It looks like Microsoft won the vote on OOXML at the ISO, but as I’ve noted, the voting in a number of places seemed to be highly irregular.
Of note, at this point, there are no OOXML compliant applications, including Office 2007, for which it was written, and as I’ve detailed before, the entire spec is a bloody mess, see here.
Of course, I thought that the ISO would reject it, chalk up another one for my blown predictions.
Ailing (and corrupt) mortgage giant Countrywide Financial has just placed a cap of 4% on Mortgage brokers.
Note that 4% is way too high, but it’s a start.
Basically, it stops incentivizing the most extreme Yield Spread Premiums (basically a “load” on the loan which largely goes to the broker) to the detriment of the borrower, the lender, and the rest of the economy.
The incentives in the current home mortgage environment is a morass of forces pushing lenders toward unsafe, immoral, and destructive loan products, and this is something that should be changed.
We have a report that the Federal Reserve is making inquiries with the Scandanavian banks regarding how they handled their banking crisis in the early 1990s.
What they did back then was nationalize their banks:
Scandinavia’s bank rescue proved successful and is now a model for central bankers, unlike Japan’s drawn-out response, where ailing banks were propped up in a half-public limbo for years.
…
Norway ensured that shareholders of insolvent lenders received nothing and the senior management was entirely purged. Two of the country’s top four banks – Christiania Bank and Fokus – were seized by force majeure.
“We were determined not to get caught in the game we’ve seen with Bear Stearns where shareholders make money out of the rescue,” said one Norwegian adviser.
“The law was amended so that we could take 100pc control of any bank where its equity had fallen below zero. Shareholders were left with nothing. It was very controversial,” he said.
Works for me.
Senior management gets the boot without golden parachutes, shareholders get nothing, and then people think twice before they pull this crap again.
Unfortunately, property is the one true religion of the good old USA, so I don’t think that it would work here.
But it is probably the best solution.
Microsoft’s attempt to abuse the international standards process has gotten even more bizarre.
Beyond the fact that this standard sucks, with tags for things like color varying from application to application in the suite, the ISO is now delaying an announcement on the vote.
It could be that they don’t want to make an announcement on April fools day, but more likely it is the fact that the legitimacy of various national votes on this have been disputed, in particular Norway, which voted 4:1 against accepting the standard, but was recorded as voting for the standard.
To the degree that I understand such things, which is limited, this standard sucks, which is part of the problem. Additionally, there is a very real issue that Microsoft will use IP laws, and “undocumented features” to leverage their control of the office suite.
Microsoft’s “promises” to allow OOXML be used by all are cut out of very thin cloth.
Sec. Paulson just proposed a series of changes, and U.S. Senate Banking Committee chairman Chris Dodd response call it a , “ pitch. … It’s not even close to the strike zone.”
I agree with the distinguished gentleman from Connecticut.
My analysis is that this is an attempt to make fixing things more difficult.
In proposing that the Federal Reserve have additional regulatory authority and responsibility, Paulson is trying to transfer this from executive agencies, which would follow the direction of the next president, to an independent organization which has been loaded to the gills with Bush toadies over the past 8 years.
Additionally, by putting these powers in an organization almost wholly dedicated to monetary policy, it means that other actions, either through fiscal policy (Keynesian budgets), or regulation will get the short end of the stick.
The biggest strike against this is the enthusiastic endorsement from the financial industry. If the people who f%$#ed this up in the first place like the proposed regulatory regime, it’s likely that this regime sucks wet farts from dead pigeons.
In honor of March Madness:
Click image for source
You may recall that Monoliner insurer FGIC having problems. Now it is saying that was saying that it would not honor its insurance contract withCredit Agricole SA and IKB Deutsche Industriebank, because they deceived the insurers about their financial health.
Seeing as how IKB seems to be facing villagers with torches, this may very well be true.
It’s in court.
And of course, because it’s a day of the week ending with “y”, the Federal Reserve is giving away another $100 billion to the banks.
No wonder noted bear, and Oppenheimer analyst Meredith Whitney is predicting that Citi will be cutting its dividend again soon.
In economic matters for the rest of us, personal income did better than expected, but personal spending remained weak, and the head of Freddie Mac is saying that he does not expect recovery in house prices until 2010.
I say that he is an optimist. The regional crashes we have seen, which have been much less severe, have all lasted at least 5 years, which puts the date at 2012, though I would take 2015 in the over/under in non-inflation adjusted dollar terms.
I don’t think that we will be back to the 2006 highs adjusted for inflation in my lifetime.
And in the world of collapsing economic institutions, we have former sub-prime lender Fremont General ordered to find a buyer by the FDIC, in addition to restricting interest it can pay to depositors, payments to senior executives, and transfers to its parent company.
This does make the fact that the Office of Federal Housing Enterprise Oversight has told Fannie Mae and Freddie Mac that they are free to raise another $20 billion a bit nonsensical.
The taxpayers will end up on the hook for all of this.
It now appears that KPMG systematically helped New Century Financial, a mortgage lender, conceal its financial troubles.
New Century Financial, whose failure just a year ago came at the start of the credit crisis, engaged in “significant improper and imprudent practices” that were condoned and enabled by auditors at the accounting firm KPMG, according to an independent report commissioned by the Justice Department.
This is what killed Arthur Anderson.
The specifics:
FWIW, I disagreed with the Supreme Court decision exonerating Arthur Anderson.
The only we get honest audits is if there is a threat of a corporate death penalty hanging over these folks heads.
South Korea’s National Pension Service will no longer invest in US Treasuries. They are saying that the rates of return are too low.
Note that this is the 5th largest pension fund in the world, so this is a decision with consequences.
I have noted on a number of occasions that the Fed would find itself torn between keeping the economy afloat, and keeping the dollar strong, and this is the first leak in the dam.
This does not necessarily mean that they won’t be investing in the US though. While the rates treasuries are low, other interest rates are rising, with the London interbank offered rate (LIBOR) up about 1%. Mortgage rates are also not responding to Fed Rate cuts.
Search for the term “pushing on a string” in my archives. It’s a quote from Keynes.
The weekly jobless claims numbers are less than were expected, which is good news, but there is a lot of noise week to week, so I’m more concerned about Commerce Department’s final GDP numbers, which show the inflation adjusted growth of the GDP being 0.6% annually.
Additionally, investors initial reaction was to flee long term treasuries following the unemployment numbers, which implies an expectation of increasing inflation.
In terms of the market recovering trust, not so much, with asset backed commercial paper, short term asset backed debt, falling. There are no buyers for it.
Finally, Merrill will write down $4.5 billion on CDOs (collateralized debt obligations), and post a loss in Q1.
We are not talking Chinese toys, or Mexican lettuce, we are talking about “Anglo-Saxon” financial products.
Increasingly the rest of the world is looking at the US and UK system of regulation, more accurately a system of no regulation, and seeing the downside, and becomind disenchanted with the US-UK model.
Henry Farrel cites articles by Wolfgang Münchau, and Steve Clemons about the change in attitude.
They both make the point that this is an ongoing, and IMHO accelerating, loss of power for the US, though Münchau is rather more stark, first because he has been an unabashed fan of what I call US style klepto-capitalism, but also because of his the points that me makes:
What happens when your bank starts demanding Euro denominated mortgages?
Mouthful, huh?
The short version is that the International Standards Organisation (ISO) and the International Electrotechnical Commission (IEC) are having a vote as to whether to adopt Microsoft’s Microsoft’s Office Open XML (OOXML) format for its office suite as a formal standard, and Cuba and India just voted no.
Microsoft had this voted down before, largely because there already is an ISO standard format out there, Open Dcument Format (ODF).
Microsoft, of course, uses OOXML, which is a proprietary format, notwithstanding its name, but with increasing numbers of users, particularly in government, demanding open formats to prevent vendor lock in, they want to be adopted as a “standard”.
Microsoft’s whole business model, of course, is vendor lock in.
Furthermore, as is made clear here, OOXML was written around the specific internals of Microsoft products:
Here is the Microflaccid office way of making text red:
Word: <w:color w:val=”FF0000″/>
Excel: <color rgb=”FFFF0000″/>
Powerpoint: <a:srgbClr val=”FF0000″/>
Here is a standards compliant way.
ODF text: <style:text-properties fo:color=”#FF0000″/>
ODF sheet: <style:text-properties fo:color=”#FF0000″/>
ODF presentation: <style:text-properties fo:color=”#FF0000″/>
Jill Brooke is reporting that JP Morgan CEO Jamie Dimon is now calling Wall Street firms and threatening them if they attempt to hire away curretn Bear Stearns employees. (The hed, btw is Ms. Brooke’s not mine).
He’s claiming that it’s “unpatriotic” to poach people before he fires them, and he also, “threatened to cut counter-party credit lines to firms that poach Bear stars before the transaction is completed”.
If I were on the jury, I would vote to acquit his murderer.
On a slightly more law abiding note, I believe that the Bear employees might have grounds for one hell of a class action lawsuit.
I can’t add much to Harold Feld's analysis. The short version is that it generated more money than expected, and unless you explicitly exclude the incumbents, they will tend to win.
The New York Times notes that there is a tug of war going on between the Bush Administration and Democrats over the type and extent of new regulations.
While I think that some centralization of the “regulatory alphabet soup” is a good idea, one of the things you are hearing, particularly from the Bushies, is that there is a, “tangled web of federal and state regulators”.
I think that this is Bush speak for cutting the states out of it, so actions like those of Elliot Spitzer* will be impossible.
On the other end of Pennsylania Avenue, you have Barney Frank, who I like, but truth be told, I think does not go far enough.
We have large organizations operating under the idea that they are too big to fail, and remember that Bear Stearns is a smallish player in this market, so this assesment is correct.
If the taxpayers are at risk, and they are, then the taxpayers must be allowed to regulate to minimize that risk.
Krugman makes this very point:
America came out of the Great Depression with a pretty effective financial safety net, based on a fundamental quid pro quo: the government stood ready to rescue banks if they got in trouble, but only on the condition that those banks accept regulation of the risks they were allowed to take.
Over time, however, many of the roles traditionally filled by regulated banks were taken over by unregulated institutions — the “shadow banking system,” which relied on complex financial arrangements to bypass those safety regulations.
Now, the shadow banking system is facing the 21st-century equivalent of the wave of bank runs that swept America in the early 1930s. And the government is rushing in to help, with hundreds of billions from the Federal Reserve, and hundreds of billions more from government-sponsored institutions like Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
As does Noriel Roubini who believes that the actions taken to this point are band aids, and not solutions, furthermore, he notes that, “Only a few of such securities firms are systemically important and deserve the liquidity support of the Fed in case of a run on their liabilities”, which is a large portion of this crisis.
Many of these institutions have, through years of lax antitrust enforcement become “too big to fail”.
So, my first suggestion is that the continuing concentration of market among fewer and fewer firms in the financial arena needs to be reversed.
These firms need to be broken up into small pieces.
On CNN Money, of all places, Paul R. La Monica suggestion that investment banks need to be treated like children. It’s eye catching, but wrong, particularly when he suggests that the repeal of Glass-Steagall was still a good thing..
The behavior of the banks, or more accurately the individual people working in those banks, was quite mature, if amoral.
From top to bottom, the employees of these firms behaved in a manner consistent with those employees own personal best interests, as opposed to those of the firm or the market.
The name for such a system, where individual players arbitrage for their own personal best outcome is called Capitalism, by the way.
What we need to do is to ensure that taxpayers are not left on the hook down the road for decisions made for personal benefit now.
Among other things, this means that we need real regulations of wages and benefits in the financial services industries, with real consequences including asset forfeiture and jail.
People will continue to do stupid things for good results this quarter so long as their bonuses and promotions are a result of their performance in this quarter.
I would note that I have not yet come up with any specifics on how to limit excessive compensation for short term results beyond taxing all excessive taxes. I’ll put my thinking cap on.
The push for quarterly results is what leads to excessive leverage, which is what has led to many of the problems.
In 1929, you needed about 20¢ to buy $1.00 stock on margin. Following the Roosevelt regulations it was 75¢ to buy that same stock on margin, though this was lowered to 50¢ in the late 1970s.
Bear Stearns was leveraged on the order of 50 to one, or about 2¢.
Leverage is essential to a modern financial system working, but excessive leverage causes a collapse.
We need to put government auditors in the major financial firms today, with the power to review all records and investments, and to demand changes.
Also, there should be a change in taxes. If the rich have to be bailed out, and this appears to be the case, then they should make the down payments on that bail out.
I would also suggest that a surcharge be added to income tax to which no credits or deductions apply, starting at the salary of the President (currently $400K) with a 1% surcharge, and increasing by 1% for each multiple above that (so $400k-$800K would be 1%, $800K-$1.2M would be 2%, etc), to a maximum marginal rate of 75% at around $180 million a year, which would apply to all forms of compensation (H/T to Dean Baker, see below, for noting the total compensation thing).
It would serve to put a brake on executive compensation, and generated some much needed revenue for the treasury.
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, DC, suggest instead that we legislate a cap on total compensation in the financial industry of $1 million.
It appeals to my vengeful side, but I think that my suggestion is better. It applies to overpaid athletes, drugged out pop stars, and worthless hotel heiresses too†, and provides resources to create a better and more just society.
*No, I mean his legal actions against Wall Street, when the FTC, SEC, etc., led by Bush and His Evil Minions™ were letting the foxes run the henhouse.
†Let’s be clear, I am keeping my promise not to mention They Who Must Not Be Named. I don’t see no names, do you?
So now the White House is maintaining that the computer hard drives containing the email records subject to a federal lawsuit were all destroyed as a part of computer upgrades. (Background here)
Arkansas Attorney General Dustin McDaniel is saying that two recent State Supreme Court decisions mean that payday lenders can be prosecuted under the Arkansas Deceptive Trade Practices Act.
No offense to any reader of mine from Arkansas, and a quick look at the statistics reveals that number over the past 8 months to be 27, but this is the one of the last places that I would expect this.
I do understand that Arkansas is less corrupt than Louisiana, more populist than Texas, and less backward than Mississippi, but I find this to be a very surprising development.
While Arkansas does have a a bit of a tradition of populism, I think that this more important than simply short term politics.
There is an increasingly strong view, society wide, that deregulation of financial markets, from the very small (Payday Lenders), to the very large (Wall Street) have failed.
People realize that in the real world, there are situational and informational asymmetries that require that the government take action to prevent predators from preying on the weak.
Took them long enough.
Courtesy of Harold Feld’s Tales of the Sausage Factory
The intervention of the Jewish holiday of Purim, which is celebrated by getting drunk until you cannot tell the difference between Verizon winning the C Block and Google winning the C Block, kept me from posting sooner.
OK, there aren’t that many great telecommunications regulations jokes, but still, this is really funny….If you are Jewish…..and if you have been following the FCC’s C Block auction.
OK, it’s a limited audience….but I find it funny, OK?
No Google, though I think that the Goog was playing to lose, they just wanted to ensure open access on part of the spectrum.
The auctions were quite successful, with the exception of the “D Block”, the which was supposed to cover emergency first responders too, which is now under a corruption investigation as to whether Morgan OBrien and Cyren Call, who vetted the bids, were self dealing. (The answer is pretty clearly, “yes”)
This is the correct decision, which is why I’m surprised that the FCC made it:
Regulators on Wednesday unanimously approved a rule banning exclusive telephone service agreements in apartment buildings, giving tenants their pick of providers.
The five-member Federal Communications Commission said in a release that exclusive contracts between carriers and apartment-building owners “hurt consumers and harm competition, with little evidence of countervailing benefits.” It noted that the deals have also blocked residents from getting bundled voice, video and high-speed Internet service packages.
…
Good.
I’m not sure if the bailout is good or bad policy yet, but it should be painful for those who made the decision, to make sure that they think 2 and 3 times before doing it again.
I sent this to the good folks at Marketplace:
In David Frum’s essay yesterday about Federal reserve policy, he stated that he remembered, “the little white stickers my family’s favorite steak house used to overwrite last month’s price”.
I would make two points here.
First, Mr. Frum is born and bred in Canada, specifically Toronto, Ontario, and it appears that the nearest American soil, Niagara Falls, New York, was about 80 miles away.
Given the number of steak houses available in Toronto, it is likely that the menu of which he spoke was for a Canadian restaurant, and using a Canadian restaurant to describe US inflation is not the basis for an honest discussion of any policy.
Second, this was in the days when plain paper copiers were a rare beast, so reprinting a menu was a significant issue, even if it was done only once a year.