Author: Matthew G. Saroff

When Ideology Makes You Stupid

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The FDIC is trying to create a program to guarantee home mortgages to encourage modifications to contracts. This is stupid, particularly because in many of the cases, you can’t find anyone to modify the contract, because the instrument is held in a portfolio of bonds with hundreds, if not thousands, of stake-holders, all of whom have a legal right to veto any change,

The solution is simple, and does not cost the taxpayer anything: Modify bankruptcy to allow judges to modify mortgages. When you can’t find the owner of the loan, an judge handles it, and when you can, it to force lenders to the table.

We Are Living in Bizarro World

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and John Sidney McCain III is the Bizarro candidate.

Case in point, according to a filing with the Federal Election Commission, the highest paid person in the McCain campaign in the first week of October was her makeup artist:
That annualizes to $592,800.00 a year.

Ms. Strozzi, who was nominated for an Emmy award for her makeup work on the television show “So You Think You Can Dance?”, was paid $22,800 for the first two weeks of October alone, according to the records. The campaign categorized Ms. Strozzi’s payment as “Personnel Svc/Equipment.”

That annualizes to $592,800.00 a year.

In addition, Angela Lew, who is Ms. Palin’s traveling hair stylist, got $10,000
for “Communications Consulting” in the first half of October. Ms. Lew’s address
listed in F.E.C. records traces to an Angela M. Lew in Thousands Oaks, Calif.,
which matches with a license issued by the California Board of Barbering and
Cosmetology. The board said Ms. Lew works at a salon called Hair Grove in
Westlake Village, Calif.

$260,000.00/year.

I’m in the wrong bloody line of work.

Argentina Plans to Renationalize Pensions

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Of course, Moody’s investor’s services hates the idea.

I will make a note on the bigger picture: When Argentina privatized its pension system over a decade ago, it set the stage for its brutal economic implosion in the first place, because it stripped the government of all reserves in the process.

In response to the reports of the plans the Argentina markets dropped like a stone (13%).

I will note Brad Delong’s blog, and this quote:

The private retirement system, set up in 1994 to help bolster capital markets, owns about 5 percent of companies listed on the Buenos Aires stock exchange and 27 percent of shares available for public trading, data compiled by pension funds show.

The market crash was inevitable. It would either happen now, or when the population cohorts start sellling stocks when they retire.

This should have been done sooner.

A Good Note on Policy

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Tom Angotti of the Gotham Gazette Makes a very good point:

Neither of the two candidates [Obama and McCain] has explicitly acknowledged the failure of the current urban policy that single-mindedly promotes homeownership. But if history is not to repeat itself, both parties might do well to explicitly acknowledge the needs and problems of urban renters – that means the majority of New Yorkers — and redefine the “American Dream” as a stable job, a rent-controlled apartment and a safe, walkable urban environment.

This is true. In addition to being a failure in regulation and monetary policy, it is a failure of philosophy on two levels:

  • As Greenspan admits free market fundamentalism has failed.
  • The idea of a stand alone home owned by the occupant as an unexpurgated good.

Many of our problems, not just the housing crash, but also urban sprawl, are a direct result of the latter philosophy.

Another Bald Guy Gets Top Bailout Bailiwick

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I did not come up with bon mot, rather it was John Carney at Clusterstock did. He was talking about James H. Lambright, former head of the Export-Import Bank, who has been tapped to serve as interim Chief Investment Officer for the Troubled Asset Relief Program (TARP).

Mr. Carney notes that we should be concerned, and not just because we have, “Bald midwestern ex-Wall Streeter running our banking system.”

In his time at the Ex-Im Bank, it appears that his main accomplishment was to remove it from congressional scrutiny by making it self financing.

In English this means that Congress has no control, but is still liable for the bill if the Ex-Im bank sees losses.

And now they want him to be in charge of investments at TARP….Lovely.

Eurocrats Looking at Massive Propaganda Campaign in Ireland

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It looks like they are looking for another bite at the apple after the Irish referendum on the Lisbon Treaty went down in flames.

So, now we are seeing EU propoganda minister communication commissioner Margot Wallstrom suggesting what is needed is a major education campaign, but remember, don’t actually talk about the treaty that is at issue:

“Whatever you do, you won’t have in the end everybody reading a 400-page document,” she said. “That’s what MEPs are being paid for.”

Better yet, don’t have a 400 page constitution. The original constitution of the United States, including all amendments, is less than 15 pages.

You had people vote on a byzantinely complex document where no one, not even your vaunted MEPs understand the complete document.

That’s enough reason to vote against it, because who knows what mischief, corruption, and self dealing lives in those pages.

Gary Larson Works for Standard & Poors and Caused the Credit Meltdown?

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I’ve always wondered what he did after he shuttered his daily The Far Side job, and now we know that he got a job at S&P, because, when cows are at the center of malfeasance, Gary Larson will be there:

Official #1: Btw (by the way) that deal is ridiculous.

Official #2: I know right…model def (definitely) does not capture half the risk.

Official #1: We should not be rating it.

Official #2: We rate every deal. It could be structured by cows and we would rate it.

(emphasis mine)

Gary Larson rules our world.

Not Enough Bullets: South Korean Edition

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A South Korean financial analyst, Han Sang-choon, was fired for saying that much of the losses people have experienced in the market are the result of greed:

“I reckon people haven’t cashed in their funds because of personal greed and expectations (of profits),” he told an investor, according to quotes from the Friday TV show that appeared widely in South Korean media.

There is a saying, “In Wall Street, the Bears make money, and the Bulls make money, and the Pigs lose.”

How Russians View NATO and the US

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Yes, I am quoting an article in Pravda, and I think that what it says about Russian attitudes is more important than the objective truth (though I generally agree):

….

NATO was originally designed to keep Germany down, America in Europe and the Soviets out. With no Soviet Union, NATO’s purpose, like that of all good bureaucracies, has mutated. It has reneged on its promises to Russia not to expand eastward and has expanded eastward into some rather questionable regimes, particularly in the Baltics. All the same, as it was declaring Russia a useful partner, though a minor one not worthy of ever inviting in, it sought out a new purpose.

….

Afghanistan was and is the first real NATO fighting war. No longer is this primarily NATO bombers dropping bombs, often on civilians targets, from 3,500 meters, no this is a fighting war with a jihadist guerrilla force, trained by the very same NATO experts. Afghanistan as a whole has already shown NATO to be an empty shell. Many of the members have opted out of contributing anything to the conflict and quite a few that have sent soldiers have sent them with such strict rules of engagement (ROE)s that they are all but useless.

To the Anglo-American Neocons, this of course was a disaster. Their grip on power over Europe and thus the EU in general, was cracking. Add to this the economic knots tied by Russia to several key members, using the very real ropes of energy and business investments, and NATO was opting to be nothing more than a sewing circle.

The Anglo-American Neocons had to take bold action, something that would cause the member states of NATO to recoil back under the Neocon umbrella and unify against a common enemy. But whom? The Muslims showed little ability to project military power into Europe, they do much better with immigrants. The Chinese were out of the question a general rule, way to much elite money at risk for that kind of nonsense. Thus there was only one clear choice: Russia. But how to resurrect the Soviet Union, or at least it’s shadow?

Enter stage right, a small time Georgian dictator and one not to bright but very egotistical. The perfect dupe: Saakashvili.

….

Still, all this in itself, may not be enough to finally finish off NATO and end the 100 years of Ideological Warfare, for yes, dear reader, we have yet to leave that period. Russia is no longer the Soviet Union, no longer the Stalinist Marxists, but Economic Trotskyite Marxism (fascism) is alive and well, having infected the West flowing from the decayed corpse of Military Trotskyite Marxism (Nazism). NATO is the final guard against the return of the traditional world, where nations sought economic advantage for themselves not in the name of some mutant form of Internationalism. It is the final guard against nationalistic states that sought the betterment of their people first and foremost and not that of some hypothetical global village or for the internationalistic elite.

The Bank Panic of 2008 may be, however the final stone to knock down this aged and staggering Goliath. The Anglo-American Trotskyites who created this mess are in short, bankrupt. Their ability to project power grows weaker every day with a new DOW low. At the same time, nations such as Iceland, once one of their key military posts, are seeking aid not from their so called allies but from Russia itself. Bound together by economic or cultural or religious or historical ties, or all of the above, nations such as Iceland, Germany, Romania, Bulgaria, Greece, Czech, Slovakia and others will naturally pull away from the now bankrupt alliance. Historical ties that were supposed to have died along with history, as proclaimed by one of the fathers of Trotskyite Neoconism: Fukuyama, will now return the globe to an equilibrium long not seen and one that promises more stability than the Internationalist regimes of the past 100 years.

Going through Stanislav Mishin’s other blog posts, it’s clear that he’s a bit of a Russian nationalist, though less so than any Fox News commentator, and his 16 reasons for Russia to NEVER trust the West is an instructive read, even if you disagree with parts of it.

Bush Caved Completely in Status of Forces Agreement

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The Washington Independent has the scoop. Basically, Bush and His Evil Minions™completely caved to Iraqi demands.

You’ll recall that they pushed back the date to 2011, for, as Nouri al-Maliki admitted, for US domestic political reasons, and that is what it says in sub-article one of article 25 of the agreement:

The U.S. forces shall withdraw from Iraqi territories no later than December 31 2011.

But wait, there’s more, there is also sub-article 6:

U.S. forces may withdraw from Iraq before the dates indicated in this article if either of the two sides should so request. The U.S. government recognizes the Iraqi government’s sovereign right to request a withdrawal of U.S. forces at anytime.

So we leave when we’re told to leave by al Maliki, and indirectly by his sponsors in the government of the Islamic Republic of Iran.

Alan “Bubbles” Greenspan Is Shocked At Meltdownan

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So now Greenspan is shocked that a completely unregulated market leads to irrational speculation and abuse.

At the core of the theory capitalism is the idea that selfish people thinking only of themselves are what make the system work.*

If you had ever gotten your head far enough out of Ayn Rand’s long dead festering ass, you would have noticed that there were dozens, if not hundreds, of people you worked with who told you that this was going to happen.

You sir, are not a tool, because a tool has a use.

*Yes, I am paraphrasing Keynes.

Economics Update

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I think that the first story is a real biggie, the Insurance Bureau at the Financial Supervisory Commission of Taiwan has forbidden Insurance companies in that nation* from buying mortgage backed securities from the GSEs, Fannie Mae, Freddie Mac and Ginnie Mae.

The scare quote of the article is, The FSC has not only limited insurance company exposure to Fannie, Freddie and Ginnie bonds and mortgage-backed securities, but has decided that existing credit ratings are meaningless.“

Taiwan is not huge in relation to world GDP, but it’s a lot bigger than Iceland….We may be seeing the first furtive steps toward an exit that will likely end in a stampede.

If I’m wrong about a stampede away from US securities, it’s clear that there
is a stampede away from hedge funds…Makes sense, why pay these guys something like 20% when they are losing money.

In the real world or ordinary people and work, the weekly US jobless claims were worse than forecast, 478,000. The standard caveat about this being a noisy metric applies.

I would be remiss in not noting that the 4 week moving average fell, to 480,250 from 484,750.

BTW, it looks like the credit crunch is not near over, because very little let up on interest rate spreads. (H/T Calculated Risk.)

For what it’s worth, Oil prices were up a bit, because there are indications that OPEC might actually make a small supply reduction stick amongst its members.

The thing that really scares me is the fact that Washington Mutual’s Credit Default Swaps will be sold at 57¢ on the dollar, and this is considered a relief to investors.

Even scarier is the little note at the bottom that losses in the Lehman debacle, when investors got 8¢ on the dollar ended up losing less money than expected, because it was a small group who all sold in a big circle to each other.

What happens when one of the members of this circle jerk goes down in flames?

*Or whatever the frack the Taiwan’s status is right now.

They are Lucky that they are White Folk

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Because we now have a report that Iceland is going to accept an IMF bailout in the amount of $6 billion, about $18,740.10 per person living there, and about 1/2 of the island’s GDP.

Luckily for them, they are white, because the “strict measures” to be demanded by the IMF will be along the lines of, “a stipulation that Iceland quickly deleverage its three nationalized banks Kaupthing, Landsbanki and Glitner.”

If they were more darkly complected, you would likely see things demanded like a reduction of the minimum wage, the abolition of free primary schooling, the abolition of the government health care system, higher sales taxes and lower income taxes to favor investors, the sale of public utilities to foreign investors, a roll back of labor rights and employment protections, and aggressive measures to depress domestic consumption at because it would theoretically benefit exports.

BTW, that the last one is called creating poverty, which is fine for the n*gg*rs, but just wouldn’t do for the pale skinned blue eyed folk.