know until an hour beforehand who will be a guest on a given show (if it matters to you, these scheduling nightmares tend to come in waves for some reason, and last night was a Nor’easter). Also, to announce, on-air, each guest’s preferences, prejudices, shillings and shiv jobs, would reduce the rest of the show to “Good Evening. Call Me Ishmael. My Boat Sank. The End. Good Night.” And Lawrence O’Donnell’s insight is almost always perceptive, relevant, and enlightened.

But even with these caveats, the point about this appearance, especially in the wake of such a freshly-written piece, is well-taken and I’m very sorry.

It will be addressed tonight on the show.

Thanks.

Economics Update

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We’ve just had £2 billion ($4 b) fund in the UK suspend trading because of a panic, but “Aegon UK added that it believes the “underlying fundamentals of the asset class remain healthy”.

Nope, there is an increasing understanding that the last one leaving the room won’t only be without clothes, but that the price of exit will involve selling an organ.

Standard and Poors is now assessing the risk of bond insurer giants MBIA and Ambac in excess of 70% over the next 5 years. If they unwind, a lot more unwinds too.

Sprint is laying off 4000, and closing 125 stores.

Bond insurer ACA is asking for more time to unwind its contracts, basically because it’s out of case. If they go under, “Banks and brokers could suffer billions of dollars of losses from credit protection they bought from ACA.”

Volcker Blames Alan “Bubbles” Greenspan Fed for Bubble

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This is a big surprise. One of Greenspan’s first acts when he joined the fed was to vote against Volker and to relax, eventually to the point of near meaninglessness, the Glass-Steagall to the point of near meaninglessness.

Now he is saying that the Fed (by which he means Alan “bubbles” Greenspan) is responsible for the bubbles.

Former Federal Reserve Chairman Paul Volcker thinks the U.S. central bank is to blame for allowing bubbles to inflate asset markets, and says that current Fed chief Ben Bernanke is in a tough spot.

“I think Bernanke is in a very difficult situation,” Volcker told the New York Times Magazine for a story it will run on Sunday. The Times made the text available to the media in advance of publication.

“Too many bubbles have been going on for too long … The Fed is not really in control of the situation,” the Times quoted Volcker as saying, in clear criticism of both Bernanke and his predecessor Alan Greenspan.

No, it really means just bubbles.

Alan Greenspan never found an MBA written scam that he would not allow, or a bad stupid investment that he would not bail out.

Director’s Guild Has Contract

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The theory has been that the DGA contract would form the basis of pattern bargaining (uniform terms across the industry), bringing an end to the writers guild strike.

However, the DGA is also known as being a soft touch, and the contract has not be approved by the members, many of whom are also in the WGA, and so the quality of the contract and its meaning to the writers is unclear.

More pros and cons at the Group News Blog.

Well, This Will Play Great in Vegas

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Hmmm, it looks like the Clinton campaign is hitting Obama on his anti-gambling stance in Nevada.

Barack Obama has warned about the dangers of gambling — that it carries a “moral and social cost” that could “devastate” poor communities. As a state senator in Illinois, he at times opposed plans to expand gambling, worrying that it could be especially harmful to low-income people.

sanctimony, and anti-gambling self-righteousness won’t go over well in Nevada.

That being said, the fact that it’s taken Clinton’s campaign so long to find this indicates that just perhaps, she is surrounded by a bunch of drooling idiots as political advisers *cough* Mark Penn *cough*

Obama, an avid poker player, developed a reputation in Illinois as a critic of gambling. He voted against a 1999 measure to extend riverboat gambling to include boats stationed at dockside.

But Obama was not dogmatic. In submitting campaign questionnaires in 1998 and 2002 for the anti-gambling group Illinois Churches in Action, he left himself room to back the industry, answering “undecided” on whether he favored adding riverboat and land-based casinos. On a 2002 questionnaire bearing his signature, the words “not sure” were penciled in as answers to questions about several forms of expansion, such as moving casinos from rivers to land and raising the gambling age to 21.

Asked about Obama’s stance on gambling, his presidential campaign sent a list of quotations from the candidate in which he distinguished between Illinois and Nevada when talking about the industry.

In the comments cited by the campaign, Obama cast the industry’s effect on Nevada in a positive light. For example, he told the Associated Press last month that gambling could be a “successful economic model” as long as it was “properly regulated.”

Sanctimony, and hypocrisy.

Sorry, when someone serves up a softball like this, you need to hit it out of the park.

To Err Is Human, but It Requires an MBA To Create Total Clusterfu$% . . .

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I probably should include this in my standard economics update, but Barry Ritholtz’s line (my title) is too good not to give top billing.

He is talking about something called “Counter-Party Risk“, which is the risk that an issuer might default on a payment or go into liquidation. Also known as counter party risk.

Basically, he is continuing his ongoing riff on what will happen if monoline insurers go belly up, as increasingly seems likely.

He expects there to be a lot more “down” there, as do I. There is a lot of leverage, out there. For an MBA, it’s called leverage, for the rest of us, it’s called “being in debt up to our eyeballs”.

In describing the monoliners, MR. Ritholtz is right:

That situation was obviously intolerable. So they brought in the financial engineers. Hey, we should be issuing insurance on Credit Default Swaps (CDS) — the premiums are much much bigger than boring old munis!

Any time you hear words to that effect, you know you are dealing with an idiot of the highest magnitude. Those are the equivalent to “Give me a match, I want to see if there is any gas in the tank.”

The monolines are not in trouble because Municipalities are defaulting on bond payments. (That’s waaaay in the future). The problem is they wrote insurance — taking in that fat premiums — without properly understanding the risk.

….

I’ve said it before, and I’ll repeat it again: To err is human, but it requires an MBA to create total clusterfu#@ . . .

My analogy, that like those people on American Idol whose friends have told them that they can sing. Is nowhere near as clear or as lyrical.

Are Brokers and Financial Professionals Like American Idol Contestants?

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Michael Lewis asks, “What’s odd about the subprime crash is Goldman Sachs Group Inc. A single firm took a position contrary to the rest of Wall Street. Giant Wall Street firms are designed for many things, but not, typically, to express highly idiosyncratic views in the market.”

Basically, what happened was that in 2006, some smart guys at Goldman, as they did at other places, went to senior management, and said that they thought that the Subprime market was soft, and that they should short it.

This probably a bit of advice that any number of brokerages got over that time, but how they handled it was different.

As opposed to reviewing the data, coming to a decision, and issuing guidance to the subprime traders based on that decision, Goldman Sachs has some different management structures. They

The only difference between Goldman and everyone else was that Goldman had, in effect, an entirely separate enterprise, sitting on top of the firm, with the power to reverse the judgment of its own supposed experts in various markets. They were able to do this, apparently, without ever saying a word about it to their own traders. Instead of telling the fools trading subprime mortgages that they are wrong, and that they should unwind their positions, they simply offset their trades.”

Rolling Heads

All across Wall Street risk managers are being fired, reassigned or hovering under a cloud of contempt and suspicion. Heads must roll, and after the CEO, these guys are the most plausible to guillotine.

But at the same time it’s pretty clear that a lot of these so-called risk managers never really had the power to manage risk. They had to consider the feelings, for example, of the guys who ran subprime mortgages. Morgan Stanley conceded as much when it said recently it was considering changing things around so that the risk manager reported to the CFO, rather than the heads of individual businesses.

But at Goldman there were two intelligences at work: one, the ordinary Wall Street intelligence, which was allowed to get itself in trouble, just as at every other Wall Street firm; the other, more like an extremely smart hedge fund that made its living off the idiocy of big Wall Street firms, including its own people.

(emphasis mine)
There is a frightening corollary to this, that the experts operating in high finance are less like dispassionate experts than they are like those people on American Idol whose friends have told them that they can sing.

Accusations of Inappropriate Pressure by WaMu on Appraisers

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I am so not shocked that Jeniffer Wertz is claiming that claiming she was blacklisted last year for providing a housing market forecast that was too gloomy.

In the lawsuit, which was filed a week ago, Wertz says she completed appraisals on two houses in May and then quickly got a call from a WaMu sales manager demanding she change her outlook to “stable” so a loan could be approved.

The WaMu sales manager also demanded Wertz change her appraisal process to produce higher prices for the properties she was evaluating, according to Wertz’s lawyer Stephen Danz. The higher an appraisal comes out, the more likely it is a home loan will get approved.

When Wertz refused to comply, she claims the sales manager threatened to block her from doing future appraisal work for the bank. A month later, Wertz’s suit says, a third-party appraisal request assigner told her WaMu would no longer accept her work.

I have no doubt that this is true, and that this was endemic in the lending industry among most, if not all of the major players.

Andrew Cuomo is alleging that WaMu’s pressure on “title company First American and its appraisal unit, eAppraiseIT” is why they were basically falsifying appriasals, and The Securities and Exchange Commission and the Office of Thrift Supervision has opened an investigation.

I think that it will be more difficult to find a major lender who did not do this than to find one who did.