Author: Matthew G. Saroff

Speaking of Saroff’s Rule

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If a financial transaction is complex enough to require that a news organization use a cartoon to explain it, its purpose is to deceive.

Williambanzai7 at zero hedge finds this description of how mortgage securitization works from an auditor by the name of Dan Edstrom.

The gentleman, “Performs securitization audits (Reverse Engineering and Failure Analysis) for a company called DTC-Systems.”

Of course, Saroff’s Rule does not strictly apply here.

This is not the product of a publication that is generating graphics for the edification of the reading public.

This is a visual aid to a Securitization Workshop for Attorneys, and it is what happened to his own mortgage.

This is not some theoretical mortgage that he looked at. This is his mortgage.

It took him a full year to track it all down, and his business is to do mortgage securitizations.

This happens because complexity is the enemy of transparency, and without transparency, the opportunities to profit by cheating and defrauding your counter-parties increases.

George Soros Implies Support for a Primary Challenge

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Or maybe not, since his people are walking it back a little bit:

According to multiple sources with knowledge of his remarks, Soros told those in attendance that he is “used to fighting losing battles but doesn’t like to lose without fighting.”

“We have just lost this election, we need to draw a line,” he said, according to several Democratic sources. “And if this president can’t do what we need, it is time to start looking somewhere else.”

……

While Soros’s comment gave some attendees the impression that he’d cheer a primary challenge to the president, the point, sources say, was different. Rather, it is time to shuffle funds into a progressive infrastructure that will take on the tasks that the president can’t or won’t take on.

“People are determined to help build a progressive infrastructure and make sure it is there not just in the months ahead but one that will last in the long term,” said Anna Burger, the retired treasury secretary of SEIU. “Instead of being pushed over by this election it has empowered people to stand up in a bigger way.”

“There was frustration,” said one Democratic operative who attended the meetings. The main concern was about messaging. I think they are frustrated that the president isn’t being more direct. But I did not get the sense that anyone’s commitment to the progressive movement was wavering… The general consensus is that support has to move beyond being about one person and more about a movement. I don’t know if we’ve moved beyond there.”

So, it could be that Soros is saying that he thinks that liberals should disassociate themselves from the Obama political operation, and go back to funding people 3rd party political operatives, because you can’t trust the Obama team to fight for you, or to fight period. (true)

It’s been well known that the Obama administration, and the associated political operation, has been tremendously hostile to 3rd party political operations, both out of a need to micromanage the message, and because of their ceaseless focus on process at the expense of results.

I think that the message, particularly as put forward by a billionaire, is a shot across Obama’s bow.

I think that there was the intention to tell the Obama White House that if they kept trying to veal pen and defund independent groups, then there is a billionaire out there who is willing to dump a significant chunk of change on making his life difficult in 2012.

For myself, I support a robust primary challenge.

Obama’s weakness, and his eagerness to please the malefactors in this situation (do nothing Republicans, dishonest bankers, etc.) while casting his behavior as liberalism could cripple the party, and the solutions that our country needs, for decades to come, much as Herbert Hoover crippled Republicans and conservatism for a generation.

The difference is that Barack Obama’s PPUT (Post Partisan Unity Schtick) is a refutation of liberalism, while Hoover’s activities were an endorsement of conservatism.

Let There Be No Kings……

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In 1997, I was reading Usenet,* and my wife rushed in, and told me that Diana, Princess of Wales, was in a serious car wreck, and I paraphrased the words of George Washington† to her, noting that the affairs of the British royal family is really not a proper for Americans to exhibit the level of fascination that it does with the subjects of the crown.

Well, I now learn that Prince William and his long time girl friend Kate Middleton will get married, and so I feel compelled to add both of them to my list of They Who Must Not Be Named.

Unlike many of the other denizens of the list, I do so without malice.

I have no knowledge of any specific wrongdoing from either of them, and I wish the happy couple the best.

I just never want to hear about them.

That being said, in homage to our founding fathers, who thumbed their nose at the British crown, I feel an obligation to engage in a snark before consigning them to the list, and the good folks at The Awl found what is likely the best snark on the internet:

In any event, welcome to the best Internet comment ever, from here: “Her parents can’t be overly happy. She has been largely unemployed since she left school and is now marrying someone who has been on welfare most of his life. With the new government’s promise to cut housing benefit and force those who repeatedly turn down work into manual labour I do worry for them.”

Heh.

In any case I have no interests in toothless constitutional monarchs.

*Yes, remember Usenet? It was a wonderful way for people with common interests to get together, but eventually, the trolls, spammers, and the rest of the tragedy of the commons, drove most of the useful dialogue to other technologies.
†Actually, his response to the suggestion that he be king was far more eloquent and evocative:

To Lewis Nicola

George Washington

Newburgh, May 22, 1782

Sir: With a mixture of great surprise and astonishment I have read with attention the Sentiments you have submitted to my perusal. Be assured Sir, no occurrence in the course of the War, has given me more painful sensations than your information of there being such ideas existing in the Army as you have expressed, and I must view with abhorrence, and reprehend with severety. For the present, the communication of them will rest in my own bosom, unless some further agitation of the matter, shall make a disclosure necessary.

I am much at a loss to conceive what part of my conduct could have given encouragement to an address which to me seems big with the greatest mischiefs that can befall my Country. If I am not deceived in the knowledge of myself, you could not have found a person to whom your schemes are more disagreeable; at the same time in justice to my own feelings I must add, that no Man possesses a more sincere wish to see ample justice done to the Army than I do, and as far as my powers and influence, in a constitutional way extend, they shall be employed to the utmost of my abilities to effect it, should there be any occasion. Let me conjure you then, if you have any regard for your Country, concern for yourself or posterity, or respect for me, to banish these thoughts from your Mind, and never communicate, as from yourself, or any one else, a sentiment of the like Nature. With esteem I am.

US Comes Out Against Patenting Genes

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This is a big deal, and a case where a very bad actor forced their hand:

Reversing a longstanding policy, the federal government said on Friday that human and other genes should not be eligible for patents because they are part of nature. The new position could have a huge impact on medicine and on the biotechnology industry.

The new position was declared in a friend-of-the-court brief filed by the Department of Justice late Friday in a case involving two human genes linked to breast and ovarian cancer.

“We acknowledge that this conclusion is contrary to the longstanding practice of the Patent and Trademark Office, as well as the practice of the National Institutes of Health and other government agencies that have in the past sought and obtained patents for isolated genomic DNA,” the brief said.

Basically, a company, Myriad Genetics, got a patent on breast cancer genes, it licenses government funded research which found the BRCA1 and BRCA2 genes, and has used this patent to prevent the development of better and cheaper tests, and their behavior was so egregious that the government felt compelled to act.

It’s still up to the judge, but this is a good first step.

Genes have never been an invention, they have been a discovery, and discoveries are not supposed to be patentable.

Economic Quote of the Year*

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Final thoughts from an economist on Armistice Day:

There are plenty people out there (I’ve just seen a documentary on Channel 4 presented by one) who don’t believe in Keynesian economics, but who think that the Great Depression was ended by the Second World War. In other words, paying men to dig holes and fill them in again is a ridiculous policy, compared to the sensible and effective course of action of paying men to dig holes and die in them.

H/t Mithras.

Obama Can’t Win if He Does Not Fight

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There have been numerous reports that the White House will welsh on its promise to begin its withdrawal from Afghanistan in July 2011, and now it’s pushing back, claiming that it will begin a withdrawal on schedule.

I’m inclined to believe that what the Obama administration means by “withdrawal” from Afghanistan is rather like what it meant by “withdrawal” from Iraq, so-called “non-combat” troops and a sh%$ load of contractors, but still, the push-back from the administration from Pentagon leaks is impressively muscular:

The White House vehemently denies that there is any change in policy. “The president has been crystal clear that we will begin drawing down troops in July of 2011. There is absolutely no change to that policy,” said Tommy Vietor, a White House spokesman.

(emphasis mine)

The spokesman is on the record and named, which, for any administration in this situation, is a strong statement.

That being said, we have a pretty good idea where these anonymous statements are coming from, because General, and Bush butt boy, David Petraeus is threatening Afghan President Hamid Karzai on his statements about withdrawal timing:

In what may be one of the most significant breaches between Afghan President Hamid Karzai and the Obama administration, Gen. David Petraeus personally warned Afghan officials over the weekend the U.S.-Afghan partnership could be “untenable” if Karzai wants U.S. troops out of Afghanistan prematurely.

A senior coalition military official confirmed details of what Petraeus said, but asked not to be identified so he could speak more candidly.

………

After reading the article, Petraeus felt the views expressed by Karzai “makes it untenable for us to have a partnership,” the official told CNN.

I’m not sure who the “senior official” quoted is, but you can be pretty sure it is someone who was authorized by Petraeus to make this statement.

You see, according to the Pentagon, and perhaps other elements of the US state security apparatus, we have to be at war forever.

There is a hell of a lot of insubordination from the military on this matter, and unfortunately, Barack Obama is absolutely the wrong sort of person to tell them to shut up and do their jobs, because it means that they would not like him.

Because Doing the Right Thing is Too Hard

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So, once again, after taking a bit of heat from Republicans, Barack Obama and His Evil Minions™ are looking to cave on a core value.

Only this time, it is not a core value of the Democratic party, but rather a core value which our nation was founded, the idea that the King’s power to simply imprison indefinitely on a whim is an anathema to a civilized society:

Khalid Sheik Mohammed, the self-proclaimed mastermind of the Sept. 11, 2001, attacks, will probably remain in military detention without trial for the foreseeable future, according to Obama administration officials.

The administration has concluded that it cannot put Mohammed on trial in federal court because of the opposition of lawmakers in Congress and in New York. There is also little internal support for resurrecting a military prosecution at Guantanamo Bay, Cuba. The latter option would alienate liberal supporters.

The administration asserts that it can hold Mohammed and other al-Qaeda operatives under the laws of war, a principle that has been upheld by the courts when Guantanamo Bay detainees have challenged their detention.

The White House has made it clear that President Obama will ultimately make the decision, and a federal prosecution of Mohammed and four alleged co-conspirators has not been ruled out, senior officials said. Still, they acknowledge that a trial is unlikely to happen before the next presidential election and, even then, would require a different political environment.

You see, even after they tried a child soldier using laws that were made up after the actions, and using evidence derived from torture, Republicans are still saying bad things about them, so now, they will now just stop trials altogether.

Due process is just too politically inconvenient.

There is a point where moral cowardice crosses a line, and becomes actively evil, and emulating the practices of the worst despots in history out of electoral consideration is way over that line.

Economics Update

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The good news is that foreclosures fell in October, the bad news is that this was just temporary, as the banks paper over their fraudulent, and likely criminal, behavior.

An better indicator of the indicator of the health of the housing market right now is house prices, which fell 5% in the three months ending in October.

Outside of real estate though, the numbers look better, with retail sales rising significantly and credit card card defaults falling, though one month does not a trend make, particularly with sales numbers being driven by volatile auto, food, and fuel sales.

On the other side of the Pacific though, things are looking up as the South Korean central bank boosted its benchmark rate by 25 Basis Points (¼%), implying that they are now more worried about their economy overheating than about a double dip recession.

Your Pentagon in Action

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The US Navy’s newest amphibious warship, the San Antonio Class, has been deemed, “not survivable in combat,” in results from Pentagon testing:

Northrop Grumman Corp.’s $1.68 billion amphibious warship, designed to transport Marines close to shore, wouldn’t be effective in combat and couldn’t operate reliably after being hit by enemy fire, according to the Department of Defense’s top testing official.

……………

The San Antonio-class vessel’s critical systems, such as electrical distribution, ship-wide fiber optics and voice- communications networks, aren’t reliable, according to Michael Gilmore, the Defense Department’s director of operational test and evaluation. The ship’s armaments can’t effectively defend against the most modern anti-ship weapons, Gilmore said.

……………

“Survivability” for the San Antonio means the degree to which the vessel “is able to avoid or withstand” an attack “without sustaining an impairment” of its ability to accomplish a combat mission, he said.

His conclusion that the San Antonio is “not survivable” doesn’t mean, however, that the hull and structure can’t withstand a blow from an anti-ship missile due to inherent weaknesses, Gilmore said. In fact, the Northrop ship’s hull construction is “improved” in comparison with the four classes of ships it will replace, he said.

The inmates (Pentagon) are running the asylum.

Giving Great Hed

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As in headline, not oral sex, is Barry Ritholtz, who, writing for Bloomberg, notes that one should, “Kiss Your Assets Goodbye When Certainty Reigns.”

His basic thesis is that when you have unanimity of opinion, the markets are almost always disastrously wrong:

History teaches that whenever the opposite occurs — when certainty overwhelms uncertainty — the herd tends to be wrong. In rare instances, when there is a near-total lack of uncertainty in the market, the outcome is usually a spectacular disaster.

It’s a good read, and probably a very good investment strategy.

What the Nobel Laureate Says

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No, not Paul Krugman, George Akerlof:

As economists such as William Black and James Galbraith have repeatedly said, we cannot solve the economic crisis unless we throw the criminals who committed fraud in jail.

And Nobel prize winning economist George Akerlof has demonstrated that failure to punish white collar criminals – and instead bailing them out- creates incentives for more economic crimes and further destruction of the economy in the future. See this, this and this.

OK, that’s one Laureate, but here is a second, Joe Stiglitz:

An institutionalized system of skewed incentives allowed Wall Street bankers and other corporate executives to gamble with America’s wealth and then get away largely scot-free after the house of cards came tumbling down, plunging the U.S. into the worst economic crisis in decades and destroying trillions of dollars of wealth worldwide.

That’s the analysis of Joseph Stiglitz, an internationally renowned economist and winner of the 2001 Nobel Prize in economics. ………

Of course, this will not happen unless the politicians are forced to, because in general, the establishment believes that the big Wall Street Banks must be free to rape and pillage innovate, and in the specific case, Obama likes Timothy Geithner, Larry Summers, and Robert Rubin, and any investigation of the fraud would doubtless have at least one, and possibly all three, of them in the dock facing criminal charges.

Adventures in Protest, Episode 420

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In Wellington, New Zealand, a group of pro cannabis protesters pushed a cart of burning weed into a police station:

Police in the New Zealand capital of Wellington were weighing charges Friday against a group of pro-cannabis protesters who invaded the cop-shop with a cart full of burning marijuana, according to a report from the scene.

I wonder who had the fig newton concession at what was described as, “one of the happiest protests the political precinct had seen in some time.”

It’s the Fracking Juxtaposition of a Contrail and Forced Perspective

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Once Again, Jon Stewart Does News Better than the News Networks

You know, the earth is round, and if a jet is passing directly over you as it comes over the horizon, its contrail looks vertical.

Of course, we know what this was. It was a slow speed chase involving a white Ford Bronco.

As Jon Stewart notes, quoting the helicopter pilot who filmed it, this “rocket plume” continued for about 10 f%$#ing minutes, which would put the missile (assuming a 1 G acceleration) would put the missile about 1800 km (100 mi) down range.

<Facepalm>

Yahoo’s Decline

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A Testament to Management Selfishness

I was discussing this graphic on the Stellar Parthenon BBS.

It details the history of Yahoo’s acquisition activity, and it is grim.

Pretty much everything that they ever bought never made money when they bought it, and never made money after they bought it, and they sold it for a loss.

In any case, someone was wondering why companies keep making purchases like this, and I put in my 2¢:

Carly bought Compaq, and then promptly demanded a raise from the board, since HP was now a larger firm.

Buying this sh%$ provides a justification for upper management to demand a raise, and provides a bump in visibility which raises their profile when they apply for the next position, where they demand even more money.

It’s the virtue of selfishness, baby.*

Basically, this is the problem with corporate governance in the United States, there isn’t any.

Basically, we don’t have managers, we have pillagers running companies in the United States, and it is destroying us.

Not only has our politics become klepto-capitalist, but so has our entire culture, even when the government is not involved.

H/t Barry Ritholtz.

*Why yes, this is a reference to the execrable Ayn Rand’s even more execreable book by the same name, why do you ask?

What Took Them So Long?

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Jack Johnson, the outgoing County Executive for Prince George’s County, has been arrested for corruption:

Prince George’s County Executive Jack B. Johnson and his wife were arrested at their home Friday and charged in federal court with trying to hide or destroy the proceeds from a bribe from a local developer, according to court papers and federal law enforcement authorities.

Johnson and his wife, Leslie E. Johnson, were charged with evidence tampering and destruction, alteration and falsification of records. After brief hearings late Friday, U.S. Magistrate Judge William Connolly ordered Jack Johnson to be released and placed under electronic monitoring. The judge released Leslie Johnson on her own recognizance. Both Johnsons were ordered to surrender their passports.

The charges stem from a frantic phone call on Friday in which Leslie Johnson told her husband that “two women were at the door” and ultimately ended when federal agents found $76,000 in Leslie Johnson’s underwear, according to an affidavit in support of the criminal charges.

I think that we are finally seeing the end of the PG County machine.

It began with Donna Edwards’ defeat of Al Wynn for Congress in the 2008 primary, and you can see things piling up in this handy Washington Post timeline.

The FBI has been investigating him for about 4 years, and the fact that he owns about 6 homes, with mortgage payments larger than his salary, might have been an indicator that something odd was going on.

Here’s hoping that maybe some reformers get swept in at the next election.

Wanktastic!

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Yeah, this gives me hairballs too

Everyone’s favorite NFL blowout, Heath Shuler, has decided to challenge Nancy Pelosi as minority leader in the 112th Congress.

This guy’s entire life has been defined by his trying to do things that he was manifestly unfit to do, whether it’s being an NFL Quarterback (top ten first round draft10 busts) a representative of the values of Democratic Party, or of pretty much anything he has done since he has gotten out of college.

Here’s hoping that Nancy Pelosi hangs him by his entrails on the Statue of Freedom on top of the Capitol Dome.*

I’m considering taking up a collection to have Gus Frerotte move to his district and run against him. After all, someone needs to replace this loser, and Frerotte has already proved that he has what it takes to do that.

*In a purely metaphorical, “He needs to be slapped down in a parliamentary kind of way.”†
†The reason that I do not wish him to be threatened with actual physical harm, is that when he is threatened with the possibility of physical harm, he throws a pass to the opposing team, which in this case, is the Republican Party.‡
‡I think. All things considered, I’m not sure which team he is really playing for in Congress.

Catch Phrases I

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Round up the usual suspects

Control fraud occurs when a trusted person in a high responsible position in a company, corporation or state uses their powers to subvert the company and to engage in extensive fraud for personal gain.

Pass the Popcorn

It’s spelled al Qaeda


We don’t care, we don’t have to ……… we’re the phone company.


Richard Whitney (financier) – Wikipedia, the free encyclopedia the corrupt head of the NYSE, who went to jail, and had to find work on a farm when he got out.

The origins of the Evangelical political movement grew from racial bigotry, not abortion.

Dianne Feinstein*
*Full disclosure, my great grandfather, Harry Goldman, and her grandfather, Sam Goldman were brothers, though we have never met, either in person or electronically.

but I’m an engineer, not a doctor, dammit!*

*I LOVE IT when I get to go all Doctor McCoy!!!

 

Once again, I am compelled to make the repeat the wisest thing that I’ve read this century:

But it does inspire in me the desire for a competition; can anyone, particularly the rather more Bush-friendly recent arrivals to the board, give me one single example of something with the following three characteristics:

  1. It is a policy initiative of the current Bush administration
  2. It was significant enough in scale that I’d have heard of it (at a pinch, that I should have heard of it)
  3. It wasn’t in some important way completely f#$@ed up during the execution.

This article is far better than anything I could write, (alternate link) I learned some things:

In 1746, Parliament passed the Marine Insurance Act, requiring anyone seeking to collect on an insurance contract to have an interest in the continued existence of the insured property. Thus was born the insured-interest doctrine. The indemnity doctrine, which precludes a buyer from insuring property for more than it’s worth, soon followed. The point of these rules is to limit insurance contracts to trading existing risks and not to create new risks by giving buyers of insurance incentive to destroy property. The doctrines have been part of insurance law in both England and the United States (which in 1746 were colonies under English common law) ever since.

  

*Full disclosure, I worded at GE Transportation Systems (GETS) their locomotive manufacturing unit from 1994-1996, and for about half of my time there, the chief of the division was Bob Nardelli, who I have never met.


Picture, H/t Pro Bono Statistics


Bummer of a birth mark, InsertNameHere

*The definition of Santorum is, “That frothy mixture of lube and fecal matter that is sometimes the byproduct of anal sex”.

how do do indented multiline footnotes

*how do do indented multiline footnotes
testing
testing testing testing testing testing testing testing tes

how do do indented multiline footnotes


The classic rejoinder is the Yiddish, “Az der bubbe vot gehat baytzim vot zie geven mein zayde.” (If my grandmother had balls she’d be my grandfather.)

Please note: once again, that I do not vet, nor do I endorse any ad that appears on my site, and I reserve the right to mock both the ads that appear on my site, as well as the advertisers.

Also, please note, this should be in no way construed as an inducement or a request for my reader(s) to click on any ad that they would not otherwise be inclined to investigate further. This would be a violation of the terms of service for Google™ Adsense™.

The Swedish concept of Offentlighetsprincipen (openness)

abortion first emerged as a proxy issue about race and segregated private academies

At least, there is symmetry.

Click for full size


blah

Blah, blah, blah!

As Ronald Reagan, Jr. said about Dick Cheney, “I don’t think he’s a mindful human being. That’s probably the nicest way I can put it.”

Russia to export Worlds Most Capable Surface to Air Missile my RCS computations