Blog on the Run: Reloaded

Monday, August 31, 2009 8:48 pm

Guess the coroner couldn’t get no satisfaction

Filed under: Weird — Lex @ 8:48 pm

Police are re-opening an investigation into the death 40 years ago of erstwhile Rolling Stones guitarist Brian Jones.

The original verdict was  “death by misadventure,” i.e., an accident. Supposedly a journalist has dug up (so to speak) undisclosed new information compelling enough to lead the cops to look back into it.

But there have been questions about the circumstances of his death from the beginning. He was found dead at the bottom of his swimming pool the night of July 2-3, 1969. His then-girlfriend claimed a builder named Frank Thorogood, who had been working on the house and reportedly was the last person to have seen Jones alive, killed him. (Thorogood has since died.)

Perhaps the new information further implicates Thorogood; perhaps it clears him and/or implicates somebody else.

Q: What’s the matter with bubbles?

Filed under: We're so screwed — Lex @ 8:21 pm
Tags: ,

A: Eventually, they all pop. Which hasn’t prevented China from going ahead and blowing one up anyway. I noted before that that appears to be the case. But now? They’re flat-out admitting it and daring anyone (read: the SEC) to do anything about it:

In a phenomenal demonstration of frankness and true economic assessment, the head of the China Investment Council, Lou Jiwei, who controls China’s $298 billion sovereign wealth fund, admits the ponzi nature of today’s markets:

Both China and America are addressing bubbles by creating more bubbles and we’re just taking advantage of that. So we can’t lose.

Indeed, they can’t lose thanks to the criminal silence on behalf of Mr. Jiwei’s US financial counterparties. It doesn’t get any simpler than that folks. Keep in mind Madoff was thrown in jail for a few hundred years for much less: what’s $55 billion when you are dealing with a $20 trillion+ global equity market Ponzi scheme. And yet both China and the US continue their struggle to perpetuate a Ponzi, with the full implicit backing of all financial, regulatory and legal authorities. The system is now officially broken, even ignoring the conspiratorial ramblings of fringe bloggers. …

One wonders at what point the US authorities will have the guts to at least admit what China is now openly saying is one big pyramid scheme. And as for the Fed’s prudent approach to fighting bubbles – well, that is now completely discredited, as the only goal for the US Federal Reserve is to make sure that Wall Street’s “VIP club” manages to cash out before all the stupid money and other retail investors, presumably before all hell breaks loose, and the latest bubble pops once more. Good luck to all.

Any ideas on just where we’re supposed to put our money so that it doesn’t just disappear when the next balloon pops?

Sunday, August 30, 2009 11:07 pm

Simple Answers to Simple Questions, commercial real estate edition

Filed under: We're so screwed — Lex @ 11:07 pm
Tags: ,

Welcome to another edition of Simple Answers to Simple Questions.

Today’s simple question: How bad is the commercial real-estate market?

A: Very, very, no-good, awful bad.

This has been another edition of Simple Answers to Simple Questions.

Saturday, August 29, 2009 4:34 pm

Politics in a time of funerals; or, Logic fail

Filed under: Aiee! Teh stoopid! It burns! — Lex @ 4:34 pm

Maybe it’s just me, but it strikes me as beyond weird that people somehow think it’s unseemly to talk politics upon the occasion of the death of a prominent politician. I don’t care whether you’re talking about Paul Wellstone or Ronald Reagan, Gerald Ford or Ted Kennedy, politics was what they devoted their lives to. And now when they die you’re not supposed to talk about it? I’m sorry, but I just don’t get how that works.

Four years ago

Filed under: Say a prayer — Lex @ 4:07 pm

KatrinaRemember

(image via First Draft)

Hot wheels

Filed under: Hooper — Lex @ 3:52 pm
Tags:

Hooper outgrew his old bike, so we found him a bigger one:

“This is the sweetest thing of my entire life!” he announced after riding it for a half-hour or so. “But, boy, does my penis hurt!”

Help a band out

If you’re going to tonight’s Panthers game at Bank of America Stadium, stop by the Wendy’s booth on the upper level, Booth #528. It’s being run by the band boosters at my old high school, South Mecklenburg. Besides, you WANT one of those bacon/blue-cheese burgers. You KNOW you do. OK, well, maybe that’s just me. But still.

Thursday, August 27, 2009 8:28 pm

Friend spoke my mind, as the Quakers might say

Filed under: Hold! Them! Accountable! — Lex @ 8:28 pm
Tags: ,

I disagreed with Ted Kennedy on any number of things, but in the spirit of respectful remembrance, I’ll focus instead on one thing on which he and I agreed wholeheartedly:

If Congress immunizes the telecoms for past violations of the law, it will send the message Congress approves what the administration did. We would be aiding and abetting the President in his illegal actions, his contempt for the rule of law, and his attempt to hide his lawbreaking from the American people. Voting for amnesty would be a vote for silence, secrecy, and illegality. There would be no accountability, no justice, no lessons learned.

The damage will not stop there. The telecommunications companies are not the only private entity enlisted by this administration in its lawbreaking. Think about Blackwater and its brutal actions in Iraq, or the airlines that have flown CIA captives to be tortured in foreign countries. These companies may also be summoned to court one day to justify their actions. When that day comes, the administration may call yet again for retroactive immunity, claiming the companies were only doing their patriotic duty as “partners” in fighting terrorism.

The debate we are having now about telecom amnesty is not likely to be the last round in the administration’s attempt to immunize its private partners. It is only the opening round. In America, we should be striving to make more entities subject to the rule of law, not fewer. Giving in to the administration now will start us down a path to a very dark place.

Think about what we have been hearing from the White House in this debate. The President has said American lives will be sacrificed if Congress does not change FISA. But he has also said he will veto any FISA bill that does not grant retroactive immunity–no immunity, no FISA bill. So if we take the President at his word, he is willing to let Americans die to protect the phone companies.

Shamefully, Congress, including then-Sen. Barack Obama, voted for the retroactive immunity anyway.

People who supported immunity tended to dismiss opponents as far-left-wingers. I preferred then and prefer now to think of myself as a law-and-order conservative who thinks that if you can’t do the time, you shouldn’t do the crime. Even if you are a telcom CEO.

Compromise

I’ve read a number of tributes to the late Sen. Edward Kennedy, and one point made pretty consistently (by, among others, Sen. John McCain) was that, although deeply liberal from a philosophical standpoint, he would compromise readily with Republicans on legislation. (One significant example was No Child Left Behind.)

As Digby puts it:

Kennedy’s great gift was fighting for progress without shame or obfuscation, making the moral argument for liberalism, and always trying to move the ball forward, inch by inch if that’s all he could get and in great leaps if the opportunity presented itself.

Americans as a whole like to think we hew toward the moderate middle. The mainstream media particularly likes to think that, which is why people such as the Washington Post’s David Broder go on so much about the need for compromise and bipartisanship.

But the fact of the matter is that politically and culturally we’re pretty deeply split right now. In such times, seeking compromise for its own sake may or may not be the morally correct thing to do, depending on the issues, but often it sure isn’t the practical thing to do.

I mention this because of the current discussion about bipartisanship and compromise as it relates to the six U.S. senators, three Republicans and three Democrats, currently negotiating over that chamber’s health-reform plan. One of the Republicans is Mike Enzi of Wyoming:

Mike Enzi, one of three Republicans ostensibly negotiating health care reform as part of the Senate’s “Gang of Six,” told a Wyoming town hall crowd that he had no plans to compromise with Democrats and was merely trying to extract concessions.

“It’s not where I get them to compromise, it’s what I get them to leave out,” Enzi said Monday, according to the Billings Gazette.

Enzi found himself under attack at the town hall simply for sitting in the same room as the three Finance Committee Democrats. Republicans in the crowd called for him to exit the talks. He assured conservatives that his presence was delaying health care reform.

“If I hadn’t been involved in this process as long as I have and to the depth as I have, you would already have national health care,” he said.

Let’s assume for the sake of argument that on the substance of the bill he’s right on the merits. But if I’m a Democrat, I’m thinking: “Why am I even talking to this guy? He wants concessions, but he won’t give anything in return. That’s not compromise. Forget that; we’ve got a majority, so we’ll just use the reconciliation process to ram through what we want.” If that happens, how has playing his cards as he has helped Enzi’s constituents who oppose the bill as he does?

Just askin’.

UPDATE: One of the other two Republicans, Charles Grassley of Iowa, isn’t flat-out opposing reform the way Enzi is, but he certainly has been moving the goalposts.

Not just a fine. Time.

Tyler Durden of Zero Hedge on Bank of America’s legal problems — and, possibly, BofA’s lawyers’ legal problems — regarding what it told (or didn’t tell) its shareholders about the Merrill Lynch takeover:

The bottom line is that either Bank of America’s executive committee, or as the [Securities and Exchange Commission] claims, the lawyers advising it

… whom Durden identifies as the firm of Wachtell Lipton in general and partner Ed Herlihy in particular …

were responsible for one of the most blatant public filing misrepresentations in history. A $33 million slap on the wrist which comes out of BAC’s troubled investors and, by [extension], taxpayers, is a ludicrous way to “punish” those responsible. The Attorney General must see through the smoke and mirrors of this scam and has to seek criminal punishment for whoever ends up being the responsible party in this “hot potato” blame game.

Word. If we’re going to have long-term economic stability, we need to unrig the rigged game that investing has become, particularly when taxpayer dollars are involved. And the best way to do that is by packing the riggers off to prison, rather than looking the other way, as the SEC usually does, when huge crimes are committed.

Karl Denninger identifies another likely case (h/t: baum):

I [ran a search for] the highest-volume stocks with prices over ten cents (to exclude the little penny pumper stocks on the OTC market.)

Well gee, let’s add this up!

That would be about 2.126 billion shares in total for these four stocks, two of which (Fannie and Freddie) are so far underwater in their equity value (to the government no less!) that there is no chance they’re worth anything, yet they remain listed, and the other two are zombie banks with Citibank existing only because of $300 billion in asset guarantees by The Fed and Treasury (which, incidentally, is under investigation, and that assumes that the $300 billion is all there is. There is persistent chatter that the real amount of “back door support” that Citibank (C) has is closer to a cool trillion dollars, although I’ve never been able to get anyone to speak on the record in that regard.)

But I digress.

Here is the NYSE Volume for Tuesday – for all shares, right off NYSE Euronext’s page:

So let me see if I get this right. 2.126 billion shares traded in four stocks, two of which that accounted for some 900 million of those shares are in companies that by any measure of accounting have absolutely zero common equity value whatsoever (and never will under any rational view of the future), yet NYSE Euronext continues to list them.

These four stocks represented thirty seven percent of all shares traded Tuesday. …

If there was ever an argument to be made for the NYSE having turned into a gigantic “hot potato” parlor game, this is it – in your face in an impossible-to-explain-away fashion.

NYSE Euronext, of course, derives a fee from each share traded, so they have to love this sort of thing. The ordinary investor who has a brain sees it as an amusing sideshow, but the unfortunate fool who gets sucked into the maelstrom is going to get destroyed when the computers move on to some other issue and the price collapses as there is no authentic bid out there for any of this crap.

Beware. This is the sort of cheap parlor game that our capital markets have turned into as a direct and proximate result of our so-called “regulators” turning a willful blind eye while supposed “improvements” in liquidity and “customer access” are put in place by those who have one singular purpose in mind – find a way to steal a fraction of a penny at a time by playing “hot potato” with a handful of issues (sometimes starting a nice juicy rumor to go with it, aka the one last week about BAC allegedly being taken out by Goldman just to prime the pump a bit!) hoping that you will be the bagholder upon whom they can unload.

I certainly hope the companies that manage my (now significantly depleted) retirement and college savings know what the hell’s going on and are acting accordingly.

And this, too, has to be a crime, yet the government does nothing about it.

And on a philosophical level, how can anyone possibly call this anything approaching a free market?

And if no one can, then why aren’t the advocates of free markets screaming bloody murder about this? Is it because they don’t get it? Is it because they’re hypocrites? Or is it because they think they’ve got an edge in this rigged game, that when the music stops they won’t be “the bagholder upon whom they can unload”?

They need to stop kidding themselves. There is nowhere near enough room to keep every free-market advocate in this country, myself included, safe from exposure.

Nice economy you got there. Be a shame if anything happened to it. (cont.)

Filed under: You're doing WHAT with my money?? — Lex @ 8:15 pm
Tags: ,

That’s basically what the banks that have gotten taxpayer bailout money are saying about Bloomberg’s FOIA lawsuit and bills pending in Congress to audit the Federal Reserve:

In a declaration filed in the Bloomberg Case (08-CV-9595, Southern District of New York), the banks demonstrate no shame in attempting to perpetuate the status quo with regard to the Federal Reserve and demand that the wool over the eyes of the general population remain firmly planted in perpetuity.

The [group of tax-receiving banks] submits this declaration because the Court’s Order threatens to impair the ability of our members to access emergency funds through the New York Fed’s Discount Window without suffering the severe competitive harm that public disclosure of their identity will cause.

Our members have accessed the New York Fed’s Discount Window with the understanding that the Fed will not publicly disclose information about their borrowing, especially their identity. Industry experience, including very recent and searing experience, has shown that negative rumors about a bank’s financial condition – even completely unfounded rumors – have caused competitive harm, including bank runs and failures.

Surely transparency would facilitate rumor-mongering to an unprecedented degree. After all rumors spread much easier when everyone knows the true financial condition of banks.

And here, in plain written Times New Roman, you see what racketeering by a major bank consortium looks like:

If the names of our member banks who borrow emergency funds are publicly disclosed, the likelihood that a borrowing bank’s customers, counterparties and other market participants will draw a negative inference is great. Public speculation that a financial institution is experiencing liquidity shortfalls – which would be a natural inference from having tapped emergency funds – has caused bank customers to withdraw deposits, counterparties to make collateral calls and lenders to accelerate loan repayment or refuse to make new loans. When an institution’s customers flee and its credit dries up the institution may suffer severe capital and liquidity strains leaving it in a weakened competitive position.

Pardon me if I am a broken record here, but would rumors not spread much less if there was more transparency, if investors and other financial intermediaries were fully aware of the conditions of their counterparties, if banks did not have to cover their billions in reserve losses by pretending they are viable and essentially being constant wards of the state?

I say again: rigged game. Here’s hoping the judge has the good sense to laugh this out of court. And thanks to ZH for keeping this issue in front of us.

UPDATE: In the House, Barney Frank calls their bluff, saying HR 1207 will pass in October, with delays on release of data added so that the info won’t be “market-sensitive” in the way the banks claim to fear. Senate prospects less clear.

Perhaps Obama and Congress remember Katrina …

… but if so, they don’t remember it too well, the Institute for Southern Studies finds.

Talk is cheap, folks.

(h/t: Ed)

Wednesday, August 26, 2009 8:34 pm

Insure this

The American Association for Justice, a professional association of trial lawyers (i.e., people who sue for a living), has named what it calls the Ten Worst Insurance Companies in America. Although this comes out at the height of the debate about health care, this paper is looking at insurance coverage in general, not just health insurance:

To identify the worst insurance companies for consumers, researchers at the American Association for Justice (AAJ) undertook a comprehensive investigation of thousands of court documents, SEC and FBI records, state insurance department investigations and complaints, news accounts from across the country, and the testimony and depositions of former insurance agents and adjusters. Our final list includes companies across a range of different insurance fields, including homeowners and auto insurers, health insurers, life insurers, and disability insurers.

Who’s No. 1? Well, let’s just say those hands you’re in may not be as good as you think.

Obviously, trial lawyers aren’t exactly the most unbiased source of information on this subject, and although the gathering of information and documentation might have been scrupulously factual, “worst” is still at least partially a judgment call. But take a look at the report and see what you think.

Of the four companies that handle our family’s various insurance needs, only one is on the list, I’m happy to say.

(h/t: Valerie)

Tuesday, August 25, 2009 8:53 pm

Investigating torture

Filed under: I want my country back. — Lex @ 8:53 pm
Tags: , , , ,

At long last, Attorney General Eric Holder has decided to appoint a prosecutor to determine whether roughly a dozen previously closed cases in which CIA employees or contractors may have broken the law should be reopened.

That’s the good news. But the Washington Post also says:

[Career Justice Department prosecutor John] Durham’s mandate, the sources added, will be relatively narrow: to look at whether there is enough evidence to launch a full-scale criminal investigation of current and former CIA personnel who may have broken the law in their dealings with detainees.

And that’s the bad news. Because we didn’t abuse and torture prisoners, threaten to kill their children and carry out mock executions, in a vacuum. The individuals responsible did what they did because they received direction from the highest levels of government and fraudulent assurances from John Yoo and Henry Bybee that what they were doing didn’t somehow violate U.S. law, the United Nations Convention Against Torture and other laws.

(Durham, by the way, is the same guy who’s investigating the disappearance of CIA videotapes of interrogation sessions.)

There was, in other words, a conspiracy that, according to a boatload of information already in the public record, extended all the way up to the President of the United States. And conspiracy to torture is punishable by the same sentence (except for the death penalty in cases in which the victim died) as the crime of torture itself.

Mr. Durham needs to conduct a fair and full investigation, following the evidence where it might lead (including, if need be, the administrations preceding and following George W. Bush’s), letting himself be guided by the fact that no one can be above the law if our country is to survive.

* * *

Relatedly, censored versions have been released of the CIA reports that former Vice President Dick Cheney claimed would prove that torture had been justified because it prevented terrorism. (Those documents are here.) I’ve scanned them, and my immediate reaction is that despite what Cheney claims, they don’t prove anything either way. Oh, they say that the fruits of interrogation in general were certainly helpful, but not all the helpful interrogation involved torture or was in any other way illegal. Perhaps the uncensored versions would shed more light one way or the other. I don’t know.

UPDATE: Although Cheney’s defenders insist the documents imply that torture worked, former Homeland Security adviser Frances Frago Townsend concedes that though that might indeed be the case, the documents — which, remember, Cheney said would prove torture worked — don’t actually say that.

Linin’ ‘em up

A couple of weeks ago I said that auditing the Federal Reserve was a great idea even if it was Ron Paul who introduced the bill that would make it happen. I am delighted to note that that bill, HR 1207, has, as of today, 282 co-sponsors, more than enough to pass if the bill makes it to the floor. I’m less delighted that only one of Greensboro’s three reps, Howard Coble, is among the co-sponsors, although I don’t know whether that means Brad Miller and Mel Watt oppose the bill or just figured that with a majority assured they would turn their attention to other things.

The companion Senate bill, S 604 from Bernie Sanders, I-Vermont, has 23 co-sponsors, ranging in political ideology from Tom Harkin, D-Iowa, to Sam Brownback, R-Kansas. (That’s quite a range, actually.) Among them is North Carolina’s Richard Burr but not our other senator, Kay Hagan. I do not know why that is.

But here’s what I suspect.

I suspect that the Fed has been doing things with our tax dollars, largely for the benefit of a few very large financial institutions, that will infuriate people once word becomes public. I further suspect that the wave of outrage that will follow will be something any incumbent and quite a few challengers would want to surf, rather than be swamped by. That wave is coming, and the time to get your board lined up and get up on your feet is drawing to a close.

There’s additional good news on this front: The Bloomberg news organization sued the Federal Reserve Bank of New York last year under the Freedom of Information Act for records on how tax money was spent. On Monday, a federal judge granted Bloomberg’s motion for summary judgment, meaning that both the facts and the law are so clearly on Bloomberg’s side that there’s no need for a trial. The bank has five business days to provide certain records and until Sept. 14 to let the court know how it intends to provide others. Should bank allies manage to kill or stall the Paul or Sanders bills, people could just file more FOIA lawsuits. So one way or another, this stuff’s coming out.

Congresscritters and would-be congresscritters of all stripes, take note.

UPDATE: Arguably another excellent reason to support auditing the Fed: Tim Geithner thinks it would be a bad idea.

Monday, August 24, 2009 8:22 pm

Caring for them who shall have borne the battle …

ain’t going so well:

While hundreds of thousands of disability claims lay backlogged at the Department of Veterans Affairs, thousands of technology employees at the department received $24 million in bonuses, a new report says.

Lawmakers want to know why some IT workers in the VA Department have received millions in bonuses.

A report issued by the VA’s Office of Inspector General said the department issued millions of dollars in awards over a two-year period in 2007 and 2008.

“The frequent and large dollar amount awards given to employees were unusual and often absurd,” the report stated.

The reports also called the payments “not fiscally responsible.”

Four high-level employees received about $60,000, $73,000, $58,000, and $59,000, respectively, according to the report, without sufficient justification. Another employee received a $4,500 performance award within the first 90 days of her employment from a manager who said that she did not even remember her.

The annual average award per employee was about $2,500 for both years, according to the report. About 4,700 awards and bonuses were issued in 2007, and about 5,000 in 2008.

Thanks to some inside information provided me by Craig Kabatchnick, a Greensboro lawyer (and now head of the Veterans Law Pr0ject at N.C. Central’s law school) who once defended the VA against lawsuits over disability payments, I was able to write a number of stories during my last couple of years at the News & Record about problems in the system through which disabled veterans get their disability payments. Unlike VA health care, which, as I’ve noted, is a model program by and large, the VA disability-payments system has long been a royal mess.

First, it takes too long even for straightforward claims to be processed. As of a week ago today, the claim backlog stood at more than 422,000 cases nationally, up about 30,000 from a year ago. (Winston-Salem’s regional VA office, with a backlog of more than 21,000, had more cases pending than any other regional office in the country except St. Petersburg, Fla.) Nationally, more than 20 percent of cases had been pending for six months or more.

Second, filing a claim is rarely straightforward. Medical records, doctors’ statements, buddy statements and many other records must be compiled, organized and submitted. VA officials may ask, after months, that claims be re-submitted because they lacked an item or two, if they don’t reject the claim outright. And if the claim is denied, there’s a lengthy, multi-level appeals process in which, in many cases, a vet’s best hope is to win an order that his claim be re-examined at the regional-office level — in effect, starting the process over again. Vets sardonically describe the VA’s claims-handling policy as “Delay and deny and hope that I die.”

The only people under such a system who should be receiving any bonuses whatever are those whose work singularly contributes to dramatic reductions in the backlog. But so far as can be ascertained at the moment, there have been no such reductions.

The outrageous bonuses being paid to bankers whose companies are being propped up by our tax dollars are a scandal, and that’s where I’ve had my focus lately. But these bonuses for incompetence are a slap in the face to hundreds of thousands of men and women who have served our country, many of whom are permanently disabled because of their service. Sen. Daniel Akaka, D-Hawaii, the chairman of the Senate Committee on Veterans Affairs, and North Carolina’s Richard Burr, the committee’s ranking Republican, need to join with their House counterparts to, first, put a stop to these unjustified bonuses and then do whatever it takes to reduce the claims backlog dramatically. This problem has festered for years, with publicly available Government Accountability Office reports (go here to search GAO reports by agency and date) and VA Inspector General reports documenting the problem available in numbers sufficient that no lawmaker should be able to claim ignorance. (If they, or you, want to follow along at home, you can visit the VA’s Monday Morning Workload Reports page weekly to download updated reports as Microsoft Excel spreadsheet files.)

As the Civil War was ending, Abraham Lincoln called on America in his second Inaugural Address to “care for him who shall have borne the battle and for his widow and his orphan.” For the vets (and in some cases, their survivors) who depend on these payments, we need to do a better job.

(h/t: Fred)

Sunday, August 23, 2009 7:53 pm

Journalism sucks …

Filed under: Journalism — Lex @ 7:53 pm
Tags:

… at least as it is widely practiced in America:

… so much of political journalism consists of pontification by people who have supposedly been around and understand how things work — and yet they’re constantly stunned when history repeats itself in the most predictable of ways.

And the latest realization that has so many reporters flabbergasted: the misinformation has worked! People believe falsehoods about health care! Many people don’t even know basic facts about the current system!

Gee, you don’t say? Many people don’t know the basic facts about anything. That’s one of the basic facts of American democracy. And when people are repeatedly told things that aren’t true by people they trust, they tend to believe those things. That’s one of the basic facts of … people.

Surely reporters — whose jobs, after all, involve communicating with the public — are aware of these basic facts of life? Surely they’ve heard the expression about a lie making it halfway around the world before the truth has time to get its boots on? So why are they so surprised? Particularly when they’ve spent the bulk of the health care debate talking about politics and polls and chattering endlessly about who is “winning the message war” rather than repeatedly and clearly explaining to viewers the facts about health care.

Just look at the way much of the media have reacted to the belated realization that the public is woefully misinformed: By speculating — sorry, “analyzing” — why this is the case, and guessing — sorry, “analyzing” — whether the White House can develop a “message” that “works.” And what aren’t they doing in reaction to this realization? Clearly and repeatedly explaining the facts. And they’re surprised people don’t know the truth. Unbelievable.

In fact, it is the media’s behavior that has made this summer’s madness inevitable. When they let the loudest yellers and most audacious liars drive the discourse, they guarantee that people who can’t win on the merits will yell and lie. When they focus on politics rather than policy, they guarantee the public will remain in the dark about basic facts. When they repeat false claims, or treat them as he-said, she-said situations, they guarantee that those false claims will sway confused citizens. When they continue to give a platform to people who have a history of lying — and assume those people are telling the truth this time — they guarantee those people will continue to lie.

As long as the media approach their jobs this way, we’re going to see the same thing play out over and over again. And each time, the media will be shocked — shocked — that some people lie, and other people believe lies.

If the journalism bidness gave a damn for its customers’ well-being, it would gauge its performance on the basis of how well informed the populace is and adjust its performance accordingly. In no developed country in the universe should any significant number of people have been able to believe, years after the fact, that Saddam Hussein was responsible for 9/11. But if the journalism bidness did anything at all in reaction to this travesty, it was to blame it on those scruffy, undisciplined, unserious bloggers.

Saturday, August 22, 2009 2:17 pm

A plea of a somewhat different kind

Filed under: Sad — Lex @ 2:17 pm
Tags: ,

It would be real easy to crack a lot of jokes about Sherry Johnston. She’s the mother of Levi Johnston, the father of former Alaska Gov. Sarah Palin’s daughter Bristol’s baby.

As if trying to live up to some of the classist assumptions about the Palins and anyone connected with them, Sherry got popped last winter for six felony counts pertaining to the prescription pain reliever OxyContin, familiarly known as Hillbilly Heroin. She pleaded guilty Wednesday to one count of possession of the drug with intent to deliver. The other five counts will be dropped and she will get a five-year sentence, of which she actually will serve only three years if she behaves.

Fine and good so far. Now here’s the interesting part:

Sherry Johnston has two pain pumps implanted in her body to deliver medication because she suffers a rare condition involving scurvy and chronic pelvic pain from prior medical surgeries, [defense attorney Rex] Butler said. She was receiving professional pain relief treatment but the problems arose when her insurer refused to pay for the medication, Butler said.

“People want to think she was just a drug addict,” he said. “She made a poor judgment choice. But what do you do?”

This could very well be just defense-attorney BS. But what if it’s true? I mean, insurers have never refused to pay for a needed treatment, right?

The linked story makes it clear Sherry Johnston was dealing, but not clear why. Was she doing it for fun ‘n’ profit, or was she doing it simply to finance the purchases she needed to make her own chronic pain more bearable?

We can’t tell from this story. But here’s the thing: Chronic pain, severe chronic pain, can make you so miserable that you’ll do anything, anything to make it stop, or at least to make it manageable.

Is that what was up with Sherry Johnston? I do not know. But if it was, and if the facts regarding her insurer are as her lawyer has claimed, then she neither needs nor deserves to be in prison.

AIG’s new chief really, really, REALLY doesn’t get it

Filed under: I want my money back. — Lex @ 1:31 pm

Among the things he told AIG employees in a company town-hall meeting Aug. 4, according to a recording obtained by Bloomberg:

“(I) had the luxury to say to the government [after the company stock's recent price increase], I’m not going to rush to do this. I’m appalled at how much pressure has been put on all of you to just sell it no matter what, because the Fed wants out, or the Treasury wants out. If they want out in a hurry, they shouldn’t have come in in the first place.”

And never mind what would have happened if the government hadn’t come in in the first place.

Benmosche told staff he was working to get Kenneth Feinberg, the Obama administration’s so-called special master for executive pay, to “buy into” a new compensation plan for all employees expected within months. Benmosche will get $7 million in salary and as much as $3.5 million a year in long- term incentive awards, AIG said.

“I want to make sure we all get paid competitively,” he said. “If you shoot the lights out in a given year, we should have enough flexibility to give you a big increase.”

Two thoughts: 1) I see no danger whatever that anyone with AIG is going to “shoot the lights out” anytime soon, and 2) no bonuses or big increases while the company is still on the hook to the taxpayers for $182 billion. None. Period.

“It’s time the people in Congress stopped talking about you as the problem, because you’re the solution,” he said. “It’s not your fault, it’s their fault, it’s the regulators’ fault.”

The Office of Thrift Supervision “fell short” in its oversight of AIG’s credit-default swaps, Scott Polakoff, a former acting director of the regulator told lawmakers at a hearing in March.

Bless Bloomberg’s heart for getting this recording, but it overlooks two significant points here. First, Benmosche is in effect conceding what many of us have known for even longer than since Alan Greenspan admitted it last fall in Congressional testimony: The financial industry simply cannot or will not regulate itself adequately; wide, deep government oversight is required.

Second, for the full story, once again we must turn to Matt Taibbi:

Two things about this. One, let’s not forget that AIG went out of its way to cherry-pick the weak and understaffed OTS [Office of Thrift Supervision] as its primary regulator by chartering an S&L called the AIG Federal Savings Bank in Wilmington, Delaware back in 1999. By this little maneuver AIG got itself declared a thrift holding company, which made the OTS, which only had one insurance expert on its staff, the primary regulator for the world’s largest insurance company.

Two, the notion that AIGFP was AIG’s only problem is bananas. It may not even have been AIG’s biggest problem. This legend obscures the fact that playing a nearly equal role in the demise of AIG was AIG’s securities-lending business, headed by yet another bombastic narcissist (AIG must lead the world in the hiring of these to senior management) named Win Neuger. Neuger back in the earlier part of this decade issued a clarion call to his subordinates, announcing a plan he called “10 cubed” — securing 1000 million (i.e. $1 billion) dollars a year in profits. Back in 2005 he told his staff that anyone who wasn’t on board with the plan to make a billion in profits a year could hit the road, literally, saying, “If you do not want to be on this bus, it’s a good time to step off.”

But how does one make a billion in annual profits in the normally staid, risk-averse securities lending business? By taking the collateral from the securities you lend out and investing it not in low-risk or risk-free instruments like treasuries, but in residential mortgage backed securities!

Neuger’s insane decision to bet billions in AIG collateral on the residential housing market was the other half of the story of AIG’s death spiral. Fully $43.7 billion of the bailout monies paid to AIG’s counterparties via the Maiden Lane facilities were tied not to Joe Cassano and AIGFP, but to the sec-lending operation. So is it plausible that AIG’s senior management could have simply not understood where all those billions in revenues from AIGFP were really coming from all those years? I don’t think so, but I know one thing for sure: it’s definitely not plausible that AIG’s senior management could have been unaware where the money was coming from from both Cassano’s and Neuger’s operations. …

It wasn’t the OTS that kept Joe Cassano on the payroll for a million bucks a month for seven whole months after it was revealed that he had incurred tens of billions in losses via his CDS portfolio, among other things by steering independent auditors away from his books, and after he had twice declared publicly that he could not foresee even “one dollar” of losses. That would be AIG that did that (they didn’t stop the payments until a month after the bailout).And it wasn’t the OTS that decided to keep Win Neuger around as the Chairman and CEO of AIG Investments to the present day. Hell, Neuger is still an Executive Vice President of AIG. We the taxpayer are probably going to be giving this guy a nice bonus this year, because AIG couldn’t see fit to fire the man who single-handedly inspired $43 billion in bailout payments. It is for the right to increase compensation to valuable retained personnel like Neuger that Benmosche is now going to the mattresses with Kenneth Feinberg, Obama’s special master in charge of executive pay.

And with respect to regulators, there’s also this:

Benmosche told employees not to be immobilized by concern that they will upset regulators.

“My fear is that you’ll say, ‘I don’t know if Treasury wants it, I don’t know if the Fed wants it, I don’t know if the lawyers want it, I don’t know whatever,’” he said. “If you sit there every day not making the right decisions to take us to the next level, we’ll miss an opportunity.”

So, hey, if you don’t immediately get frog-marched out of here in handcuffs, it’s all good.

Your government, Republicans and Democrats alike, is, by and large, standing still and letting this stuff happen. If you’re not communicating with your congresscritters and urging them to head over to AIG HQ right now with torches and pitchforks and a lot of handcuffs, then you deserve whatever happens to your savings, your taxes and your country.

(Earlier.)

UPDATE: Wouldn’t it be big fun if the Fed became the next AIG?

Friday, August 21, 2009 8:45 pm

I, for one, think it may be premature to welcome our new Chinese financial overlords

Filed under: We're so screwed — Lex @ 8:45 pm
Tags: ,

… because they’ve been blowing bubbles over there, too:

To make up for the estimated 20% decline in Chinese exports, and in order to “maintain” the artifical minimum 8% growth of the economy, the Chinese bank has to redirect consumption to internal sources of demand, which can only be achieved by providing virtually free credit. The problem with that is that practically all of mainland China has taken the free cash and invested it in the stock market. The eventual collapse of this fake liquidity transfer will be one for the ages.

Is it just me, or does having the phrases “collapse” and “one for the ages” in the same sentence make you want to hug your gold bars a little more tightly, too?

Relatedly — and you’ll have to bear with me for a minute to see how — both U.S. and Eurozone trade balances appear to be improving only because imports are collapsing, not because exports are rising. Why? The Chinese bubble:

Yet the real wild card is China, where estimates for export decline approach the 20% mark, after a prior year increase of 20%. This is a huge hit to the Chinese economy and is the primary reason for the $1.1 trillion in increased lending, whose primary purpose is to spur replacement demand with traditional export partners reeling.

In essence what is going on, is that the brief pick up in German and US GDPs on the trade balance side, are being facilitated exclusively by the credit bubble in China. By dint of China being able to recognize GDP at production instead of expenditures (like normal Western countries), China is now trying to back fill into the trade void left from the collapse of Western economies by promoting the same kind of irresponsible lending (and borrowing) that led the US economy to its current sorry state. This will eventually end very, very badly.

Indeed, I shall be shocked should anything different happen.

Health-care reform update: stalemate.

Filed under: Fun — Lex @ 8:26 pm
Tags:

It’s going nowhere:

WASHINGTON—After months of committee meetings and hundreds of hours of heated debate, the United States Congress remained deadlocked this week over the best possible way to deny Americans health care.

“Both parties understand that the current system is broken,” House Speaker Nancy Pelosi told reporters Monday. “But what we can’t seem to agree upon is how to best keep it broken, while still ensuring that no elected official takes any political risk whatsoever. It’s a very complicated issue.”

“Ultimately, though, it’s our responsibility as lawmakers to put these differences aside and focus on refusing Americans the health care they deserve,” Pelosi added.

The legislative stalemate largely stems from competing ideologies deeply rooted along party lines. Democrats want to create a government-run system for not providing health care, while Republicans say coverage is best denied by allowing private insurers to make it unaffordable for as many citizens as possible.

“We have over 40 million people without insurance in this country today, and that is unacceptable,” Sen. Orrin Hatch (R-UT) said. “If we would just quit squabbling so much, we could get that number up to 50 or even 100 million. Why, there’s no reason we can’t work together to deny health care to everyone but the richest 1 percent of the population.”

“That’s what America is all about,” he added.

I lurvs me some Onion.

Phase 2

Filed under: We're so screwed — Lex @ 8:22 pm
Tags: ,

When they came for the banks that were sinking under the weight of toxic loans, I did nothing, for I was not a bank sinking under the weight of a toxic loan, I was a bank that had bought a bunch of mortgage-backed securities and other banks’ loans.

Problem is, now they’re coming for me.

The kid is alright, or, Say hello to the Boomstick, hellbeast!

Filed under: Fun — Lex @ 8:01 pm
Tags:

A friend of mine from high school, now living alone in the rural South, reports being female, liberal and armed:

My therapist had been encouraging me to buy a shotgun for years, because he didn’t like my living out here without some form of protection. (You KNOW you are doing okay, mental-health-wise, when your therapist is urging you to buy a gun.) … You can snicker at its small size, but loaded with 000 buckshot, it should serve my needs just fine, unless wild elephants overrun Mississippi.

Thursday, August 20, 2009 8:47 pm

And it’s 1, 2, 3, what’re we fightin’ for?

Filed under: Uncategorized — Lex @ 8:47 pm
Tags: , , ,

With al-Qaeda now largely decamped from Afghanistan to Pakistan, the U.S. military there now facing a homegrown insurgency rather than an international terrorist movement and Americans dying in Afghanistan at some of the highest rates since 2001, dday at Hullabaloo observes, “Actually, we have morphed our goals in Afghanistan, from counter-terrorism to counter-insurgency, without anyone really challenging it.”

Except that, well, someone actually is challenging it:

A majority of Americans now see the war in Afghanistan as not worth fighting, and just a quarter say more U.S. troops should be sent to the country, according to a new Washington Post-ABC News poll.

I had no trouble seeing the point of having the U.S. military in Afghanistan to pursue al-Qaeda. That was about as clearly defined and rational a national-security interest involving combat as we’ve had since World War II. But why are we still there? What, exactly, are we attempting to achieve, are we going about it in the right way, and whether we are or not, what is the likelihood of success?

I ask because I honestly do not know.

About bloody time

Once again, Rep. Alan Grayson, D-Fla., is stepping up, and now he has help:

Citigroup Inc.’s $301 billion of federal asset guarantees, extended by the U.S. last year to help save the bank from collapse, will be audited to calculate losses and determine whether taxpayers got a fair deal.

Neil Barofsky, inspector general of the U.S. Treasury Department’s $700 billion Troubled Asset Relief Program, agreed in an Aug. 3 letter to audit the program after a request by U.S. Representative Alan Grayson. Barofsky will examine why the guarantees were given, how they were structured and whether the bank’s risk controls are adequate to prevent government losses.

The Treasury, Federal Deposit Insurance Corp. and Federal Reserve provided the guarantees last November, when a plunge in Citigroup’s stock below $5 sparked concern that a run on the bank might rock global markets and impede an economic recovery. New York-based Citigroup paid the government $7.3 billion in preferred stock in return for the guarantees.

“What kind of toxic assets did the Federal Reserve guarantee, and what off-balance-sheet liabilities have been pinned on us?” Grayson, a Florida Democrat who sits on the House Financial Services Committee, wrote yesterday in an e- mailed response to questions on the audit. “How much money have the taxpayers already lost? We need to know.”

Citigroup’s guarantees are among $23.7 trillion of total potential government support stemming from programs set up since 2007 to ease the financial crisis, according to a report last month by Barofsky’s office. The “total downside risk” from Citigroup’s asset guarantees is about $230 billion to the Federal Reserve alone, Grayson said in a June 24 letter to Barofsky requesting the audit.

A few thoughts, in no special order:

  • Every single transaction undertaken under TARP should be audited. No exceptions, no mercy.
  • The loans on Citi’s books need to be priced at their true market value, right now. And if the result is that Citi is insolvent, which would not in the least surprise me, then nationalize it, shut it down and sell it off.
  • We can afford to put ourselves on the hook for $23.7 trillion to bail out a lot of banks that should have been allowed to fail, but apparently we can’t afford $100 billion a year for health-care reform. That’s some whacked-out math. There may be good reasons to oppose any/all of the currently pending bills, but “We can’t afford it” definitely isn’t one of them.

Way too cool for AT&T

Filed under: Aiee! Teh stoopid! It burns! — Lex @ 8:09 pm
Tags: , ,

I haven’t even had a cell phone that takes pictures for very long. I don’t have a Blackberry, let alone an iPhone, so to a certain extent all this is happening way over my head, practically speaking. But I get the ramifications:

Earlier this month, Apple rejected an application for the iPhone called Google Voice. The uproar set off a chain of events—Google’s CEO Eric Schmidt resigning from Apple’s board, and the Federal Communications Commission (FCC) investigating wireless open access and handset exclusivity—that may finally end the 135-year-old Alexander Graham Bell era. It’s about time.

With Google Voice, you have one Google phone number that callers use to reach you, and you pick up whichever phone—office, home or cellular—rings. You can screen calls, listen in before answering, record calls, read transcripts of your voicemails, and do free conference calls. Domestic calls and texting are free, and international calls to Europe are two cents a minute. In other words, a unified voice system, something a real phone company should have offered years ago.

Apple has an exclusive deal with AT&T in the U.S., stirring up rumors that AT&T was the one behind Apple rejecting Google Voice. How could AT&T not object? AT&T clings to the old business of charging for voice calls in minutes. It takes not much more than 10 kilobits per second of data to handle voice. In a world of megabit per-second connections, that’s nothing—hence Google’s proposal to offer voice calls for no cost and heap on features galore.

What this episode really uncovers is that AT&T is dying. AT&T is dragging down the rest of us by overcharging us for voice calls and stifling innovation in a mobile data market critical to the U.S. economy.

Bad enough that AT&T didn’t come up with this on its own, it had to keep anyone else from using it, too. Say what you will about the dinosaurotude of newspapers, at least newspapers didn’t t try to keep the Internet out of your house. (In fact, the N&R’s parent company was one of the first ISPs in this area, although it later got out of the retail ISP business in favor of more big-ticket enterprises.)

(h/t: Fec)

Wednesday, August 19, 2009 8:48 pm

See, the problem is that the Declaration of Independence isn’t a legally binding document

Life, liberty and the pursuit of happiness? Associate Justice Antonin Scalia says that’s just so 1776:

“This Court has never held that the Constitution forbids the execution of a convicted defendant who has had a full and fair trial but is later able to convince a habeas court that he is ‘actually’ innocent,” wrote Scalia. “Quite to the contrary, we have repeatedly left that question unresolved, while expressing considerable doubt that any claim based on alleged ‘actual innocence’ is constitutionally cognizable.”

And he says this like it’s a good thing.

Employee compensation

Filed under: You're doing WHAT with my money?? — Lex @ 8:06 pm
Tags: ,

I know a lot of people whose pay effectively has been cut 5% through furloughs. And I know some people whose pay effectively has been cut 20% by 20% pay cuts. And I know some people, including myself, whose pay effectively has been cut 100% by virtue of no longer having a job.

So I’m a little puzzled as to why the new CEO of AIG, a company 80% owned by the American taxpayer, a company that claimed a “profit” this past quarter only on the backs of the American taxpayer, a company whose main function for the past year appears to have been hoovering money out of the American taxpayer and distributing it to Goldman Sachs, has to be paid $7 million a year.

But wait, I hear some of you saying, more than half that’s in stock, not cash. Yeah, and how much would that stock be worth if the taxpayer weren’t propping it up?

Pay this guy $500K. (The president of the United States only gets paid $400,000 a year, and he has certainly had a better year than the CEO of AIG.) Give him a meal allowance with at least some tenuous connection to everyday reality. (Eating lunch at McDonald’s every once in a while probably won’t actually kill you. Not directly, anyway, especially if you order the chicken wrap or something.) Make his butt fly coach. Even under those terms, there are still plenty of competent people who would kill to have the job. If he wouldn’t want it under those conditions, let’s hire one of them.

Tuesday, August 18, 2009 5:37 pm

One that (literally) got away

Filed under: Photos that got away — Lex @ 5:37 pm

Ahead of me merging from southbound Benjamin Parkway onto eastbound Wendover Avenue and then off toward the sunrise: one bright-orange Lotus coupe. Sweet.

Quote of the day

Filed under: Quote Of The Day — Lex @ 5:36 pm

I may or may not agree with him on the substance, but this has to be the most cutting piece of political criticism in a long, long time. It’s from Matt Taibbi and refers to this past weekend’s White House signal that President Obama might be willing to sign a health-care reform plan that lacks a public option:

“Can you imagine Bush and Karl Rove allowing themselves to be paraded through Washington on a leash by some dimwit Republican Senator of a state with six people in it the way the Obama White House this summer is allowing Max Baucus (favorite son of the mighty state of Montana) to frog-march them to a one-term presidency?”

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