Thursday, July 15, 2010

Last Call

And Goldman Sachs settles up with the SEC for $550 million and a "we're kinda sorry".
Goldman acknowledges that the marketing materials for the ABACUS 2007-ACI transaction contained incomplete information. In particular, it was a mistake for the Goldman marketing materials to state that the reference portfolio was "selected by" ACA Management LLC without disclosing the role of Paulson & Co. Inc. in the portfolio selection process and that Paulson's economic interests were adverse to CDO investors. Goldman regrets that the marketing materials did not contain that disclosure.
P.S.  Goldman earned $12 billion in just profit in 2009, and made $3.5 billion just in Q1 alone.  They're kinda sorry all the way to the f'ckin bank.  It's about 3-4% of what they paid out just in bonuses to employees in 2009.  That's the penalty Goldman has to pay.  That's asswipe money for them.  They made multiple times that in just profit, not to mention bonuses to the people who engineered the whole fix...and they have the capital to keep playing the Big Casino even more.

Michale Douglas playing Gordon Gekko in "Wall Street" was wrong when he said "Greed is good."  That's a moral judgment, and there's no morality involved here.  He should have just stopped at "Greed is."  It's an economic tautology, an inevitability, in 2010.  The lesson here is if you game the system with enough leverage to the point that the system breaks down for everyone involved if you should lose, everyone then has an invested interest in making sure you win.  You can't lose the game if you are the game.

Meanwhile, how you doin'?

Me?  Been a long day.  Oil geyser is capped (for now), FinReg passed, Goldman Sachs settled with the SEC.   Somehow, I do see ordinary Americans getting some benefit from all this, but not compared to the pain we're going to go through to pay for all this.

And we will be paying for all this for a very, very long time.

He Is A Robot Possibly, Or One Of The Undead

Dick Cheney.  He has no pulse now.

No, literally.
Cheney, who likely has end-stage heart disease, was fitted with a special pump last week to help his heart pump blood through the body. The left ventricular assist device (LVAD) is consider a last step before a full heart transplant.
"It's reserved for people who have end-stage heart failure, and advanced and heroic therapies have been tried, and after folks have optimized evidence-based and guideline-recommended drug therapies," said Dr. William Abraham, director of the division of cardiovascular medicine at Ohio State University. "Their heart conditions have progressed to a state where the mortality risk is very high and they turn to LVADs and transplants."
Cheney's doctors describe the operation as a success and say he is now recuperating.
But the device does have one almost creepy side effect. The former vice president will not have a pulse, according to Dr. Alan Stewart, director of the Aortic Surgery Program at New York Presbyterian Hospital, Columbia University Medical Center.
"This is a continuous ventricular assist device, meaning that blood is impelled. It is not a pulsatile device. So if someone were to feel Mr. Cheney`s wrist, Mr. Cheney will have no pulse," Stewart told MSNBC's Rachel Maddow Wednesday.
"You can have a pretty decent quality of life on a ventricular assist device. The devices are smaller now and they`re quite durable. This device could be expected to last for three to five years and then could even be changed out for another device," Stewart explained.
On one hand, medical technology is amazing...if you can afford it.  On the other hand, Dick Cheney's circulatory system is a scary, scary place.

But in all seriousness, Dick Cheney is someone I happen to have serious and massive political disagreements with and I don't like the guy.  He is however a human being, a husband, and a father.  Late stage heart disease is not anything I would wish even on Dick Cheney.

In Which Zandar Admits He Was Wrong

Yep.  I was wrong, the financial regulation bill actually passed today, as Harry Reid said it would.
It's done. The Senate this morning, by a vote of 60-39 passed the final version of Wall Street reform legislation -- the exact same version the House passed two weeks ago, which will now go the White House for a signature. Senate Majority Leader Harry Reid (D-NV) said that the President plans to sign the bill next week.

The development, though expected for days, represents a major achievement for President Obama and congressional Democrats -- their first landmark bill since health care. And this time it's actually popular.
Naturally, Orange Julius is already calling for the bill's repeal.
"I think it ought to be repealed," Boehner told reporters at a press conference Thursday morning. "I think the financial reform bill is ill-conceived. I think it's going to make credit harder for the American people to get -- clearly harder for businesses to get. And the fact that it's going to punish every banker in America for the sins of a few on Wall Street, I think is unwise. On top of that, I think that it institutionalizes "Too Big To Fail" and gives far too much authority to federal bureaucrats to bail out any company in American they decide ought be bailed out."
Yes, they hate Obama that much.  Now this law must be destroyed because Obama can claim victory.  Expect months of Rasmussen polls asking if the bill should be repealed and constant monitoring of the bill's popularity, as well as any negative economic news to be blamed on the bill once it's signed into law.

Zandar's Thought Of The Day

This right here.

When employers are able to recover their profits many years before their employees can even hope to attain the income and employment levels they had prior to recession’s devastation, economic policy is clearly skewed in favor of corporations and not workers.
As profit numbers for the big Dow/S&P 500 components roll in over the next couple weeks, ask yourselves "Is this fair? I'm angry at the Democrats for allowing this over the last 18 months, but will putting the Republicans back in charge make the gap between the blue line and the red line any better?"

That's the main question for voters in 2010.

What Atrios Said

Duncan Black on the failed foreclosure relief program:
I think there's a giant issue that political reporters, though not other reporters, have completely ignored, and that's the complete failure of the HAMP program. Here was a program which was supposed to help people. It in theory might have helped some, but for many more it either didn't help or prolonged the agony. They had an interaction with a "government program" which was poorly designed, complicated, and ultimately unhelpful.
To prove that government should be allowed to help people in the future and to expand that capability through legislation, you first have to prove that you can make the government work at the current level.  Unfortunately, the HAMP program was a complete disaster and has directly contributed to more foreclosures, not fewer.  We got proof of those results today: record home foreclosures in the second quarter.

HAMP is a program that failed miserably and because of it, millions of Americans have even less confidence in the government than before and they are right to think so.

Of course, we wouldn't have needed the HAMP program if cramdown legislation had been passed by the Dems back in early 2009 to allow bankruptcy judges to directly change mortgage rates in foreclosure cases to offer effective foreclosure relief.  It was killed in the Senate in April 2009 and again in the House in December when it was voted out of the Wall Street reform bill that passed.  The administration then resorted to HAMP to fix the foreclosure problem.

The Obama administration has done a lot of things well.  But when it comes to fixing arguably the fundamental root cause problem of our economic woes, the housing collapse, this administration has failed miserably.

Now we're all going to pay for it.

Bust a Cap In It

...or in this case, the cap is not busting.
For the first time since the Gulf oil spill disaster started on April 20, the entire flow of oil was being contained Thursday as part of BP's pressure testing of a new cap, BP and federal officials said.

If the cap holds, the idea is to keep it on — and the flow checked — until a relief well can plug the blownout well in August. 
If the cap does not hold, BP has added to its siphoning capacity and expects to be able to siphon up most if not all of the oil starting next week.
BP had slowly dialed down the flow as part of the pressure test. Engineers are now monitoring the pressure to see if the busted well holds.
BP Vice President Kent Wells said that oil stopped flowing into the water at 3:25 p.m. ET.
The federal Joint Information Center confirmed that the flow had stopped.
"I am very pleased that there's no oil going into the Gulf of Mexico," Wells said. "In fact, I'm really excited there's no oil going into the Gulf of Mexico."
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It's good if this cap holds.  I still stand by my theory however that the daily siphoning numbers BP should be reporting from this cap will find some way to get lost.

For now, the Gulf is the victor here.

Dear America:

"My only real regret is if I had done a better job of covering up for Bush and Cheney lying America into war in Iraq, I wouldn't be have to be working so hard at doing it now."

--Karl Rove, Wall Street Journal.

Bonus Verbatim Stupid: "We know President Bush did not intentionally mislead the nation. Saddam Hussein was deposed and eventually hung for his crimes. Iraq is a democracy and an ally instead of an enemy of America. Al Qaeda suffered tremendous blows in the "land between the two rivers." But Democrats lost more than the election in 2004. In telling lie after lie, week after week, many lost their honor and blackened their reputations."

Another Milepost On The Road To Oblivion

The LA Times confirms what we've known for a while now:  second quarter 2010 gave us a record number of bank foreclosures on homes.
The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation's housing recovery but probably won't sink it completely if the nation's employment situation doesn't deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

"It is almost a certainty that we will see over a million over the course of the year, and that would definitely be a record," he said. "It's serious, but it doesn't appear to be that these levels will crater the housing market if the economy at least stabilizes and we do start to see some job creation."
What do you mean "if the economy stabilizes"?  Anyone who's been paying attention knows that the million foreclosures themselves are the catalyst that will "crater the housing market" and the economy along with it.  In 2007 the first wave of foreclosures happened as the housing bubble burst and it caused the financial crisis.  The second wave in 2008 happened because the collapse went national and it tore up housing markets across the country.  We're now riding high on the third wave of foreclosures caused by the unemployment spike from the recession, and that's going to generate a second leg down in the housing market, which will in turn give us a double-dip recession (or more correctly a depression).

We're now fully in the middle of the deflationary spiral.  We're now choosing to do absolutely nothing about it and let the "free markets" solve the problem.  The resolution will be another plunge in housing prices in the next 18 months and more homeowners underwater and on the foreclosure lists...and the spiral will continue unless there is some sort of government intervention.

I said a year ago the cycle would be inflation, deflation, hyper-inflation.  We're well into the deflationary period now.  The hyper-inflation over-correction to fix it is coming sooner than you think.

A Liberal Amount Of Humor

If you aren't already listening to it, Bob Cesca and Elvis Dingeldein are hysterical if you're into scathing political humor and taking potshots at Village Idiocy.  Their weekly hour-long show rocks and you can now subscribe to the show's podcast on iTunes.

New stuff on Thursdays, and it's Snark of Extraordinary Magnitude(tm).

Irony, Thy Name Is The Village

Politico's John Harris and Jim VandeHai sum up everything that's wrong with the Village in one easy article.
The imminent passage of financial reform, just a couple months after the passage of comprehensive health care, should decisively end the narrative that President Obama represents a Jimmy Carter-style case of naïve hope crushed by the inability to master Washington.

Yet the mystery remains: Having moved swiftly toward achieving the very policy objectives he promised voters as a candidate, Obama is still widely perceived as flirting with a failed presidency.
To recap, the Village's favorite new media politics spot is lamenting how the Obama administration is perceived as a failure by listing all the Villagers who perceive the Obama administration as a failure and giving a public forum to the notion that...the Obama administration is a failure.  All without a shred of self-awareness.  They continue:
The reality is the opposite. You can argue over whether Obama’s achievements are good or bad on the merits. But especially after Thursday’s vote you can’t argue that Obama is not getting things done. To the contrary, he has, as promised, covered the uninsured, tightened regulations, started to wind down the war in Iraq and shifted focus and resources to Afghanistan, injected more competition into the education system and edged closer to a big energy bill.

The problem is that he and his West Wing turn out to be not especially good at politics, or communications — in other words, largely ineffective at the very things on which their campaign reputation was built. And the promises he made in two years of campaigning turn out to be much less appealing as actual policies. 
The Already Failed Obama Presidency as Village tautology, ladies and gentlemen.  When I complain about the Obama messaging shop losing the battle, it's because stuff like this is being said every day and the Village is getting away with it.  "Sure, Obama's done all this stuff and shown he can master the art of getting things done in Washington.  But he's a complete failure!"

What liberal media?

If It's Thursday...

New jobless claims down substantially to 429k which is good news.  Bad news, the Empire State manufacturing index fell 15 points.

12 million more unemployed than jobs available is not a good thing.

A Bite Out Of The Apple

Apple is scrambling to fix its iPhone 4 reception problem and the Cupertino, CA company's "halo" image is very much on the line here.  A press conference has been scheduled tomorrow and everyone's wondering what Apple will announce.  The question is will it be enough to save the company's reputation, or is this the beginning of the slippery slope that will eventually give America at new tech darling?
Apple spokesman Steve Dowling said late on Wednesday the company would hold the event at 10 a.m. on Friday at its headquarters in Cupertino, California.

He declined to provide further details, or to say whether the event will address the signal-strength problems that some people have reported having with the iPhone 4 when the device is held in a certain way. 

Apple has faced mounting criticism from analysts and consumers over its handling of complaints about the reception issues on the newest iPhone, which was launched last month. 

Analysts say Apple has created a public relations headache for itself by appearing to dismiss or ignore the problem, allowing a minor issue to be turned into headline news. 

Although most analysts believe a recall of the device is unlikely, a growing chorus have urged Apple to resolve the matter, perhaps by offering free iPhone cases, which appear to solve the problem. 
If Apple doesn't make good on this and soon, the company's in dire trouble.  There are simply too many other tech giants out there waiting to dethrone Steve Jobs and become the Next Big Thing, and especially in this economy being second-best means you're going to be hurting big time.

Also, there is the matter of making good to customers being the right thing to do.

The Crusaders Of Opposite Land

Steve M. makes an outstanding point this morning about "America's toughest sheriff", Arizona's Joe Arpaio.  Seems the crime rate in Sheriff Joe's beat is up sharply from 2002, while in every other jurisdiction in Arizona, it's down.  There's a much larger point, however:
Arpaio is reputed to be an extremely effective crime-fighter, but the numbers reveal that he actually isn't an effective crime-fighter. It doesn't matter, though, does it? He's a Republican, he's a tough guy, so if crime goes up on his watch, it has to be someone else's fault. Right?

This is the same principle that allows Republicans to believe that the budget-busting Ronald Reagan was actually a deficit hawk and that George W. Bush was actually a valiant defender of America against terrorism despite 9/11.

And it explains why Republicans in Congress have no fear of economic hardship, even when it's self-evidently caused by their actions.

Large numbers of Americans are losing their unemployment benefits? And it's the Republicans' fault? It doesn't matter. Much of the public simply "knows" that Republicans are careful fiscal stewards, while Democrats always destroy the American economy with taxing and spending. They "know" that the way Joe Arpaio's fans "know" he's America's #1 crime-fighter.

And it doesn't matter if we continuing running deficits forever because Republicans block any Democratic attempt to raise taxes, even on the rich. Everyone "knows" that deficits are caused by liberalism, and that right-wingers hate red ink.

The facts just don't matter.
Amen to that.  I will append Steve's theory to say that right now there are two facts that do matter, however:  an unemployment rate just shy of 10% and a black Democrat named Barack Obama in the White House.  And for millions of Americans, that's all that matters.

What are the Republicans going to do differently when they are back in power, people ask.  Simple.  They're not going to be Democrats.  And for tens of millions of Americans that's the only fact they'll ever need at the voting booth.


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