Author: Matthew G. Saroff

This is Not News, This is Bullsh%$

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So now we have the following report on what is going to happen with the current director of the CIA:

But officials are pushing back a little on that issue, suggesting that Hayden has been carrying out the policies backed by Congress and the president before he arrived at Langley, not freelancing on his own. “It’s unfair to blame Hayden for things that occurred long before he took the job. But he deserves credit for standing up for the folks over there at CIA, even though a lot of the stuff he has dealt with didn’t happen on his watch,” said an intelligence official. “Administration policy and American law shape what the CIA does. If the president says he doesn’t want something done, that’s it. These are his programs,” added the official.

(emphasis mine)

Ummm…this is not coming from the Obama people, it’s coming from the CIA, and remember that in Michael Hayden’s CIA, it’s OK to delete evidence and go after your own Inspector General to get him to stop investigating corruption.

So we are supposed to believe a source in the CIA, who does not even say that Obama is considering Hayden….It isn’t Michael Hayden talking to this reporter, otherwise, he would have to use the modifier “Senior” before official, but it’s someone who Michael Hayden sent out to talk to a one of his pet reporters.

This is Hayden lobbying to keep his job, and it’s already quite well known that he wants to keep it, and he just knows a reporter who is willing to report a press release as real news.

Deal Near on Auto Bailout

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So, it looks a deal for a bailout of the Big 3 (Big 2½) auto makers is near, and once again, the Democrats have folded like a bunch of overcooked broccoli, agreeing to take the money from the fuel economy program that Congress had passed earlier.

Yeah, like you have to go and make nice to the lamest duck in the White House in my lifetime.

This is stupid, standing up to Bush and His Evil Minions™ is not only the right thing morally, but it is a win politically.

The UAW is involved in all this too, but they are showing more backbone than the Dems, demanding a significant equity stake, and possibly a seat on the board of directors, for any concessions.

Economics Update

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Well, I will start of with Mr. Ritholtz’s trenchant analysis of the scary statistics I’ve been throwing about recently. He looks at them and, concludes that the employment numbers are tweaked to make things look less dire.

Basically, he is saying that the birth/death (of small firms, not people) adjustments and the seasonal adjustments are bunk, and the numbers on workforce participation as a percentage of the economy bear him out.

Additionally, you have people leaving the labor force, or being underemployed, which is not counted in the normally covered statistics.

BTW, the fact that foreclosures rose 76% year over year in the 3rd quarter bodes ill for the housing to recover any time soon. (chart pr0n captured by Barry Ritholtz, I highly recommend his site)

Of course, the results of Manpower, Inc. survey of employers does not point to an increasing in hiring in any segment of the economy.

About the only bright news is that looks poised to approve the various bank rescue plans in the Euro zone, they just approved France’s plan.

Going further east, however, things get grim, with S&P downgrading Russian government debt and downgrading 6 of the larger Russian banks.

Despite the news, oil was up today, largely on reports of a bailout of the Big 3 (Big 2½), but retail gasoline is continuing to head down.

Gasoline will continue to lag oil on the way down for 2 reasons: It takes time for oil to get shipped from a refinery and become gasoline, and people are extracting profits on the way down, because what was expensive seems cheap to the consumer now.

Obama Goes for Massive Infrastructure Spending

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This is not a surprise. It’s a good way to prime the pump, and the needs in terms of deferred maintenance on roads, bridges, water supplies, etc. are very real.

One thing that does concern me is that some of this infrastructure spending is on broadband (good), but they are (at least according to what I heard on Marketplace Money Sunday) planning to use incentives to private firms.

While Obama is correct in saying that it’s unconscionable for the US to be number 15 in broadband penetration, the idea that the private sector would save this is absurd and misguided.

This was tried in the 1990s, with the incumbent telcos getting over $100 billion in incentives, but they spent the money that they got on cementing their position as incumbents, rather than on improving the communications infrastructure.

This is not surprising. Monopoly and near-monopoly generate the best profits, which is the objective in a capitalist system.

I do believe in competition in broadband, from the curb to the home phone/TV/PC, where the incumbent advantages are small, but in the last mile from the “central office” to the curb, having a private entity in running the business is an epic fail, and it is why the US lags behind state owned Telcos in both performance and price in places like Korea and Japan.

Just in Case You are Wondering….

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The selection of former Army Chief of Staff Eric Shinseki as head of the Department of Veterans Affairs IS a big steaming helping of f$#k you to Bush, Rumsfeld, Wolfowitz and and the rest of their Evil Minions.™

Shinseki, as you may recall, was basically fired for saying that we would need around ½ million troops in order to make sure that post invasion needs were attended to.

He was promptly cashiered, and both Rumsfeld and Wolfowitz made a point of not showing up to his retirement ceremony.

Rummie and Wolfie, suck…on…this.

SCOTUS to Review al-Marri

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This is actually probably the most significant of the “unlawful combatant” detention cases, as Ali al-Marri was a legal resident of the US arrested in the US, and so whatever precedent we see here would apply to citizens.

The short version is that he was arrested for credit card fraud, but the charges were dropped and he was detained as an enemy combatant, and detained in the US navy brig, where he has been subjected to torture.

The only evidence that has been presented is a, “sworn statement from a defense intelligence official.”

If Bush and His Evil Minions&trade win this one, and it will actually be heard under an Obama administration, it will mean that the President can lock up anyone at any time for any reason without recourse to the courts.

George W. Bush would have made Stalin proud.

The Return of the Sit-Down Strike

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More echos of the 1930s, with workers at the Republic Windows and Doors plant in Chicago occupying the plant, after being given three days notice that the plant was closed.

They are saying that, “They won’t go home without assurances they’ll get severance and vacation pay.”

I don’t think that the governor will call out the national guard, so it will be up to modern day Pinkertons to murder them, my money would be on Blackwater, USA.

So, It Appears that We Have the First Catfight of the New Administration

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Timothy Geithner, U.S. Treasury Secretary nominee, is seeking to dump dump Sheila Bair as Federal Deposit Insurance Corp. (FDIC) Chairman.

Normally, I would think that this is a good thing, as she was appointed by George W. Bush, but she has been remarkably honest and competent, working on behalf of homeowners rather than investors, and by publically debunking the myth that the meltdown is was caused by the Community Reinvestment Act caused the meltdown, said myth being Republican speak for, “It’s all the fault of the n*gg*rs.”

So, while Geithner has been mute on the people brought in by Henry Paulson to (mis)manage the bailout, he wants her gone ASAP, which raises the obvious question, “Why this target in such a target rich environment?”

After all Hank Paulson and His Evil Minions™ all seem to be white dudes who are either bald or have shaved heads, and so are easily identified.

Well, the answer seems to be small and petty:

Geithner, president of the Federal Reserve Bank of New York, has argued Bair isn’t a team player and is too focused on protecting her agency rather than the financial system as a whole, according to two congressional officials and a person familiar with his thinking. Bair has battled with Geithner and fellow regulators over aid to Citigroup Inc. and other emergency actions, making her enemies in the Bush administration.

“The idea of having an independent actor on the stage with you who might not be singing the same tune can make you nervous,” said Wayne Abernathy, a former Treasury official who is now executive vice president with the American Bankers Association in Washington. “They recognize that she’s a very independent person.”

It isn’t clear that Obama would ask Bair to step down. Such a move would be fraught with political risk for the new administration, especially on Capitol Hill, where Bair’s campaign to rework mortgages for struggling homeowners has won respect from top lawmakers, including Senate Banking Committee Chairman Christopher Dodd and Barney Frank, his counterpart in the House.

Not a team player, when the team is the hole in the head gang, is a recommendation, not a condemnation.

It seems that Greithner, who has spent his entire career being second fiddle to someone, is offended by the fact that she has different opinions, and she is, well, more correct on these issues than any of the other players, including Mr. Greithner.

Basically, it sounds like we have someone who expects sycophancy from people who are nominally under his authority, in this case FDIC Chair to Secretary of the Treasury, because that has been what he does.

But maybe I’m over analyzing the psychology of the situation, and Barney Frank’s assesment, that it’s No Girls Allowed’ on the bailout team is accurate.

I’m not sure if Bair should be fired, but it is clear that she is the best of the lot on the job today, and based on the complaints that I have heard, which have generally come from Wall Street finance types, she may even be competent and conscientious.

On January 20, Have Her Walked Out of Her Office By Security

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Well, it looks like political hack Mary Beth Buchanan will not be submitting her resignation to Barack Obama as US Attorney for Pittsburgh on January 20, as is customary.

I’ve document a few of her partisan abuses of power here.

This is a woman who literally made a 45¢ fax a federal case, because the person in question, Cyril Wecht, was a Democrat.

She also prosecuted comedian Tommy Chong for selling bongs, went after a California erotica company, and was hip deep in the US Attorney firings scandal.

Seriously, this woman is a clear and present danger to justice, and she should not be allowed in the building without an armed escort.

I Think that Someone is Stuck in a Do Loop

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Because it looks like Treasury’s latest plan is to lower mortgage rates to 4.5% for new home buyers, to stop the slide in home prices.

First, you can’t re-inflate the bubble…The speculative frenzy that was at its core is over.

Second, why would someone buy a house at 4.5%, when whoever you sell the house to 20 or 30 years later would buy at a more normal rate, driving the price down.

Basically, it’s an attempt to get people to knowingly buy overpriced homes.

Does it come with a kick me sign for buyers to wear on their back?

Fundamentally Corrupt

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Well, some good news for municipalities, Stnadard and Poors (S&P) has upgraded their debt significantly, which should lower their borrowing costs.

This is not a recognition of economic changes, after there is no one who is safer to loan to than they were a year ago, and the municipalities in question have seen the basic metric of credit worthiness, things like “unreserved general fund balance” and “debt per capita” have actually headed in the wrong direction.

What has happened is two things:

  • The monoliner insurance companies who used to rent their credit ratings to municipalities, at taxpayer expense, are effectively defunct.
  • People have noticed that government bonds have been routinely rated lower than commercial ones based on the same criteria, and are looking at investigations and/or regulations of the ratings agencies.

What has been going on for years is that the ratings agencies have systematically underrated state and municipal debt, because it’s how their buddies with the monoliner insurers got business.

It’s why I suggest that the current financial system may need to be amputated.

Election Update

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So, we still have about 133 ballots missing in Minnesota, but now we have some twists, with the Coleman campaign claiming that they never existed, and election officials saying that they most certainly do exist. Given the circumstances, I’d go with the election officials:

Minneapolis elections chief Cindy Reichert explained yesterday that the ballots were placed in envelopes numbered 1 to 5 — and they’re missing the “1” envelope, probably still in storage at the warehouse. The precinct has obtained a waiver from the Secretary of State to keep their recount officially open while a thorough search goes on.

If envelope “5” were missing, Coleman and His Evil Minions™ might have a case, but not for envelopes 1, 2, 3, and 4.

This entire thing gets even crazier when you discover that elections officials just found another envelope of missing ballots, but only 12-20 uncounted absentee ballots, not the 133.

Franken campaign is saying that they are up by 4 votes, but considering how random things are when the count is this close, it’s really flipping a coin, I just hope that the coin isn’t “Two Face’s” coin, because if it’s Two Face, Norm “Two Face” Coleman wins.

The Onion is a National Treasure

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I’m Really Gonna Miss Systematically Destroying This Place

Oh, America. Eight years went by so fast, didn’t they? I feel like I hardly got to know you and methodically undermine everything you once stood for. But I guess all good things must come to an end, and even though you know I would love to stick around for another year or four—maybe privatize Social Security or get us into Iran—I’m afraid it’s time to go. But before I leave, let me say, from the bottom of my heart: I can’t think of another country I would’ve rather led to the brink of collapse.

Brilliant.

Well, at Least the New York Post Is Calling Rubin a Crook

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They are saying that Citi was at the center of a “Ponzi Scheme”, and yes, they are using the term “ponzi scheme” to describe the interlocking network impenetrably complex investment vehicles that has Citi in a government bailout:

Director Rubin and ousted CEO Prince – and their lieutenants over the past five years – are named in a federal lawsuit for an alleged complex cover-up of toxic securities that spread across the globe, wiping out trillions of dollars in their destructive paths.

I’m not sure how much of this is the Post’s predilection for hysterical screaming headlines, and how much is because Bob Rubin is a former senior Clintion official, but I agree with them: former Treasury Secretary Robert Ruben is a crook.*

The mainstream media is, of course, much too polite to say something like that about a titan of banking, though Jonathan Weil in the Bloomberg OP/ED that he is extremely concerned about the lack of transparency regarding what toxic investments that Citicorp is writing down.

At the center of this whole mess, at every stage, is Robert Rubin, either in the front, or in the room, and while some argue that the problem is systemic, so is poverty and deprivation breeding crime, this should not stop us from either imprisoning Robert Rubin or the guy who boosted your stereo.

*I would also note that current Treasury Secretary Henry “Hank” Paulson is a bigger crook.