Category: Corruption

I Am Not a Finance Guy, But I Have Some Warning Signs………

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And they are:

  • Opaque markets where ask and bid prices are not known by the participants.
  • Opaque financial instruments that seem to generate return and safety at the same time.
  • Minimal disclosures.
  • Promises from the sellers that they will take care of clients without regulation.

So we see all of this in so-called structured notes:

Wall Street banks are creating the “next investment bubble” by selling opaque and unregulated structured notes to investors hunting for yield, according to Christopher Whalen, managing director of Institutional Risk Analytics.

Using the same “loophole” that allowed over-the-counter sales of collateralized debt obligations and auction-rate securities, firms are pitching illiquid structured notes whose value is partly derived from bets on interest rates, Whalen wrote today in a report.

What’s even worse:

Individual investors, who “love the higher yields” on structured notes, will lose money when benchmark interest rates climb, according to Whalen.

“We already know of two hedge funds that are being established specifically to buy this crap from distressed retail investors as and when rates start to rise,” said Whalen, a former Federal Reserve Bank of New York official and co-founder of the Torrance, California-based research firm.

What this means is that when the economy starts to recover, and interest rates rise, we will see another bubble pop and push us down.

Lovely.

Obama Consensus Building: The Incumbent Oligopolies Win, We Lose

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Google and Verizon have released the details of their carve up the internet among the big players proposal:

Google Inc. and Verizon Communications Inc. on Monday called for equal treatment of most Internet traffic while at the same time saying fast-growing cellular networks and yet-to-be-developed broadband services should be exempt from such restrictions.

Google and Verizon released a proposal arguing that broadband providers shouldn’t be able to discriminate against Internet content providers. Marcelo Prince and Amy Schatz discuss. Also, Dennis Berman discusses why bond investors are giving up on recovery and jobs.

The ideas outlined in the proposal put forth by the Internet search giant and one of the largest broadband providers stand in contrast to the Federal Communications Commission’s recent proposals on “net neutrality” rules, which would prevent companies from giving preferential handling to certain types of online traffic.

In Google’s case, the proposal’s endorsements of two-tier Internet service and a hands-off approach to cellular-based Web services represent a break with many other online companies, which have argued for strict neutrality in how Internet traffic is treated. Google itself previously expressed general support for rules prohibiting discrimination among forms of Web traffic.

This is a direct consequence of the tenor and approach of Barack Obama. It is clear that in internet access, the incumbents have taken billions of government subsidies, and used this money to cement their monopoly positions, rather than improvement access.

It’s why US internet performance and penetration* is the worst in the developed world.

These are not people who you partner with to get the outcome you want, these are people you defeat to get the outcomes you want.

As to the long term consequences, I’ll go with what Atrios says:

I’m one who thinks that ultimately the forces of light will prevail and the repeated attempts to carve out internet walled gardens will, over the long run, fail as killing the internet would… kill the internet. But the long run is a long time and companies will likely screw and gouge us over the not very short run unless the FCC acts.

So not hopey changey, and as I have said before, this sort of craven acquiescence to the incumbent players who screwed everything in the first place appears to be a core philosophy of Barack Obama and His Clueless Minions™, whether it be telecommunications, finance, healthcare, etc.

*That sounds dirty, doesn’t it?

It’s Not, “Not So Bad,” It Sucks

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It appears that lawmakers on both the state and federal level are starting to look at the salaries of senior executives for tax-exempt organizations.

What I love is the quote from M. Cass Wheeler departing CEO of the American Heart Association:

“If you peeled all that [outrageous supplemental pension and other provisions] back, you’d get to a base salary less than $600,000,” he said.

OK, so your base is almost 1½ times that of the President of the United States of America, and you are doing charity work, and we are supposed to be OK with that.

No, we aren’t.

Neither should we be OK with hedge fund managers making over a billion dollars a year, but for non-profits, we are subsidizing the donations that pay their salary.

Enough.

I would note that the most egregious examples are in “not for profit” hospitals, which would imply to me that these institutions are “not for profit” as a fig leaf.

Another Ethics Investigation

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This time, it’s Maxine Waters, who is alleged to have intervened on behalf of a bank that her husband had a significant interest in.

So, in the past 4 weeks, the Ethics Committee has made a substantive move against 2 Dems, though Rengel’s ethics problems have been ongoing for months.

I’m curious as to why this is all cropping up now, and I expect a 3rd shoe to drop.

I would note that in comparison to what the Republicans did, Rengel is alleged to have done favors to people who contributed to a building named after him, evaded taxes, and misused rent controlled apartments, while Waters is alleged to have intervened on behalf of a bank where her husband served as a board member (though it was also the only minority owned bank in Massachusetts) is pretty mild.

By comparison, with the Republicans, (rolling the Abramoff* Wiki) you had people paid to lobby for slave labor in the Marianas, cheating Indian tribes, taking money from the gambling business while also taking money from anti-gambling activists, and lobbying for the genocidal monsters in Sudan.

Come to think of it, Democratic corruption appears to be rather quite lame in comparison.

It is still reprehensible, but rather a lot like comparing a small snatch and grab with the Great Train Robbery.

Both crooks, but one of them has a bit of audacity.

*Full disclosure: I went to school with, and served in the student senate with, one of his associates who has faced legal repercussions, and my babysitter went to school with his daughter.

Goldman S@#54

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We live in Bizarro World

Jon Stewart asks a question, “What is the appropriate response for a company that is selling its customers a sh%$ty deals, being caught on email calling them sh%$ty deals, and then being forced to pay a $550 million fine?”

Well if you are Goldman Sachs, the response is to ban profanity in employee email.

<Facepalm>

Another Way That the FIRE* Sector Cheats Ordinary Americans

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If you get a large insurance payout, they won’t send you the money, they just send you a “check book,” and keep your money in an account that they hold.

Only the “check book” is not a check book, because it’s not a bank, and it’s not FDIC insured, and they pay you 1% for an account that earns them 5%:

Lohman, a public health nurse who helps special-needs children, says she had always believed that her son’s life insurance funds were in a bank insured by the FDIC. That money — like $28 billion in 1 million death-benefit accounts managed by insurers — wasn’t actually sitting in a bank.

It was being held in Prudential’s general corporate account, earning investment income for the insurer. Prudential paid survivors like Lohman 1 percent interest in 2008 on their Alliance Accounts, while it earned a 4.8 percent return on its corporate funds, according to regulatory filings.

Note that her son was a soldier killed in Afghanistan, so they are stealing from the bereaved families of fallen soldiers.

At this point, I normally say, “Not Enough Bullets,” but I’ve used that a bit too much lately, so I will go with the apocryphal end of Marcus Licinius Crassus, who was made to drink molten gold by his captors as punishment for his greed.

*The Finance Insurance and Real Estate sector.

Not Enough Bullets

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BP has given their CEO, Tony Hayward, his waking papers.

Only, he gets to stay on until October, at full pay, and he still has his millions in stock options, and in 2 years, he is eligible for a pension of £600,000 a year.

On the brighter side, he is literally being sent to Siberia, as, BP is, “Planning to nominate him as a non-executive director of its Russian joint venture, TNK-BP.”

If you are one of the hyper-rich, you are safe from the consequences of your actions, which is why these f%$#s act the way they do.

If they win, they make a sh%$ load of money, and if they lose, they are still set for life.

One note here, he will be replaced by Bob Dudley, who is an American, which just goes to show that the BP board does not get the USA.

I think that they think that an American CEO will defuse American anger at them.

They are wrong. Americans are suckers for a British accent, we love being conned by people with British accents, just look at the success that lying charlatans like Niall Ferguson, Christopher Hitchens, and Andrew Sullivan have done selling their crap as gold.

The problem here is that something bad happened, and the more people looked at BP, they saw that it is a corrupt criminal psychopathic organization, even by the standards of the oil industry.

News of the Unsurprising

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It turns out that one of the reasons that executive compensation has been skyrocketing lately is that compensation boards game the system to maximize pay for the executives, who, after all, hired them in the first place.

Imagine that.

I would remind everyone that the pot for wages are not infinite: When they get 7 or 8 figure paychecks, it means that everyone else there gets less.

I once figured that Michael Eisner’s compensation at one point in the mid 1990s, $550,000,000.00,* or about $73.45 a second, would have added about $6.00/hour to the pay of every Disney employee, which in turn would likely have saved money through reduced turnover.

It doesn’t matter to them though, they just want to make more than the next CEO.

*For that, he did some rather wooden dialogue with Mickey Mouse on the Wonderful World of Disney. For that kind of money, the mouse should have been able to do him like Marlon Brando did Maria Schneider in Last Tango in Paris.

Cowards.

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When people talk about DFH* bloggers hating on the Obama they seem to think that its all about Obama being a pragmatist. It isn’t about his being a pragmatist.

It’s about his, and his people being abject cowards, who soil themselves when someone on the right wing shouts out a lie.

Case in point, Shirley Sherrod, USDA Georgia Director of Rural Development, who was just fired for a yet another deceptively edited video from professional bigot Andrew Breitbart.

You see, she gave a talk about how when she was working helping farmers, when the first white farmer came to her for help, the thought crossed her mind was not to help, because they were white, but she realized almost as soon as the thought hit her that it was wrong.

Well after excerpting 30 seconds out of a 45+ minute speech (see below), so that Fox News could go “Oh noes! N*****s are trying to take over America.”

The response of the Secretary of Agriculture was to fire her before any real facts came out.

I am with what Digby said:

“Her decision ‘rightly or wrongly” will be called into question” because some right wing hitman put out an edited tape that makes her sound as if her point is the opposite of what it is, so she had to be fired.

They are telling wingnuts everywhere that all they have to do is gin up a phony controversy (especially about a black person, apparently) and the administration will fire them so as not to shake confidence that they are “fair service providers.”

This is sheer cowardice.

This is what pisses people off.

Video after break

*Dirty F%$#ing Hippies.

I Really Cannot Wrap My Head Around this

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As much as I rag on the Washington Post, there is some reporting of real value amongst the dross, including Dana Priest, who, along with William M. Arkin, have published an extensive investigative report on the burgeoning world of the American security-industrial complex:

These are some of the findings of a two-year investigation by The Washington Post that discovered what amounts to an alternative geography of the United States, a Top Secret America hidden from public view and lacking in thorough oversight. After nine years of unprecedented spending and growth, the result is that the system put in place to keep the United States safe is so massive that its effectiveness is impossible to determine.

Basically it points to a picture of a state security apparatus run amuck, where there are so many players, generating so much analysis, from so many sources, that it is impossible to separate the wheat from the chaff, or as Glenn Greenwald notes:

So it isn’t that we keep sacrificing our privacy to an always-growing National Security State in exchange for greater security. The opposite is true: we keep sacrificing our privacy to the always-growing National Security State in exchange for less security.

(emphasis original)

More than ever, we need to ensrhine into the constitution something analogous to the the Swedish concept of Offentlighetsprincipen (openness), because right now all that our paranoia is generating is a massive trail of profiteers/contractors without generating much in the way of security.

It should be noted that reigning in this will not be easy. You can be sure that when the budgets are in jeopardy, the various wings of the state security apparatus will come up with scary stories to subvert any effort at real reform, and the current administration is terrified of being labeled, “soft on fillintheblank,” so they do not have the inclination to even bend the curve.

I’ll be going through the story, and the supporting material, to see if I have anything to add.

Not Gonna Happen……

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Now that financial reform is due to become law, the word is that gadfly for the common folk Elizabeth Warren is the most likely candidate to head up the Consumer Financial Protection Bureau (CPFB, it was originally going to be a full agency called the CPFB).

This is not going to happen.

The Obama administration, particularly Timothy “The Bankers’ Bitch” Geithner, hate her.

She has embarrassed then by publicly reporting on how the TARP has been too easy on big banks, she has embarrassed them by advocating for real reform, and she has embarrassed them by lobbying aggressively for the CPFAB, which the Obama administration does not really want as a meaningful entity, because they actually believe the talking points from the finance industry about the need for “innovation”.

I should note that Something Awful is reporting that Ben Nelson asked for, and got, a veto on the head of the CPFB in exchange for his vote on financial reform, and that Nelson has flatly stated that Warren is not acceptable.

Honestly, I can see members of the protesting Nelson’s as vehemently as Br’er Rabbit asked not to be thrown into the briar patch.

Barack Obama Hires Enemy of Healthcare Reform to Manage Implementation

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Liz Fowler, who was a former staffer of Max Baucus, who went to work as a lobbyist for Wellpoint (vice president of public policy), and then came back to Baucus to kill the public option, has has been hired by the White House to implement the regulations for healthcare reform.

Yet more of the criminally naive concept of bringing enemies in to run programs that they did their best to destroy.

Additionally, it makes a joke of yet another of Obama’s promises, to shut down the revolving door between government and industry, because if Ms. Fowler were going through the revolving door any faster, it would look like a Cuisinart set to liquefy.

And the DCCC Can Go Cheney Themselves Too

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Because the Democratic Congressional Campaign Committee (DCCC) funds Republicans like Stephanie Herseth-Sandlin, who has just come out with a campaign commercial touting her vote against healthcare reform.

You can be sure that the DCCC will be funding her heavily, because the first goal of the Democratic Senatorial and Congressional campaign committees is to protect incumbents, and their second goal it to support DINOs.

Note however, that this is throwing good money after bad this year. She is polling horribly, the TPM polling averages have her down by 9 points as an incumbent.

Do your own research, and donate to the candidates you support directly.

</RANT>

Why You Should not Give to the DSCC

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Because, will throw money at people like Blanche Lincoln, who, now that the primary challenge is done, is once again throwing her lot in with the rich bankers who are in the process of destroying our country.

This time, she and John Kyle, he of the “never need to pay for tax cuts for rich folk,” fame, have introduced an inheritance tax bill that is a big wet kiss for the richest families in the United States:

Their proposal would require Democratic leaders to amend the small-business jobs bill with a provision that sets the estate tax at 35 percent with a $5 million exemption. These amounts will be phased in over a 10-year period and also be indexed for inflation. In addition, inherited assets would be taxed at their worth upon transfer, not when the deceased purchased them.

Of course, because of the way the Bush and His Evil Minions™ wrote his tax cuts, there is no inheritance tax at all this year, but next year, it goes back to 55% and a $1 million exemption, and, quite honestly, the “liberal” proposal is a $3.5 million exemption and a 45% rate.

Of course, when given a choice between giving something to rich heirs, and giving everything to those same heirs, Blanche Lincoln goes with giving money to the useless heir class.

The first broad based tax adopted by the founding fathers was an inheritance tax. They did it because they realized that dynastic wealth was corrosive to the republic.

But Blanche Lincoln needs those campaign dollars, so f%$# the budget and American people.

It goes without saying that the Democratic Senate Campaign Committee is backing her to the hilt, which is why you shouldn’t give to the DSCC when they come calling.

Polanski Extradition Denied

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Basically the Swiss government said that it would not extradite until and unless it got the details on the judicial and prosecutorial irregularities that occurred in the initial trial:

The justice ministry said that the US authorities had failed to provide confidential testimony about Polanski’s original sentencing procedure.

“The reason for the decision lies in the fact that it was not possible to exclude with the necessary certainty a fault in the US extraditionary request.”

So the prosecutors decided that covering their screw-ups, and their asses, was more important than a prosecution of someone who is a confessed child rapist.

I’ve always felt that the people, such as sociopath and Washington Post columnist* Richard Cohen, who tried to excuse the rape because he was one of them, or worse, to cast the child as some sort of predator were repugnant.

But this was the right decision. There have always been alarming irregularities in the original case, ex-parte communications and other misconduct that should have seen most of the prosecuting team, as well as the judge, disbarred, and the information being withheld included testimony which might have shown that Polanski had actually served his complete sentence. (All of 42 days)

*But I repeat myself.

Yes, the Housing Crisis Was Caused by N%$##@&S

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You know the right wing talking point, that Fannie Mae and Freddy Mac, AKA the GSEs, and the Community Reinvestment Act (CRA) are responsible for the housing meltdown.

Ignore the fact that the GSEs proportion of mortgage securitization fell during the housing bubble, ignore the fact that the lenders that drove the craze were not banks, and were not covered by the CRA’s requirements for them to do lending, because if you are are a right winger, it’s all the fault of people who had the wrong coloration.

Once you let “darkies” buy houses, disaster is soon to follow.

It’s a f%$#ing lie, and the latest data point on this is the fact that, “The rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.”

So an essential part of this narrative, that non-whites cannot be trusted to pay their debts or to be lent to seems to be another lie:

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.

(emphasis mine)

The right wing has spent a lot of time attempting to manufacture the fiction that it was attempts to deter discrimination and to put some fairness into the system that caused this problem, but the GSEs could never securitize the jumbo mortgages, and the CRA never applied to the neighborhoods where the über-rich built their homes, because you don’t need banks to be forced to lend in well-to-do neighborhoods.

Their lying in furtherance of their bankrupt ideology, as well as a corrupt press corps which elevates “balance” above the truth, is all they have.

The facts prove them to be morally bankrupt parasites who should not be trusted.

I’m a Bit Late in the Game on This

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But I do want to note that there is a program out there in defense procurement land that is:

  • On or ahead of budget.
  • On or ahead of schedule.
  • Appears to have no technical issues on the horizon.

It is the upgraded CH-53K, which has now had its schedule delayed by over two years.

What is going on here, I think is that the helicopter matches the V-22 in every capability except for speed, it carries more over short distances, and about the same over longer distances, it is more maneuverable in hover, and safer because it can autorotate.

Additionally, it is , and cheaper to buy and operate, and occupies less deck space than the Osprey, and the Marines with some justification, see it as a threat to their MV-22:

Slowing CH-53K development will keep the new helicopter out of the air (and prevent real-data comparisons between platforms) until after a second multi-year MV-22 contract gets signed in FY 2013. Even worse, slowing the CH-53K schedule raised the program price by at least $1.1 billion dollars, raising the per-unit price. The delay may also may dampen the enthusiasm of potential international buyers and give competing firms an opening to exploit this as yet unexplained delay in what was, once, a procurement showpiece. Why slow a program that stands to be a high-demand showpiece with potential markets in Israel, Germany, France, Turkey, Singapore and Taiwan?

Seriously, if we really care about our fighting men, and not about the future contracting gigs of generals, we have to put an end to this corrupt bullsh$#.

Better That They Piss on Each Other…

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Because when the ratings agencies are pissing on each other, they are not pissing on the rest of us:

In a report that could equally have been written about its own prospects, S&P credit analyst Emile Courtney laid out a grim picture for rival ratings agency Moody’s saying it costs would likely rise, margins fall and litigation risks multiply.

Moody’s short-term debt has been placed by S&P on its CreditWatch list with a ‘negative watch’ outlook, meaning there is a more than 50pc chance its bonds could be downgraded.

Seriously, we need to obliterate fix the ratings agencies, sooner rather than later.

Republicans and Hookers Go Together Like Chocolate and Peanut Butter in a Reese’s

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We have another scandal in the GOP, this one involving embezzlement of Florida State Party funds, and we have now reached the now inevitable hooker stage of the story:

According to a female party official who spoke to investigators, Greer organized a men-only trip to the Bahamas with major donors and “women were involved and paid.” Gov. Charlie Crist, who was on the same trip and hand-picked Greer for the top GOP job in 2007, said today that the charge there were escorts or other paid women involved is “absurdly false.”

You know, if I had been a Republican party operative when I was single, I would have gotten a lot more action.

Hell, the debauchery would have continued after I got married if I had been a ‘Phant operative.