Author: Matthew G. Saroff

This Looks Bad

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So, the Supreme Court will be looking at overturning the bans on corporate campaign contributions.

The last time this hit, it was 6-3 supporting the bans, but 2 of those 6 votes are now Roberts and Alito, whose jurisprudence is politically motivated hypocrisy rather results oriented, which makes it a 5-4 decision which will overturn the most basic campaign finance regulations.

So much for stare decisis. They explicitly lied to congress during their confirmation hearings, but you won’t be able to get a conviction.

I’m just waiting for the first case where a Chinese owned firm uses funds to aid a political campaign.

And Then My Head Exploded

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So, I’m getting Charlie up for school, and he wants to talk about NASA’s decision make its new Orion crew capsule reusable.

I told him that it really did not make a whole bunch of sense: It’s a minuscule part of the cost of a launch, but if it were not reusable, it would be a very public admission by NASA that the entire shuttle program was a failure, and that they were unwilling to do this as an organization.

He asked why this would be a problem, since everyone else saw that this was a true, so their admission would not materially effect their budget (not an exact quote, but the gist is the same. He turns 10 tomorrow, which means that yes, he is scary smart).

I explained that, like many stupid decisions, this was driven by pride: NASA was unwilling to admit that the Shuttle was a failure because this conflicted with their self image.

They think that they are Captain Kirk.

His reply:

Who is Captain Kirk?

Excuse me, while I scrape bits of my skull off the ceiling.

Just How F%$#ing Stupid Does Hamid Karzai Think We Are?

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So, the vote count in Afghanistan is done, and now Karzai has 54.1% of the vote, he was at about 48% at 70% of the vote, so the “late reporting precincts” had to deliver him something like 68%. (also here)

There are non existent polling places, polling places occupied by his supporters, etc.

Here is the money quote:

One Western official said that had the Afghan Independent Election Commission not decided on Monday to undo a decision it made the day before to enforce stricter safeguards, Mr. Karzai’s vote total would still be under 50 percent, forcing him into a second election against Mr. Abdullah.

The election commission had moved on Sunday to carry out precautions intended to catch a number of voting irregularities. But as it became clear that those safeguards would prevent Mr. Karzai from surpassing the 50 percent threshold, the decision was reversed Monday, and the election commission announced that it had no legal authority to exclude the ballots, the Western official said.

“He was below 50 percent when you exclude the obviously fraudulent votes,” said the official, who spoke anonymously according to diplomatic protocol.

This is actually an opportunity for Obama. Now he can tell the generals that he afraid to offend to get the hell out of Dodge. It’s what Kennedy should have done after Diem’s assassination.

If he does not use this to extricate himself from the “Graveyard of Empires,” he’s going to be Johnson in 1968 without the accomplishments of Johnson in 1963, 1964, 1965, 1966, and 1967, and it won’t be pretty, because whatever Republican gets the nomination, you can be sure that they will not be as intelligent, welcoming, or honorable as Richard M. Nixon….I think that I just hurt something saying that last bit.

On Obama’s School Speech

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I really don’t give a damn what crazy people say, which is what the controversy is all about, though when Newt Gingrich said that, “It’s a good speech,” and that, “I recommend it to everybody if you have any doubts. I would love to have every child in America read it, think about it, and learn that they should stay in school and they should study,” I did look out my window for pigs flying or a rain of frogs.

The contraversy is like dealing with s 3 year old in full tantrum. Put him in a place with no sharp edges, and do something else.

Anything else just encourages more tantrums.

Economics Update

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Retail Employment Courtesy of Calculated Risk
Click for full size pic


Temp hire numbers courtesy Bloomberg
Click for full size pic

So, let’s start with employment today, shall we?

We have Manpower’s latest survey of hiring intentions for US companies, which are best described as “sluggish,” with the seasonally adjusted employment outlook for the US being the weakest since Manpower began its survey, in 1962.

On the other side it appears that retail hiring is showing some signs of picking up, but holiday retail employment was pretty beaten down in 2008 anyway. (See top picture)

Also, it appears that US companies are still cutting temporary employees from their payrolls, (bottom pic) and temps tend to be both the first in the door, and the first out the door.*

On Europe, we are getting conflicting signals, with consumer confidence in the U.K. hitting its highest level since May, 2008, but German industrial output falling in July, production rose 0.8% in June, but fell 0.9% in July, against a consensus estimate of a gain of 1.6%….Ouch.

The intersection of banking and consumers in the US ain’t doing well, with U.S. consumer credit falling at a 10% annual rate, or $21.6 billion, and Standard & Poor’s noting that despite a slight improvement in July, it expects credit card write-offs to continue to increase.

Meanwhile if you follow the stock market, perhaps you should listen to Warren Buffett:

Mr. Buffett declined to predict the short-run course of the stock market. But corporate data from Berkshire shows his company was selling more stocks than it was buying by the end of the second quarter, according to Bloomberg News. Its spending on stocks fell to the lowest level in more than five years, although the company is still deftly picking up shares in some companies and buying corporate and government debt.

(emphasis mine)

So he is moving out of stock, and getting completely out of Moody’s. (more on that in another post.)

Meanwhile, we have some gold bug news, with gold topping $1000.00/oz (troy).

In related news, the value of the dollar and gold tend to be inversely related, the dollar fell to its lowest level vs. the Euro this year, $1.4491:€1.0000.

We also saw this pushing up the price of oil today, up 4.5% to $71.10/bbl.

*Something I am all too familiar with, having done contract technical work for the past 17 years.

I May Have Been an Optimist on eBay

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4 Months ago, I posted a rather waggishly titled, “Ebay Discovered to Have Socially Redeeming Value,” citing an investigation in Archeology magazine that suggested that the explosion in counterfeits was actually driving real (stolen) antiquities from the market, because manufacturing frauds was more profitable.

Well, a collector of such objects, and a frequent purchaser on eBay, one Bill Stelzer, disputes this in the letters section (scroll down to Cheaper by the Millions).

He says that eBay aggressively monitors and vets such sales, and as a result, there is very little, if any fraud in this area.

Personally, I have no clue as to where the truth is, but when someone says that, “The eBay sites that auction antiquities are among the most vetted sites on the Internet,” my bullsh%$ meter spikes to 11.

I have had good luck on eBay, but what I tend to purchase are things like toner cartridges from stores with addresses and phone numbers, and I verify both before purchases.

The output of pot hunters being “vetted” sounds a bit strange, but I am speaking from a position of profound ignorance here, so YMMV.

Economics Update (Yesterdays)

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Not much going on, it was labor day, so most of the markets and regulatory announcements didn’t happen.

That being said, it looks like we may have a couple new candidates for bank failure Fridays, with the Federal Reserve imposing restrictions on two correspondent banks, Nebraska Bankers’ Bank of Lincoln, NE, and Midwest Independent Bank of Jefferson City, MO.

Correspondent banks are “banks for banks”, they provide clearing services, participate in large loans, etc. Silverton Bank was a correspondent bank.

We are also seeing more clouds on the horizon with insurance, with the cost of reinsurance increasing.

Reinsurance is basically insurance of the insurance companies, they sell risk to each other in order to spread the risk, and revenues, around.

As an aside, while I have been ranting about how the next crash is CRE, it might be insurance.

We are seeing more optimism among manufacturers, with the Price Waterhouse Coopers survey showing a 27% improvement, which may mean that people are going to start restocking inventories.

In energy, oil was basically flat at $68.05/bbl, while in currency, the Yen rose against both the Euro and the dollar.

Remember When I Said that George W. Bush Was Forming a Think Tank?

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Well, it gets better, because the person that he has charged with running this august institution is one James K. Glassman, a fact that I did not pay much attention to when I made the initial snark.

Clayton Littlejohn, Wonkette, and Matthew Yglesias caught the obvious irony: Mr. Glassman is the author of Dow 36,000, in which he and Kevin A. Hassett wrote in 1999, which predicted that the index would top thirty-six thousand in the next few years.

The Dow Jones Industrial Average closed today, about a decade later, at 9,441.27.

Mr. Glassman appears uniquely qualified to represent the ideas of George W. Bush.

Original post here.

Why Mortgage Workouts are Failing

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Martin Andelman, the founder of the Mortgage Lender Implode-O-Meter, has a pretty good explanation as to what is going on.

Basically, it comes down to the games that bankers play.

With the Federal Accounting Standards Board (FASB) backing down on reality based accounting of banks (here for background), it means that banks are continuing to account for these mortgages at full face value, but would have to write down these assets if they renegotiated the loan:

Why would a bank chose to foreclose and evict when there’s already someone living in the house who would love to buy it. By modifying the loan, the bank won’t have to pay all the associated costs of foreclosure, and then put the property on the market where it might not sell for some time. Selling an REO? Lucky to get 50% in some areas. Why not just write down the loan for the homeowner and save all the trouble? Again, it makes no sense.

Until I went back and thought about the partial suspension of the accounting regulations imposed under FAS 157 & 159, which applies only to banks and only as of last April or May, I believe. That’s when I started feeling queasy.

Under the partial suspension of the FSAB accounting rules, the banks don’t have to write down Level 3 [an asset without a regular market] assets to market value, if they state that the bank has no plans to sell the assets for an extended period. In other words, if the bank says that it’s not going to sell a given house anytime soon, they can keep it on its books at its full fictional value.

If they renegotiate loans, they rapidly become officially insolvent.

Of course, this means that by the standards of the reality based community, they are already insolvent.

As much as it pains me, I think that Andelman is wrong on blaming Timothy “Eddie Haskell” Geithner on this. The FASB set up these rules independently of Treasury, and under pressure from Congress, not from the T-men.

This Ain’t Good

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Lung damage appears to be far more common in H1N1 cases than it is in normal influenza, which is troubling, because the Spanish Influenza epidemic was characterized by fatal rapid onset pneumonia:

Study of about 70 fatal H1N1 cases so far also reveals there may be more incidences of co-infections with bacteria than was earlier thought, Dr. Sherif Zaki told The Canadian Press in an interview.

The damage to lung tissue is consistent with that inflicted by ARDS or acute respiratory distress symptom, Zaki says, referring to an often-fatal, difficult-to-treat syndrome that can have a number of causes. The U.S. National Heart, Lung and Blood Institute estimates about 30 per cent of people who develop ARDS die.

“In terms of the disease, yes, it (H1N1) is remarkably different than seasonal flu,” Zaki says. “The pathology looks very similar to H5(N1).”

This winter will not be pretty.

Not Enough Bullets

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Just when you thought that the parasites on Wall Street could not come up with a more repulsive way for them to generate commissions, they have created securitization of dead peasant insurance:

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds……

……

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them……..

Paul Volker was once quoted as saying something like the only financial innovation that has benefited society in the past few decades was the ATM machine.

He’s right.

Financial “innovations” should be treated like the FDA treats (or used to treat, before they started taking pharma money for their tests) drugs. It does not hit the market until proven safe and effective.

Glen Beck Wins Because Barack Obama Has No Balls

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Van Jones, formerly Obama’s “Special Adviser on Green Jobs, was fired resigned, because he founded a group, Color of Change, that has succeeded in getting a significant portion of Glen Beck’s sponsors to pull their ads, and because there is a Youtube of him calling Republicans “assholes”.

Mr. Jones is no longer a member of CoC, but Beck wanted his scalp, and he got it, because Barack Obama has no balls.

LBJ would have had J. Edgar Hoover strip search Beck’s sorry ass.

What’s worst is that this will only encourage the next faux right wing sh$# storm.

People Who Should Not Be Reporters

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Monica Hesse of the Washington Post, who went whining to their ombudsman.

You see, she wrote a puff piece about homophobic bigot Brian Brown, a major lobbyist against gay civil rights, and “The day before returning [from her vacation], she logged on to check e-mails — and wept.“

She wrote a puff piece, in the best tradition of Post writers being played by right wing blow-hards, and she crossed a line, and real people, as opposed to the right wing rent-a-crowd, took offense.

She was assigned the piece, and wrote it in order to ensure that she would not get irate email, and was crushed when she got irate email.

Notwithstanding her professed bisexuality, at least as related to the ombudsman, her problem is not her position on gay marriage, nor is it that she wrote a puff piece.

Her problem is that she clearly wrote this article to avoid confrontation, and when she got confrontation anyway, “she wept.”

She is in the wrong line of work. A journalist has to believe that irate letters are a mark of honor.

H/t Atrios.

Obama’s Liberal Veal Pen

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I think that Jane Hamsher puts her finger on what’s wrong with Barack Obama, most notably through the person of Rahm Emanuel, is doing to liberals, when she describes many liberal institutions that have been captured by the Obama presidency as being in a “veal pen”.

Much like industrial veal, we are being kept in a crate and, “in darkness except to be fed two to three times a day for 20 minutes,” so that the muscles atrophy, in order that our meat is tender.

Go read it.