Author: Matthew G. Saroff

Spain weighs Bankia debt issue – FT.com

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Spain has nationalized the failing bank Bankia and it proposed recapitalizing it with Spanish government debt:

Spain is considering directly injecting its own government debt into BFA-Bankia to help fund the stricken lender’s €19bn nationalisation, in an attempt to sidestep borrowing money directly from the bond markets.

The plan, viewed as highly unorthodox by analysts, involves Madrid issuing Spanish government guaranteed debt to Bankia in return for equity, with the bank then able to deposit the bonds with European Central Bank as collateral for cash.

On Friday Bankia, Spain’s third-biggest lender by assets, announced that the state would invest €19bn in what will be the country’s largest ever bailout, with the government expected to control about 90 per cent of its shares.

This would have the effect of the ECB purchasing Spanish debt, which the ECB (the German Bundesbank) is opposed to.

It would be a win win for everyone, but since there is no pain for the ordinary Spaniard involved, the European Central Bank has rejected the deal:

A Spanish plan to recapitalise Bankia, the troubled lender, by indirectly tapping the European Central Bank for cash, was bluntly rejected as unacceptable by the ECB, European officials said.

News of the rejection came as Spain faces elevated borrowing costs in the bond markets, tries to persuade investors it can contain problems in a banking sector weighed down by €180bn of bad property loans and, on Tuesday, saw its central bank governor stand down early.

Madrid had floated the unorthodox idea over the weekend of recapitalising Bankia by injecting €19bn of sovereign bonds into its parent company, which could then be swapped for cash at the ECB’s three-month refinancing window, avoiding the need to raise the money on bond markets.

The ECB told Madrid that a proper capital injection was needed for Bankia and its plans were in danger of breaching an EU ban on “monetary financing,” or central bank funding of governments, according to two European officials.

At this point, the best action for the Spanish government is to allow the bank to default on its bonds (not its deposits), where I am certain that German bank exposure is high.

The Spanish should not make the same mistake as the Irish.  Do not make the bondholders whole.

If you do, you are simply taxing your citizens to fund foreign investors bets.

There is no obligation, either legally or morally, to do so.

H/t Eschaton

Nope, No Racism Here

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Justin Combs excelled at football, and got a 3.75 GPA, and so he got a $54K mertit and athletic scholarship to UCLA.

It appears that the good folks at CNN find this controversial, because it was Shawn “P-Diddy” Combs kid, (no direct link, they don’t deserve it) and they want him to give the money back.

There are plenty of kids who get scholarships whose parents are filthy rich, but they aren’t black, in a profession which is stereotypically black (rap), so there is no question if they should return their scholarships.

I believe that a two word phrase was in the head of whoever whoever mad this post (no name listed) on CNN.

The first word was probably “uppity”, and the second word probably began with the 14th letter in the English alphabet.

H/t Atrios.

Dieing Well

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Music impresario Kathi Goldmark:

Kathi Kamen Goldmark, a beloved San Francisco literary impresario and country-rock singer, died May 24 after a long battle with breast cancer. She was 63.

Ms. Goldmark died at UCSF Medical Center surrounded by family and friends, including authors Amy Tan, Dave Barry and Maya Angelou. In her last hours, musician Roger McGuinn of the Byrds sang an Irish hymn to her over the phone, and Judy Collins called to sing “Amazing Grace.” As the end drew near, Ms. Goldmark mouthed something toward those around her. It was “Rosebud,” the famous last line from “Citizen Kane.” And she smiled as she whispered it.

“She had a sense of humor right until the end,” said Barry, the humorist. “There has never been a funnier lady.”

I hope I do half as well when my time comes.

Read the rest.

I wish that I had known of her before reading her obituary.

You Have It Backwards

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Howie Klein wonders, “Do ALL The Members Of The House Financial Services Committee Take Bribes From The Banksters?“

He has it backwards. The HFCS is a bloated and overstaffed committee, with two or three times the members that it actually needs, and it does this, because it’s known as a “money” committee.

Basically, people are put on it so that they can fund raise from the banksters.

It’s less of a bribe than it is a shakedown.

The purpose of the committee at its current size is to facilitate taking legalized bribes from the financial services industry.

Why Democrats Lose Elections

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Because our so-called leaders are cowardly incompetents:

The chairwoman of the Democratic National Committee said Friday that if Milwaukee Mayor Tom Barrett (D) doesn’t prevail over Gov. Scott Walker (R) in next month’s Wisconsin recall election, there won’t be any ramifications for Democrats nationally.

“I think, honestly, there aren’t going to be any repercussions,” Rep. Debbie Wasserman Schultz (D-Fla.) said in a broad-ranging interview on C-SPAN’s “Newsmakers.”

“It’s an election that’s based in Wisconsin. It’s an election that I think is important nationally because Scott Walker is an example of how extreme the tea party has been when it comes to the policies that they have pushed the Republicans to adopt,” Wasserman Schultz said. “But I think it’ll be, at the end of the day, a Wisconsin-based election, and like I said, across the rest of the country and including in Wisconsin, President Obama is ahead.”

Timidity to the point of paralysis.

You have a major election, near on a make or break issue, for organized labor, and the DNC is afraid to expend any resources, because it’s not a slam dunk.

It is no wonder that George “If you not want to use the army, I would like to borrow it for a time” McClellan was a Democratic presidential nominee.

Yes, the folks that they are disappointing won’t vote for Mitt, but I think that they won’t canvass or stuff envelopes for you either.

Pass the Popcorn…

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Pass the Popcorn

It looks like former TARP Inspector General Neil Barofsky is writing a tell-all memoir about his experiences with the Bush and Obama administration:

From December 2008 until March 2011, Barofsky was the Special Inspector General charged with oversight of TARP, working to ensure against fraud and abuse in the spending of the $700 billion allocated for the bailouts. From the start he was in constant conflict with the officials at the Treasury Department in charge of the bailouts who were in thrall to the interests of the big banks and steadfastly failed to hold them accountable, even as they disregarded major job losses caused by the auto bailouts and failed to help struggling homeowners. Barofsky recounts how his reports of a wave of criminal mortgage fraud and other abuses being perpetrated against homeowners in connection with programs that the Treasury itself set up were ignored time and again.

Barofsky offers detailed accounts of the behind-the-scenes conflicts and his struggles with Treasury Secretary Timothy Geithner, the Bush appointed “TARP Czar” Neel Kashkari and his successor, the Obama appointed Herb Allison, and others. His revelations show in stark detail just how captured by Wall Street our political system is; why the banks have not been held accountable; and how the failure to enact effective regulation has put the country in danger of an even bigger crisis in the future.

I can’t imagine that either Obama or Geithner are happy about this.

DINOs, F%$# ‘Em

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Gee, a bunch of the Democrats In Name Only are objecting to the Obama campaign’s ads criticizing Romney’s tenure as head of Bain Capital.

You know, if you took their dicks out of your mouth, and realized that campaign donations from rich looters are not the be all and end all, you would realize that this is a political winner:

Some influential Democrats on and off Capitol Hill are refusing to give President Obama political cover for his attacks on Mitt Romney’s record at Bain Capital.

Despite pushback from more than a half-dozen Democrats, the Obama campaign on Tuesday defended how it has scrutinized Romney’s business background.

The business model of private equity firms is to make money by either flipping, or leveraging firms, to extract value.

They are the financial equivalent of automotive chop shops.

Google Did Not Infringe Java Patents

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The jury has ruled that Oracle’s patents were not infringed by Android:

Google on Wednesday was cleared of charges that it had infringed Oracle’s Java patents, ending the second major phase of the trial.

“Today’s jury verdict that Android does not infringe Oracle’s patents was a victory not just for Google but the entire Android ecosystem,” a Google spokesperson said in an emailed statement.

Oracle, however, did not concede defeat. “Oracle presented overwhelming evidence at trial that Google knew it would fragment and damage Java,” an Oracle spokesperson said via email. “We plan to continue to defend and uphold Java’s core write once run anywhere principle and ensure it is protected for the nine million Java developers and the community that depend on Java compatibility.”

Oracle filed its lawsuit against Google last August and the trial began in mid-April. Oracle initially talked about $6 billion in damages. At the moment, it appears Oracle is unlikely to win enough to cover its legal costs.

All that’s left is the whether or not Java’s API, basically the standards for interoperability, are copyrightable.

The jury didn’t rule on this, they could not come to a conclusion on fair use, and they were instructed by the judge to assume that the API is copyrightable. The judge will decide these matters of law, the jury was to rule on matters of fact.)

It appears from the Slashdot discussions that the judge actually made an effort to understand the technical issues, so his ruling should be interesting.

Leadership Matters

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Here’s a shocker. Now that Barack Obama has endorsed same-sex marriage, the polls are moving abruptly in that direction:

Public opinion continues to shift in favor of same-sex marriage, according to a new Washington Post-ABC News poll, which also finds initial signs that President Obama’s support for the idea may have changed a few minds.

Overall, 53 percent of Americans say gay marriage should be legal, hitting a high mark in support while showing a dramatic turnaround from just six years ago, when just 36 percent thought it should be legal. Thirty-nine percent, a new low, say gay marriage should be illegal.

The poll also finds that 59 percent of African Americans say they support same-sex marriage, up from an average of 41 percent in polls leading up to Obama’s announcement of his new position on the matter. Though statistically significant, it is a tentative result because of the relatively small sample of black voters in the poll.

Leadership generates its own support for policy.

Hopefully, this lesson will stick, but I doubt it.

Your Moment of Schadenfreude

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The Heartland Institute, the phony “think tank” bought and paid for by the fossil fuel industry, is imploding as a result of revelations proving this:

The first Heartland Institute conference on climate change in 2008 had all the trappings of a major scientific conclave – minus large numbers of real scientists. Hundreds of climate change contrarians, with a few academics among them, descended into the banquet rooms of a lavish Times Square hotel for what was purported to be a reasoned debate about climate change.

But as the latest Heartland climate conference opens in a Chicago hotel on Monday, the thinktank’s claims to reasoned debate lie in shreds and its financial future remains uncertain.

Heartland’s claims to “stay above the fray” of the climate wars was exploded by a billboard campaign earlier this month comparing climate change believers to the Unabomer Ted Kaczynski, and a document sting last February that revealed a plan to spread doubt among kindergarteners on the existence of climate change.

Along with the damage to its reputation, Heartland’s financial future is also threatened by an exodus of corporate donors as well as key members of staff.

In a fiery blogpost on the Heartland website, the organisation’s president Joseph Bast admitted Heartland’s defectors were “abandoning us in this moment of need”.

They flipped out, and this was inevitable once they were outed as bought and paid for:

The pressure point occurred last February when the scientist on the conference mugs, Peter Gleick, used deception to obtain confidential documents from Heartland, including a donors list and plans to indoctrinate school children against belief in climate change.

Once the Charade was outed, they had no choice but to go full wingnut.