Category: Schadenfreude

Tom Friedman, Suck on This: Part II

The Buksbaum family, one of whose members is Tom Friedman’s wife, has been ejected from the management of General Growth Properties Inc., after financial irregularities were discovered.

Basically, what happened here is that GGP fueled its growth by leveraging itself up to its eyeballs:

Rather than apply for bank loans, General Growth began taking out short-term mortgages on its malls. As the mortgages came due, the company would replace them with even larger mortgages to provide cash for additional acquisitions.

This is what happens when you let the finance folks drive your business, rather than the other way around….It’s also why people wonder how different Bernie Madoff was from business as usual in the US financial system.

This is Some Sweet Schadenfreude

As both my readers are no doubt aware, there is in the financial world a large number of assets for which no regular market exists.

Regulations call them “Level 3 Assets”, but I call them “The Big Sh&$pile”, a term that I stole from Atrios.

Normally this means that if you want to sell them, it’s a laborious process to find a buyer and set a price, which differs from “Level 1 Assets”, like stocks, where you can fire up your PC and trade them online.

These days it means that there are no buyers at all, for these Byzantinely complex instruments that the financial whiz kids created, so they are, for intents and purposes, worthless.

Well, it now looks like employees of Credit Suisse will be getting pieces of The Big Sh&$pile instead of cash for bonuses this year:

Credit Suisse Group AG’s investment bank has found a new way to reduce the risk of losses from about $5 billion of its most illiquid loans and bonds: using them to pay employees’ year-end bonuses.

The bank will use leveraged loans and commercial mortgage- backed debt, some of the securities blamed for generating the worst financial crisis since the Great Depression, to fund executive compensation packages, people familiar with the matter said. The new policy applies only to managing directors and directors, the two most senior ranks at the Zurich-based company, according to a memo sent to employees today.

Talk about just desserts.

Me, I would also use them for severance packages for “the most senior ranks” of employees too, but I like to twist the knife.

Minnesota Corruption Update

The Star Tribune notes that Norm and Laurie Coleman, her boss, Jim Hays, and Coleman Supporter Nasser Kazemini have all high-powered retained lawyers on a matter currently being investigated by the FBI, in which allegations have been made that Kazemini funneled money to Norm Coleman via Laurie Coleman, using Jim Hays insurance company as a conduit.

The interesting paragraph in the article, and I did not catch it, the good folks at TPMMuckraker did is this:

Norm Coleman has hired Doug Kelley, Laurie Coleman is represented by Earl Gray, Hays is aligned with Doug Peterson and Kazeminy has secured the services of Joe Friedberg.

Norm and Laurie have separate lawyers. While this does not mean that they will roll on each other…yet…but it does mean that this is serious, and that they are taking this very seriously.

Heh.

Heck of a Job, Kenny Boy

Well it now appears that the merger of Bank of America and Countrywide Financial so aggressively pushed by Bank of America CEO and President Kenneth D. Lewis is finally bearing some fruit.

Unfortunately, it appears to be fruit of the toxic variety, as investors who hold mortgage backed securities of the former subprime lender are suing to demand their repurchase at full face value:

On Monday, a hedge fund sued the Countrywide Financial Corporation, the giant mortgage lender, demanding that Countrywide compensate holders of some securities backed by mortgages if the lender changes the terms of the loans.

The fund, Greenwich Financial Services, said it and other investors stood to lose money if Countrywide, now part of Bank of America, modified loans under a settlement that it reached with 11 state attorneys general in October.

Seriously, what were you thinking when you turned over the rock that was Countrywide Financial, saw the slime that lay beneath, and started to eat that, Mr. Lewis?

The problem with superstar multimillion dollar CEOs is that they don’t think that the basic rules of reality apply to them.

Circular Firing Squat*

Gee, following a crushing electoral defeat, conservative windbag Kathleen Parker goes and blames it all on the what she sees as right wing medieval religious types:

As Republicans sort out the reasons for their defeat, they likely will overlook or dismiss the gorilla in the pulpit.

….

To be more specific, the evangelical, right-wing, oogedy-boogedy branch of the GOP is what ails the erstwhile conservative party and will continue to afflict and marginalize its constituents if reckoning doesn’t soon cometh.

Simply put: Armband religion is killing the Republican Party. And, the truth — as long as we’re setting ourselves free — is that if one were to eavesdrop on private conversations among the party intelligentsia, one would hear precisely that.

….

So it has been for the Grand Old Party since the 1980s or so, as it has become increasingly beholden to an element that used to be relegated to wooden crates on street corners.

Ouch!!! Reading further it appears that her problem with the Religious right is that it is insular, nativist, and so is hostile and frightening to the majority of the population who are not a part of this. Well put

However, honesty forces me to note that her argument would be far more convincing if she hadn’t endorsed the idea of fear and hatred of those who don’t look like us using a right wing evangelical just this May:

“A full-blooded American.”

That’s how 24-year-old Josh Fry of West Virginia described his preference for John McCain over Barack Obama. His feelings aren’t racist, he explained. He would just be more comfortable with “someone who is a full-blooded American as president.”

Full-bloodedness is an old coin that’s gaining currency in the new American realm. Meaning: Politics may no longer be so much about race and gender as about heritage, core values, and made-in-America. Just as we once and still have a cultural divide in this country, we now have a patriot divide.

Maybe she’s just pro bigotry, and since it’s no longer acceptable, at least not in the Washington Post OP/Ed pages to call the President-Elect a n*gg*r (yet), she just needed someone else to hate.

It’s circular firing squad time, and unlike in 1964, there are no moderates left to target….

I’m going to get some popcorn.

*It was a typo, then I realized that I was funnier by accident than I was on purpose.

Tom Friedman, Suck on This

Tom Friedman, the New York Times Columnist, and blithering idiot, who is always suggesting that we should give the Iraq War, “Another 6 Months,” is having financial difficulties.

You see, he married into money, a lot of money. His wife is an heir to the General Growth Properties fortune, and since September, the value of the stock in the company in which the family wealth is held has fallen in value from a high of $51/share to 35¢ a share (See stock chart below), taking the value of the family fortune from $3.6 billion to $25 million.

In fact, GGP is warning of a potential bankruptcy.

As to my saying, “suck on this,” I am actually quoting Thomas Friedman, who, in an interview with Charlie Rose, suggested that it was imperative that we invade some Arab country to show that we were serius:

We needed to go over there, basically, um, and um, uh, take out a very big state right in the heart of that world and burst that bubble, and there was only one way to do it.

What they needed to see was American boys and girls going house to house, from Basra to Baghdad, um and basically saying, “Which part of this sentence don’t you understand?” You don’t think, you know, we care about our open society, you think this bubble fantasy, we’re just gonna to let it grow? Well, Suck. On. This.

(emphasis mine)

This places him in exactly the same position as the Rwandan radio broadcasters who were convicted of crimes against humanity, and any misfortune that he suffers for his continuing advocacy of an invasion that has cost hundreds of thousands of innocent civilians renders me incapable of feeling the smallest bit of sympathy.

I guess it makes me a bad person, but I haven’t had a hand in killing nearly a million Iraqis….Scratch that…We all had a hand in that as Americans, because it was done in our name, but he was cheer leading from his position atop the most respected news paper in the nation.

Here is the vid of the interview. Look at it, because this is what evil looks like.

They are Irrelevant

Timothy Burke makes a very good point:

It’s schadenfreudey fun to read the ongoing psychotic meltdowns at various far-right sites like the Corner, I agree. But there’s little need to take the really bad-faith conservatives seriously now. For the last eight years, we’ve had to take them somewhat seriously because they had access to political power. You had to listen to the hack complaints about academia from endlessly manipulative writers because it was perfectly plausible that whatever axe they were grinding was going to end up as a priority agenda item coming out of Margaret Spelling’s office or get incorporated into legislation by right-wing state legislators. You had to listen to and reply to even the most laughably incoherent, goalpost-moving, anti-reality-based neoconservative writer talking about Iraq or terrorism because there was an even-money chance that you were hearing actual sentiments going back and forth between Dick Cheney’s office and the Pentagon. You had to answer back to Jonah Goldberg not just because making that answer was arguably our responsibility as academics, but also because left alone, some of the aggressively bad-faith caricatures he and others served up had a reasonable chance to gain even further strength through incorporation into federal policy.

(emphasis original)

I would disagree on two points:

  • Schadenfreudey is an offence to the English and German language. I believe, based on my limited German, and some Google, it should be Schadenfreudes.
  • The are no seriously good faith conservatives out there. This is simply misplaced optimism. Modern conservatism is, as John Kenneth Galbraith said, “The search for a superior moral justification for selfishness.

Quite honestly, movement conservatism, which I admit is not all of conservatism, has always been so. When looks at William F. Buckley and his spawn, it is all about preserving hereditary privilege, and the feeling of superiority that comes from justifying the unjustifiable.

That’s why you see so much in the way of Racist screeds in the 1950s and 1960s in the National Review, many from Buckley’s own poison pen.

There are also the haters, Delay and Musgrove come to mind, who are simply motivated by hate, and find conservationism the easiest way to find an outlet for their hate.

There are, of course, the inevitable hangers on: people who find personal affirmation on being part of “the movement”, particularly when it is in the ascendancy, but this is largely a social, and not an ideological phenomenon but a social one.

At its core, movement conservatism in the United States believes that nothing can be done to improve anything, and thus, there is no more point in dialog with them than there would be with a turnip.

As to “non-movement” conservatives….I’ve never met any, except for senior Catholic clergy, Bishops and higher, who appear to pine for the days of feudalism, and al Qaeda, who pine for the days of feudalism, but feudalism a few miles further east.

Economics Update

Let’s start with retail, where the inestimable Barry Ritholtz points us to a pretty picture on the retail collapse from the NY Times (click on image for the NY times article):

I would note that the 4 weeks before November 1 are now firmly part of the Christmas season, and the Christmas season is typically 40% of revenue, and 80% of profits.

In related news Circuit City files chapter 11, this should come as no surprise for the people who have followed this sad tale, as was predicted when they laid off senior sales staff and replaced them with clueless low wage drones while issuing large executive bonuses: (Story dated December 22, 2007)

Circuit City laid off 3,400 workers in March to replace them with lower-paid new hires. This week, it announced the approval of millions of dollars in cash incentives to retain its top talent after the departure of several key executives over the past year. Executive vice presidents could claim retention awards of $1 million each, and senior vice presidents could get $600,000, provided they stay with the company until 2011, according to a filing with the Securities and Exchange Commission.

If you don’t have competent sales staff, then why won’t your customers go to the Amazon and Walmart?

Karma, Neh?

In the world of mortgages, we have Fannie Mae Posting a ecord $29 billion loss for the quarter, which is actually worse than it seems, since the last quarter’s profits were largely from banking losses as tax breaks.

It will likely never see those tax breaks, because a profitable year is so far off.

Yesterday, it was monoliner Ambac, today, Moody’s cuts MBIA. No surprise….dead insurers walking.

Meanwhile, in energy, it appears that the House of Saud is actually adhering to the OPEC oil production cuts, which along with China’s announcement of a $586 billion stimulus package should drive commodities up.

The Russians are hoping that it will work, as falling oil prices seems to indicate a devaluation in the Ruble.

So far, it appears to be working, oil finished the day up $4.52/bbl….Good for them, bad for us.

In any case the Chinese stimulus package has had the effect of driving the dollar down, though I’m not sure why…I just don’t know the underlying theory.

Carnegie Taken Over by Swedish Government, to Be Sold

Finally, we have a report from Calculated Risk on credit crisis indicators:

  • Libor down (good)
  • 3 month treasury yields down (bad)
  • TED spread up a smidgen (a smidgen bad)

They also have a nice scare picture of the Federal reserve balance sheet here:

Basically, it’s how much of the sh%$pile that the Fed owns, and this is fracking terrifying.

Fairy Tales are Better Than Having Enough Bullets

Well, The Daily Telegraph tells a little tale, titled, “Porsche and VW share row: how Germany got revenge on the hedge fund locusts,” and it is a happy, happy story.

You see the evil trolls, believing that the general downturn in the world economy would adversely impact profit numbers at Volkswagen, had shorted the stock heavily, to the tune of 12% of all shares in the company, but the princess, Porsche had quietly arranged to increase its equity stake in VW from 42.6% to 74.1%.

The German state of Lower Saxony owned 20.1% of the outstanding shares.

Well, 74.1%+20.1% gives you 94.2% of all shares outstanding, and so the short selling trolls had to fill their 12% from the remaining 5.8%, and fell upon each other, bidding VW shares up to unforeseen heights, from €210 to well over €1000, causing billions of dollars in losses for the trolls, and Porsche made a paper profit (they will never realize this money, because they aren’t selling) of £100 billion.

The trolls rent their garments and cried to the king (Bafin, Germany’s financial regulator), but the king would have none of it:

So should we lose any sleep over the fact that hedge funds have lost their shirts, or should we all indulge in a spot of schadenfreude? The answer, as we should know after months of financial turmoil, is that we are all, ultimately, likely to be losers.

The princess, Porsche, manages to trick the trolls, hedge funds, and lives happily ever after.

NRCC Cutting off Money to NY House Races

Not enough money, so want to direct it toward races that they have a chance of winning:

The decision to abandon much of the state came after internal party polls showed Republican candidates in at least three once-promising races falling behind their Democratic opponents, a party official briefed on the internal deliberations said.

As a result, Republican leaders are diverting money to candidates in other races in which party officials believe they have a greater chance of success, the official said.

The decision by national Republicans to focus on a smaller group of races underscores the degree to which the party is on the defensive not only in New York but also in New Jersey, Connecticut and many other states. The national party is short on cash and is being forced into the difficult position of deciding where to continue to fight — and where to effectively surrender — as the election enters the final days of campaigning.

I’d say it was a realization that they were throwing good money after bad, but all Republican money is bad money.

Happy dance!