Author: Matthew G. Saroff

Geithner Underwater, Will Rent Out New York Home

No Comments

Timothy Geithner bought his home in Westchester County, New York for $1.650 million 5 years ago, and now cannot sell it for $1.575, so he is looking for a renter, at about $7,500 a month, which figures out to be about 80% of his mortgage and taxes.

Of course, I could be wrong, and it could be that Mr. Geithner is figuring on leaving Washington, DC sooner rather than later, and does not want to sell the house under those circumstances.

Certainly, if I were in his shoes, I might be concerned that my DC sojourn would be peripatetic.

The Worst Person in Brooklyn

No Comments

Brooklyn Bishop Nicholas DiMarzio, who has threatened to close churches in the districts of state legislature if they vote to extend the statute of limitations on child sexual abuse:

Brooklyn Bishop Nicholas DiMarzio threatened state lawmakers by vowing to close churches in their districts — and blame them for the closures — if they dared support a bill making it easier for people who were sexually assaulted as kids to sue, legislators told The Post.

I guess it’s because that, you know, it might be expensive for the church.

Here’s an idea, how about Not Letting Your Priests Rape Children!

That would save even more money.

One note is that it appears that the good Bishop’s attempts at blackmail backfired, and a number of legislators are seriously looking at supporting the bill now.

Minnesota Gov Pawelenty Not to Run for 3rd Term

No Comments

What’s going on here is that this will be a bad cycle for incumbent governors, with tough budget choices to make, and so he gives that a miss by doing this, and can focus on a run for President.

Additionally, it minimizes the political damage of his refusal to certify Al Franken’s election as Senator, which he will do in order to shore up his support with the base.

He has made a statement, but note the weasel here, “If the court directs me to sign that certificate, I will.”

The translation here is that if the court does not explicitly order him, he won’t sign until Coleman goes all the way up the chain to the Supreme Court, but if it does, he has no choice.

Banks Oppose Market Transparency

No Comments

There are proposals out there to require that derivatives be traded in open regulated markets, and banks are cranking up the lobbying machine to kill this. (Also here and here)

The reason is that it will cost them a lot of money:

Potentially billions of dollars in revenue is at stake. An effort earlier this decade to improve transparency in the corporate-bond market ended up cutting bank fees by more than $1 billion in a year, according to some studies.

For CDS and other complex financial instruments, I would put the low end of savings at tens of billions of dollars a year.

How does transparency save costs for the buyers and sellers, and cost the banks money?

Well, if you have an asset nominally worth $100, a bank would list it for sale for their customer at, say $99, and list the price to buyers at $101, which means that the bank collect $2 on each transaction.

In an public market, where these spreads would be known, buyers and sellers pursue the lowest spread, so it would be closer to $99.90 and $100.10 respectively, and that’s money out of their pockets that could be spent on whores and cocaine.

Needless to say, the banks don’t want this, so they are rolling out all sorts of voluntary measures to increase transparency, which would be observed only in the breach once the moves to regulate fade into memory.

Political Prosecution Against Cyril Wecht to be Dropped

No Comments

This was a case of a blatantly political US literally making a federal case out of things like using the office fax machine, and now, because most of the evidence has been excluded, political hack Mary Beth Buchanan has been forced to drop the case.

I know that Barack Obama does not want to dismiss US attorneys until he has replacements, but Buchanan is a cancer on the Department of Justice.

Background here.

Economics Update

No Comments

Well, the ADP payroll estimate is out, and they are estimating a drop of 532,000 in non-farm payrolls, which is better than last month, but is still in major league suckage territory.

The Institute for Supply Management’s index of non-manufacturing businesses is in the same boat, which covers the services sector, is still declining, but not quite as badly.

So, things are getting worse less quickly, not getting better.

Meanwhile in the junction of banking and real estate, S&P has downgraded 59 prime Residential Mortgage Backed Securities (RMBS) to D, which, according to the Wiki, means, “Bankruptcy or lasting inability to make payments most likely.”

With all this going on in mortgages, it is not surprising that we are seeing higher rates and fewer mortgage applications.

Well, at least we are not in Latvia, whose government was unable to sell debt today….That’s right, we aren’t talking about paying more interest than anticipated, no one would buy their debt.

Mean while, the news of reduced demand and a surge in inventory drove oil down, while the dismal economic news drove the dollar higher, as investor looked for safe havens.

My guess is that the trend in the dollar is down, and it will be firmly ensconced somewhere weaker than $1.50:€1.00 by year’s end

A Distinction Without a Difference

No Comments

It appears that Anthony Taguba is now denying that he has any knowledge as to whether or not the photos suppressed by Barack Obama are rape photos.

He’s not denying that he saw photos of rape of women and boys, along with photos rape by instrumentality, he’s just denying any specific knowledge as to whether or not these specific photos are the same.

So there are rape photos, but the 44 photos that the ACLU has filed a freedom of information act about might not be them.

Economics Update

No Comments

Well, the Euros are not doing well with unemployment, hitting 9.2%, which is not as bad as it sounds, because the EU’s count is more accurate, and so generally excludes fewer people from the unemployment statistics, and because the social safety net is better there.

We have some good news in real estate, with pending existing home sales jumping, though the numbers are still awful, and large proportion of them are distressed sales.

Still, the most recent numbers on construction spending are grim, and you can see that it looks like non residential construction is due to start falling too.

Still the home sales number kept profit taking against oil to a minimum.

The dollar is getting interesting, as in the curse, “May you live in interesting times,” over the past few weeks. It hit another low for 2009:, and there is active talk about countries moving to some other currency, typically the Euro, Russia’s idea of some sort of “non western” reserve currency being a pipe dream.

Signs of the Apocalypse

No Comments

Richard Bruce Cheney has admitted that he was wrong:

Former Vice President Dick Cheney disavowed intelligence he once cited to suggest that then-Iraq dictator Saddam Hussein collaborated with al-Qaeda to stage the Sept. 11 attacks.

Cheney said today that information by the Central Intelligence Agency of collaboration between Iraq and al-Qaeda on Sept. 11 “turned out not to be true.” Still, Cheney said a longstanding relationship existed between Hussein and terrorist groups, including al-Qaeda, that justified the U.S. invasion of Iraq in 2003.

Not only is he admitting error, he is doing so on a signature issue.

I have no clue as to what is going on. First, he embarks on his “human snarl tour,” in which he says that he is right about everything, and now he is backing off of his biggest lie.

Either there are wheels within wheels beyond my understanding, or he’s throwing small strokes, and I cannot figure out which.

Economics Update

No Comments

The OECD has released its GDP figures for the 1st quarter, and they are not good, down 2.1% for the quarter, and down 4.2%year over year.

Also, consumers in the US are continuing to explore the paradox of thrift, with consumption down and savings up, even though there was a bump in income.

Of course, the financial press is optimistic on the fact that the ISM manufacturing index is the highest it has been in 9 months, only the number, 42.8, still signals further contraction, but for the financial press, the fact that the 2nd derivative is up means that prosperity is just around the corner.

The Wall Street Journal is selling the fact that corporate profits rose for the 1st time in two years in the same way.

Personally, I’m more concerned about signs of increasing interest rates and inflation, like the recent surge in 10-year treasuries, and the fact that retail gasoline broke $2.50/gal nationally this weekend.

With oil breaking $68/bbl, even a long time in the doldrums is going to have energy prices rising.

Still the traders are optimistic, which is why the dollar fell to its lowest level this year, there is less demand for a safe haven.

So GM Went Bankrupt

No Comments

They have filed for bankruptcy protection, and while I have no illusions that this will be as smooth or quick as Chrysler’s bankruptcy, the stakes are far larger, and the consequences of a mis-step will be industry wide, it looks like they got their ducks in a row.

They got most of the bond holders on board, they got a deal from the UAW, and a deal was cut to sell Opel, GM’s European division, though the Treasury almost killed that:

For the Magna deal to work, U.S. officials must abandon their opposition to German demands that Opel assets be temporarily placed in a trust to protect them from GM creditors.

I agree with Michael Moore’s take on all this though, it could be the start of something better, but only if the US government takes an active role in the running of the company, and redirect the unused industrial infrastructure into things like mass transit and alternative energy.

Of course, the free market Mousketeers like Larry Summers, co-chair of the auto task force, are determined that this won’t happen, so instead, we will end up with something still dysfunctional, just a bit smaller.

Quote of the Day

No Comments

Barry Ritholtz:

I can only conclude that in order to run for governor in Texas, there is some sort of an IQ test involved — if you pass it, you become ineligible for state office . . .

On the fact that Texas Governor Rick Perry, who had said that he would decline stimulus funds, and had actually talked secession, was in fact spending stimulus funds on remodeling the governor’s mansion.

The Next Right Wing Phony Sh%$ Storm

No Comments

It appears that the only people in the United States who are lamer than Code Pink, the “New Black Panther” Party (NBPP), have once again put their foot in it.

They stationed some of their people outside a polling place in uniforms and one of them, Samir Shabazz, was carrying a baton and brandished it, and the Civil Rights division of the DoJ filed a civil suit against them for voter intimidation, which they have now dropped, after review by Obama appointees.

They took it to court, and got a default verdict, which is not surprising, since the NBPP doesn’t have the resources for lawyers, and a permanent injunction against Mr. Shabazz from being within 100 yards of a polling place with any sort of weapon.

The NBPP drops Shabazz like he was a Plutonium milkshake, and then issues a condemnation of any sort of voting suppression, and the DoJ drops the case.

Then some of the “professionals staff” in the Civil Rights Division complained to the Washington (Moonie) Times about this.

Why the Moonie Times? Because these were Bushies burrowed into the division, and they wanted to show that it was “those n*gg*rs” who were suppressing the vote, not the ‘Phants in Texas, Alabama, etc., who were doing so with back door poll taxes.

So, Bush and His Evil Minions™ purge the Civil Rights Division, burrow political hacks to replace them, try to show that the problem is black people trying to vote, and then complain to their mouthpiece when the adults come in and fix it.

Expect this to be wall to wall on Rush, Hannity, and O’Falafel tomorrow.