Category: Corruption

The bloodbath in credit and financial markets will continue and sharply worsen

No Comments

The bloodbath in credit and financial markets will continue and sharply worsen

Indeed, according to a MarketWatch article from September – based on Bernstein Research – many Wall Street firms put an excessive amount of securities in the level 3 bucket that uses unreliable models for valuation. The share securities in the level 3 is:

15% for Goldman Sachs;

13% for Morgan Stanley;

8% for Lehman Brothers;

7% for Bear Stearns

and only 2% for Merrill Lynch.

So, what is a level three asset: Ummm….Basically, it’s sh#@ that you cannot sell, because there is no regular market, and your asset value is pulled out of the ether using models that no one understands.

Merrill Lynch just tanked, and its CEO was fired with just 2% of its assets being level 3, and look at where the other investment banking firms are.

It’s stuff that might be a million dollars, and it might be ten dollars, but you cannot tell until you try to sell it.

Or, to quote the Prudent Bear:

We may be about to find out. From November 15, we will have a new tool for figuring out how much toxic waste is in investment banks’ balance sheets. The new accounting rule SFAS157 requires banks to divide their tradable assets into three “levels” according to how easy it is to get a market price for them. Level 1 assets have quoted prices in active markets. At the other extreme Level 3 assets have only unobservable inputs to measure value and are thus valued by reference to the banks’ own models.

I’m beginning to think that I should put everything in gold under my mattress.*

It’s 1929 all over again.

*Not really. But perhaps moving some more assets to foreign denominated stuff would be in order.

OK, I Was Right, How Did I Do That?

No Comments

Remember when I said that “Maybe they know that there is some level of bullsh&% in the figures that they cannot trust.” In response to why the Fed would cut rates when the economy was growing at a brisk 3.9% growth rate? I also noted that the markets felt the same way too. The dow fell something like 350 points.

Well, Barry Ritholtz of
The Big Picture gives us all the specifics on what happened. It appears that a measure of inflation, “the price deflator rose a much less than expected .8% vs expectations of 2%.”

Essentially, this is a measure of inflation, and is used to separate out real growth from inflation. By lowering the price deflator, you count inflation as real growth.

The average of the price index since Q1 2004 to Q2007 was 2.98, ranging froma low of 1.7% to a high of 4.2%. Thus, if the deflator matched consensus, it would have generated a GDP of 1.9%; if it was at its recent 3 year average of 2.98%, GDP would be ~1%.

See the graph, and notice the WTF: point.

This I think, is the difference between an amateur (me) and a professional (Mr. Ritholtz). I knew in my gut that something was off, but a professional can tell where, and how.

Petraeus Plagiarized His Manual

No Comments

Should come as no surprise that a man who has spent his entire career as a REMF*, only to be tagged as the next coming of Sargent Alvin York by the wingnuts, plagiarized significant portions of the counter-insurgency manual that he “authored”.

While agree that a military doctrine manual need not be as meticulously footnoted as a PhD thesis, but direct quotes should be marked as such, and any source should be in the bibliography, if just to help people who might want to tweak this later.

What the Blackwater Immunity Deal Means

No Comments

ABC News has the text of the Blackwater immunity deal:

I understand this statement is being given in furtherance of an official administrative inquiry,” and that, “I further understand that neither my statements nor any information or evidence gained by reason of my statements can be used against me in a criminal proceeding, except that if I knowingly and willfully provide false statements or information, I may be criminally prosecuted for that action under 18 United States Code, Section 1001.

While the State Department claims that this still allows for prosecution, the case clearly indicates otherwise, particularly in the DC Circuit Court, where this would almost certainly be heard.

Josh Marshall called on “a highly knowledgeable source“, and their assessment was that “Use Immunity”, pretty much eliminates the possibility of presecution:

  • Prosecutors, “would then have to prove that every piece of evidence used in the prosecution was obtained completely independent of the employees’ statements.” (emphasis mine)
  • The DC circuit has an even more extreme view, where the prosecution, “would also have to show that none of their witnesses had heard what the employees said in their immunized statements.”prosecution was obtained completely independent of the employees’ statements.” (emphasis mine)

Additionally, even if there was no authorization and the immunity was granted in error, the courts, particularly the DC Circuit, generally still treat it as if it were.

I call coverup.

More Political Prosecutions

No Comments

This time, it involves Dr. Cyryl Wecht, the former Allegheny County Coroner, and former Attorney General, Pennsylvania Governor and former senate candidate, and staunch Republican Dick Thornburgh has testified before congress about this prosecution.

Thornburgh is one of Wecht’s defense lawyers, and his complaints stem from what he’s called the “sheer intensity” of the investigation, which involves relatively minor accusations that Thornburgh says should have been handled by the state ethics commission.

As a means of showing the relative triviality of the charges (the 84-count indictment doesn’t put a price tag on Wecht’s fraud), Wecht’s lawyers have calculated that the cumulative cost for the 37 charges in the indictment that involve improperly charging the county for gasoline and mileage costs add up to $1,778.55. The most colorful of the charges, of course, involve the elaborate body snatching scheme: prosecutors allege that Wecht gave a local Catholic university unclaimed bodies in exchange for laboratory space.

The source of the investigation’s “intensity” is U.S. Attorney for Pittsburgh Mary Beth Buchanan, a member of the DoJ’s inner circle who played a role in the U.S. attorney firings. It’s not the first time that Buchanan has drawn fire. During the heat of the scandal, a former assistant U.S. attorney in the district (from 1995-2000, before Buchanan took over) publicly called on Buchanan to resign because of “the extent to which she has looked to Washington for direction and political advancement.” Or to put it in plainer terms: Buchanan has prosecuted a number of Democrats but no Republicans.

There is also a history of not particularly veiled threats toward the defense attorneys.

Seriously, once Bush and His Evil Minions™ are out of office, we are going to have to deBushify our government in the way that we deNazified the German one after WW II.

Bush has polluted everything he has ever touched in his life.

Private Players in Most State Lotteries Corrupt and Inefficient

No Comments

Given the history of private tax collection, you can go to Paul Krugman’s blog post regarding the return of this activity, it is no of a surprise that the operation of most state lotteries greatly resembles the “Tax Farming” that bankrupted and caused the overthrow of the French monarchy.

It turns out that morally dubious is the most charitable description of how these companies operate, and when one takes the long view, they cost the states money when they operate a lottery.

While a state with an active lottery cannot switch immediately, it would benefit everyone by the lottery oligopoly, Gtech and Scientific Games, to take these functions internal to the state government, where there is far greater transparency.

I have not followed the lottery in Maryland, but it is clear that bribery, or something akin to bribery, has been going on in Texas for years.

So Not Shocked….ICANN is Corrupt

No Comments

It appears that someone at ICANN is feeding domain name lookups to people on the outside so that they can hold them for ransome.

If you have ever checked if a domain is available, and come back a few hours later to discover that someone has taken it, you know what I mean.

ICANN’s Security and Stability Advisory Committee is looking into suspicions that someone with access to search requests has been using this data to snap up potentially desirable domains, a process dubbed domain name front running.

Unlike traditional domain speculation, those who buy searched-for domains can be pretty sure of a potential interest when they attempt to sell their domains at a profit.

Damn straight. You already know that someone wants the domain, because they have searched for it.

Suspicions that the sharp practice is happening have not yet been proven, but are fuelled by user experiences suggesting something is amiss. Many people who check to see if a domain is available reportedly find it’s been bought by the time they return a short time later.

But the allegations are true, as anyone who has had this happen to them over, and over, and over again can attest.

If you want a domain, you need to snapit it up immediately after the search.

Islamo-Fascist Awareness Week is Scam to Get Speaking Gigs

No Comments

David Whororitz admits it in an interview with the George Washington University Hatchet, the Student Newspaper.

“I’m a prominent conservative but no one is inviting me to speak at their campuses,” Horowitz said in an interview with The Hatchet. “I had to create an event.”

Ummm…No, you are an obnoxious lying fascist clown, who jumped from one extreme to the other, and have since been trying to milk that for all it’s worth.

You have less credibility as a speaker than Mahmoud Ahmadinejad*, who at least believes the crap spewing forth from his mouth.

*And DAMN you for forcing me look up his name.

Topps Meat Plant Cut Inspections Before Reall

No Comments

Is it any surprise that under the Bush administration’s policies of “self regulation”, that companies would abandon health and safety inspections?

In the months before issuing a massive recall of its frozen hamburgers, Topps Meat Co. curtailed testing of ground beef and skipped other safeguards aimed at preventing contaminated meat from reaching consumers, according to a published report Tuesday.

It may be safer to buy your meat as steaks, and grind it at home…At least then, you can be reasonably certain that you are not getting cow anus in the mix.

Joe Lieberman, Slum Lord

No Comments

He is co-exeutor of his Uncle’s estate ($25g/year for not doing much) and the properties in Stamford Connecticut that he was supposed to manage were dilapidated, garbage strewn, and occupied by squatters.

To be fair, he did eventually sell his uncle’s property for $17 million, after he had arranged for millions of dollars in earmarks for the Stamford Urban Transitway, which increased the property’s value.

What a prince.