Kenneth Lewis Dead Pool

I've kind of thought that the Obama administration's ouster of Rick Wagoner was primarily a political ploy, but it has created a new question, with people asking why him, and not people like Bank of America's CEO Kenneth Lewis, whose purchases of Countrywide and Merrill Lynch seem to be ample reason for his firing.

I'm hoping that someone in the White House actually intended this effect.

I don't generally subscribe to the "Barack Obama has a plan, but it's too subtle for us to see right now," thing, but it does seem to me that, intentionally or not, the stage has been set for the firing of a bank president at one of the 5 or so banking giants out there.

It would be the a good thing to do, it would put the fear of God in these "masters of the universe."

The reason that I am fingering Kenneth Lewis is that the other likely bank to be so target is Citi, but CEO Charles Prince was already forced out and replaced by Vikram Pandit, and BoA is the next sickest bank on the list.

Additionally, Lewis has been unrepentant in his attitude, continuing to (over) use the private jet, and chafing at the TARP restrictions, all while maintaining that he will send back the money "real soon now."

The final reason for my suggesting that he might be forced out, in addition to my visceral dislike of him, is that he, and his bank, have aggressively lobbied against the EFCA (card check) legislation, and now directly calling for his ouster, which means that Obama picks up some labor credibility without having to go to the mat for the EFCA.

Wanna Put Social Security in the Stock Market?

Because that's what the Pension Benefit Guaranty Corporation (PBGC), the government insurance fund for defined benefit retirement programs, did last year, just before the stock market crashed.

The reason given by the Bush Evil Minion^™ Charles E.F. Millard was that the PBGC needed better returns to shore up its trust fund, because of all the companies going bankrupt and welshing on their pension obligations.

It may be true that they actually bought into the idea that they could get better returns, even in a stock market that was clearly overvalued and with an economy already shocked by the housing cost, but my money is that the real reason was that it was an election year, and they saw the signs of a stock market drop, and they wanted to push some money into the market quickly in order to keep everything afloat until after the election.

In either case, it should be noted that the PBGC's trust fund is like a drop in the ocean compared to that of Social Security, and if they thought that it could effect the markets, just imagine what the multi-trillion Social Security fund would do.

In fact, it's so large, that it would drive the stock market up upon being invested in the market, and when a large population cohort started to retire, it would drive it down, giving the Baby Boomers that wonderful "buy high, sell low" feeling.

Our Man in Afghanistan

Hamid Karzai, whose incompetence and corruption is such that he is now appealing to the most backward of religious impulses, because there is no other reason to vote for him, has just signed into law a measure that legalizes marital rape:

In a massive blow for women's rights, the new Shia Family Law negates the need for sexual consent between married couples, tacitly approves child marriage and restricts a woman's right to leave the home, according to UN papers seen by The Independent.

Hamid Karzai, yet another gift that keeps on giving from Bush and His Evil Minions^™.

Bankruptcy Updates

The Department Store Chain Gottschalks twill be filing for liquidation, and mall developer General Growth Properties has managed to put off bankruptcy, for a while at least.

I think that it is likely that GGP will go chapter 11, at which point, Thomas Friedman, whose wife is a Bucksbaum, the family that owns the developer, may have to downsize his lifestyle....I'm so sad for him (not).

Finally, the Sun-Times Media Group has filed for bankruptcy, and before you start wringing your hands over how these are dark days for newspapers, note that Conrad Black and His Evil Minions^™, most notably David Radler, looted the company, and have gone to jail for doing so.

In a way, it's a microcosm of what is wrong with the news business: Bankers take over from journalists, generate fantastic profit margins by destroying journalism at these institutions through draconian cuts, and then they walk away, leaving bleached bones.

What Chris Said

Chris Bowers, that is

There is a special election in the 20th congressional district of New York tonight. I hope the Democrat, Scott Murphy, wins. However, I am also frustrated that Murphy has received nearly $360,000 on Act Blue from around 2,000 donors. Given that Murphy has made it clear that he will attempt to join the Blue Dogs if he wins the election, the progressive small donor world should not have given him a single dime.

We--participants in blog and email list small donor fundraising efforts--have to completely stop raising money for Blue Dogs. We should not give a single cent to any current member of the Blue Dog coalition. We should not give any money at all to any candidate who refuses to rule out joining the Blue Dogs once in Congress. If we hope to improve Democratic behavior in Congress, this break has to be as public and as thorough as possible.

Agreed.

Scott Murphy may be the very best we can get in that district, and if that is the case, then liberal campaign contributions are better spent elsewhere.

I would "embrace and extend" his message, and include the corporatist "New Democratic Caucus" on the list of people that we should not contribute to.

This goes double for folks in safe Dem districts, which NY-20 is not, Republicans have a registration advantage there, but why pay for someone who will, when the going gets tough, shoot down your agenda?

But I still want Murphy to win, I just won't give him my money or time.

Economics Update

Note: Red denotes contraction, and yes, this is scary.

I guess that the lede is that the consumer confidence numbers are out, and that they remain near record lows, at 26, just one point above the all time low reported in February.

If that were not enough, we now have a survey indicating that consumer spending may fall by $1 trillion after the recession is over (by way of perspective, the US total GDP is about $14 trillion) according to the AlixPartners Long-Range Economic Outlook Survey.

That's a 7% haircut on GDP, exclusive of the secondary effects, closed stores, warehouses, etc., once the economy recovers.....Great googly moogly!

In the meantime, I don't think that a whole bunch of people will be tapping their home equity, as the Case-Shiller home price indices show a 19% drop in home prices, though it appears that defaults are abating, as private mortgage insurers saw defaults, and claims, fall in February, the first decrease since June, 2008.

Additionally, 2nd home sales fell in 2008, down to 30% of total home sales, from 40% in 2005, and more of these buyers are paying cash, which implies that a lot of the contraction in this market is an inability to find mortgages.

In terms of the general state of the economy, the Restaurant Peformance Index is showing the 16th straight month of contraction (h/t Calculated Risk), and the Philadelphia Fed State Coincident indices have shown a decline in all 50 states (pdf), for both the past month and the past three months (again h/t Calculated Risk).

Meanwhile, we have an indication that the Bank of England is looking at significant inflation, they have adjusted their pension investments to account for it, so I think that they expect the £ Sterling to fall, and inflation to increase in the UK.

In any case, we now have the chief economist for the OECD suggesting that the Federal Reserve would take aggressive action against a precipitous fall in the dollar, and work to maintain its position as a reserve currency.

I think that this is more an attempt to talk up the dollar than anything else, because protecting the dollar would, over the long term at least, require higher interest rates, which would have the economy collapsing like overcooked broccoli.

In any case, the dollar was down today, largely because the flight to safety yesterday following Obama's announcement that GM and Chrysler were on notice is now over.

Oil was up too, though it's still a bit under $50/bbl.

I'm So Happy With Obama's DNC Chair

You know, Tim Kaine, who Obama hand picked as head of the Democratic National Committee, who just signed a bill creating "Choose Life" license plates in Virginia, and has promised to support a bill banning state funding of embryonic stem cell research in the state.

I guess that throwing pro-choice advocates to the wolves is Obama's way to "reach out to the right."

Thanks a lot, Barack, for foisting this tool on the Democratic Party.

Reid Is Looking to Fold Cram Down Provisions

Reid is now saying that he might drop cram down provisions from the housing bill if it threatens passage of the whole package.

Basically, this means that he is going to kill it, because everyone who wants it gone now knows that they can get it dropped by whining.

Seeing as how this was the law until about 1993, the effect on interest rates are minimal, and it's the only way to renegotiate a mortgage that has been sliced and diced until it has hundreds of owners, cramdown is the single best thing that can be done to help with the current financial meltdown.

New York State to Institute "Temporary" Millionaire's Tax

Governor Paterson had been opposed to such taxes, suggesting that it would lead the wealthy to leave the state, but has not capitulated to progressives in the state, who were opposed to the draconian cuts in services that a "no-tax" solution would have required.

Even with this increase, 8.97% from 6.85% for income over $½ million, the top tax rate in New Jersey, is higher, and in any case, if people want to leave New York because it's too expensive, they already have.

Nice to know that the political forces in New York State who work for the other 99% of the population can actually get meaningful change....for 3 years at least, as the tax is temporary....for now.

Strange Days: Quoting Andrew Sullivan Again

He makes the point that Dick Cheney is confessing to war crimes in the process of justifying his role in committing them.

Sullivan is correct. Dick Cheney's justification of his own actions, and his condemnation of Barack Obama's position, make it clear that he knowingly broke both US and international law.

This is Not the Onion

AIG director named to Obama tax task force.

For all I know, Martin Feldstein, who has been on the AIG board is a good person, certainly, I have come across generally favorable reviews of his works.

That being said, the atmospherics here are unbelievably stupid.

My Head Hurts.

An Interesting Development in Autism Spectrum Conditions

It appears that there is a genetic link between nicotine addiction and autism, in the neurexin-1 gene, which creates an excess of neurexin-1 beta protein, which aids in nerve cells linking up with nicotine like substances to neuro receptors, in people addicted to nicotine.

It turns out that the levels of the protein, and the gene, are deficient in some people on the Autism spectrum.

It raises some interesting questions, though at this point I would be very cautious, and I think that a first step would be to compare smoking and non smoking populations of people on the spectrum.

The fact that quack physician Jeff Bradford has apparently already started putting nicotine patches on his patients should not be viewed as significant by anyone except, perhaps, for malpractice lawyers.

Giving small children nicotine is an invitation to injury or death, because a nicotine overdose can kill someone very quickly.

H/T A Photon In The Darkness.

Now We Know Why Banks Were Profitable Last Month

Because, using our tax dollars, AIG settled its accounts with the big banks at 100% on the dollar, even while they are refusing to pay on deals with smaller players.

So, not only are we funneling money to the big 5 banks through the TARP, and the TALF, and various Fed facilities, we are also shoveling money in through the back door by way of AIG's Financial Products Division.

I now have a tough choice....Should I go long in pitchforks, or torches?

Big 3 (Big 2½) Update

So, the White House does not like GM's or Chrysler's reorganization plans, and has given GM 60 days, and Chrysler 30 days to come up with a better plan.

What's more, they demanded, and got General Motors' CEO Rick Wagoner's resignation, and pretty much demanded some sort of alliance deal between Fiat and Chrysler.

The obvious question here is, "Why is the government insisting on Wagoner's resignation, and not Bank of America's Kenneth Lewis's resignation?

In terms of Chrysler-Fiat, it appears that they have come to an agreement on a "framework" for their deal.

One wonders if this deal involves a haircut for Cerberus, which it should.

Economics Update

I'll be going into the automotive news elsewhere, so this is pretty short.

First the Celtic Tiger Kitten has been taken to the vets to be neutered, as S&P lowers Ireland's rating from AAA to AA+.

Ireland played the "cheap labor with good access to markets" game, and lost to former eastern bloc nations, and played the real estate and building game, which everyone lost.

In the housing market, we have defaults on FHA insured mortgages rising with 7.46% of the loans being 90+ days overdue, in foreclosure, or bankruptcy, up from 6.16% at this time last year.

This means that there is still a lot of inventory out there that has yet to hit the market.

In energy, the concerns over the US auto manufacturers has driven oil below $50/bbl, because nothing says short oil supply like house sized SUV, and the same concerns about the economy have driven the dollar up as traders head for safety.

Quote of the Day

ROTFLMAO!!!

There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged.

One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world.

The other, of course, involves orcs.

Too true.

Not sure of the source, it's been floating around the innertubes.

Democratic Candidate Takes Lead in Special Election to Replace Gillibrand

Honestly, even with the new poll numbers, this is a heavily Republican distract, so I my guess would be that the Republican has the advantage, particularly given the low turn out in special elections, so I would expect the 'Phant to win in this Tuesday's election.

In either case, Jim Tadesco (R), and Scott Murphy (D) contest is much closer than the district's fundamentals would suggest.

Patents Reveal Shap of Northrop Grumman Bomber

Rather unsurprisingly, Northrop Grumman's design for the "Next Generation Bomber" (NGB) looks rather a lot like the cranked kite concept that has been floating around for some time.

Among other things, it's supposed to provide much lower drag, and better high altitude performance than the original B-2, giving improved range, though some of the additional range appears to be at the expense of weapons load: word is that payload is in the 20,000 pound range, or about ½ that of its predecessors.

There is an additional interesting bit of information in another Northrop-Grumman patent application, which shows the aircraft with a mustache.

Given the stealth requirements for the aircraft, and the fact that it will generally be operating at high altitude at relatively high mach numbers, the obvious conclusion is that this is a retractable canard, much like the Tu-144 Charger and the Mirage Milan. (in the latter, the retractable canards were actually called a "mustache")

The advantages on takeoff and landing are clear, giving a whole lot more pitch authority than is generally available with a short coupled tailless design, which can increase max takeoff and landing weight, decrease takeoff and landing speeds, and shrink the landing gear and breaking systems.

It's Alive!!!!

It's beginning to look like the leading candidate for purchasing the assets of Eclipse Aviation may be positioning itself to restart the company as a going concern.

Given the relatively large customer base, and given that the debts of the company will be discharged in bankruptcy, they may be in a position to bring them back in some form, though I would be doubtful of full scale production restarting with the current investment environment.

Friday Night Bank Closings: I'm Scared Now Edition

Not by the total number of bank closings, there was only one, the Omni National Bank, Atlanta, GA, the 21st of the year. (Full List of closings).

Since I figure that there will be somewhere in the neighborhood of 100 bank closings this year, that is not a surprise.

What is a surprise is Calculated Risk's report on regulatory actions in California, where 6 more banks have received a cease and desist order from the FDIC, and there are predictions that two thirds of banks in California will be operating under such orders by year's end.

I honestly cannot imagine that the situation is better in other areas with the largest real estate bubbles, such as Florida, the Las Vegas area, Phoenix, etc.

Space Debris Cleaning, My Ass!

So, the National Reconnaissance Office and Space Command are looking to set up a ground based laser system to clean up space debris. (paid subscription required)

And I'm Anna Nicole Smith....This isn't an attempt to set up a cleaning system, this is an attempt to develop a laser based anti-satellite weapon, not withstanding their fig leaf of some sort of multinational effort:

To help offset such a negative reaction, [Andrew Palowitch, director of the "Space Protection Program"]Palowitch says, five lasers could be built and installed in five countries—­Russia, China, India, France and the U.S. All would be ­operated by an international consortium with “everybody participating equally with free access to the particular sites in a coordinated activity.”

Propose a regime, that you could never get the French to agree to, much less China, and then go and develop a satellite zapper on your own.

Seriously, how stupid do they think that we are?

FCS Active Protection System is Not Working

The Active Protection System (APS) is designed to intercept RPGs, ATGMs, and long rod penetrators, to protect the smaller and lighter manned vehicles of the Future Combat System (FCS), and it now seems that it simply does not work, according to the latest GAO report.

The interesting thing is that the Israelis have a system that does work, Trophy, though it is less ambitious than the APS, but it was rejected and hundreds of millions of dollars directed towards Raytheon.^†

One of the interesting bits about FCS is that is as much an industrial base preservation system as anything else, with bizarre separations of work to ensure that various contractors get sufficient workshare.

I believe that the high technology band tracks are the responsibility of the BAE Systems^†, and the suspension is the responsibility of General Dynamics, for example, which makes no sense whatsoever.

Army Rejects Trophy


Trophy Promotional Video

^*Full Disclosure, I worked for Raytheon a number of times, both in Texas and in Maryland over the past 15 years or so.
^†Full disclosure, I worked on the Future Recovery and Maintenance Vehicle, FRMV, "wrecker" variant of the FCS-MGV from 2003-2006 at United Defense (later BAE Systems after the Carlyle Group sold me to buy Dunkin Donuts).^‡
‡Yes, I have worked everywhere. Maybe I can't hold down a job, but more likely this has been my role as "technical hit man", where you are parachuted in to take care of a specific need.

Gripen NG Gets AESA Radar

SAAB has cut a deal to integrate the front end of the Selex Galileo Vixen AESA radar with the existing back end PS-05/A radar for the Gripen NG.

This replaces the Thales radar on the NG demonstrator, which Thales does not intend to make available for production.

My previous post on the matter.

SecDef Gates Cool to Tanker Contract Split

No big surprise. Splitting the contract would increase acquisition costs significantly, and operational costs by an even larger amount.

Splitting the contract is about appeasing representatives from Boeing, who quite simply had an older and less capable design that cost more than the EADS proposal.

More JSF Problems

The first is a report from the GAO revealing the least well kept secret in defense procurement, that the JSF is over budget and behind schedule, to the tune of about $2 billion, the GAO also believes that the F-35 will need about 1000 additional flight test hours than the F-35 Joint Programme Office (JPO) does, and notes that the time to assemble the first production airframes was 40% greater than predicted.

Additionally, as I have noted before, it appears that there are some very concerning issues regarding thermal management for the aircraft, and it looks like the fuel-air heat exchanger, which not only cools the avionics, but the electro-hydrostatic flight controls is not sufficient in hot weather conditions, like the Middle East.

Additionally, the author of the linked article, Bill Sweetman, notices another potential heat issue, this one having to do with IR signature, that the location of the exhaust for the integrated APU/EPU exhaust has been relocated in the production models.

In the pre-production models, it was located on the top of the aircraft in front of the left vertical stabilizer (you can see where the heat cooked off the paint in the top picture), but in the production models, it has been relocated to the bottom of the fuselage.

The exhaust does not look particularly stealthy from a radar perspective to my untrained eye, and I would have to imagine that it would be a big infra-red "kick-me" sign for Marine STOVL JSFs which would be minutes from the battlefield with APUs running on unimproved strips when the aircraft is used to provide close air support.

Bad Day at the Office: Luftwaffe Edition

A helicopter and a Tornado crashed in Germany recently.

No fatalities in either incident, though the Tornado crew was taken to hospital.

Electric Battlefield Laser Hits 100 KW

Which is generally considered the bottom bound for viability as a battlefield weapon.

This is significant because an electric laser should be a lot easier to handle than the chemical lasers, which require very large quantities of noxious and hard to handle chemicals.

They are looking take it out of the lab and hit a test range in about a year.

I REALLY Do Not Want to See Your Vacation Pictures

Least inspired promotional sweepstakes ever!

If you win the CBS Cares^® Colonoscopy Sweepstakes:

Welcome to the CBS Cares Colonoscopy Sweepstakes!


This is an actual sweepstakes and, if you are the grand prize winner, we will fly you and a companion to New York where you will receive a free colonoscopy. You will also be given three nights' accommodation in a suite at the luxurious Loews Regency Hotel, which will include the night before you are "awarded" the colonoscopy.

.......

This is just wrong on so many levels.

People over a certain age should get regular colonoscopies, and they should be checked for polyps, but this contest is the worst idea since the little Johnnie home root canal kit.

Texas Board of Ed Going Stupid

Courtesy of the Texas Freedom Network, we have a live blog of their meeting, where they are going Creationist.

Norm Coleman May Go To Jail

There has now been testimony that Nasser Kazeminy, a close friend of Norm Coleman instructed his CFO to pay $100,000.00 to Coleman's wife's insurance agency for nothing in the way of services.

The money quote is from TPM:

Now the Star-Tribune has obtained a March 19 deposition from the lawsuit that first surfaced the scandal. The deposition is from B.J. Thomas, the chief financial officer of the company that paid out $75,000 to a firm where Laurie Coleman worked as a consultant -- even though he found no evidence of actual work.

Thomas was asked: "In that conversation that you had with Mr. Kazeminy, did he tell you, quote, United States senators don't make sh#$, close quote? Or words to that effect?"

Thomas answered: "Yes, sir."

Kazeminy is boned, unless he roles on Coleman, and Coleman is a rat, so you gotta figure so is Kazeminy.

Pass the popcorn

Anatomy of a Right Wing Hysteria Campaign: HR 875

HR 875 is a fairly innocuous bill, trying to make sure that food, both domestic and imported, is safer, but a campaign by the National Independent Consumers and Farmers Association (NIFCA), which opposes any regulation of food, and a couple of right wing conspiracy theorists, and suddenly the bill is an attempt by Monsanto to shut down every farmers market in the nation.

Well, it's not. Go read the article for the full scoop.

Remember When I Said that Cap and Trade Sucks

Well, it looks like the Europeans are wising up to the China option of creating false offsets for greenhouse gasses:

The European Union, frustrated that its 11,000 factories and power plants are failing to adequately reduce greenhouse-gas pollution, will seek tighter emission rules that may raise the price of burning fossil fuels.

The 27-nation bloc wants to curb access to a program run by the United Nations that rewards companies more for funding emission-reduction projects in China and India than for decreasing their own gas output in Europe. New limits are needed to force extra pollution cuts at home, the EU said in proposals for climate talks starting in two days in Bonn.

My original post on the subject.

Swiss Banks Put Travel Ban on Top Executives

It appears that they are concerned that foreign authorities will arrest them.....More accurately, they are concerned thatforeign authorities will arrest them, and then they will sing like canaries.

My heart bleeds for people whose business model is based on the idea that, "Only the little people pay taxes."

Michele Bachmann Is Insane

And I mean this in a clinical sense, though obviously, I am an engineer, not a doctor, dammit!<sup>*



*</sup>I LOVE IT when I get to go all Doctor McCoy!!!

NY Rolls Back Rockefeller Drug Laws

They expect to see an annual savings of ¼ billion from not locking up people for years for a single joint.

It looks like we will see more of this as the downturn saps state budgets.

Madoff's Wife In the Crosshairs?

Certainly, if I were a prosecutor, I would be looking at here, because Ruth Madoff's got a $2 million payment from Madoff Securities International Limited just before her husband was arrested, the London office of the Ponzi scheme, and itself under investigation for aiding and abetting Bernard Madoff's fraud.

The World of Red Dwarf is One Step Closer

Because Indian scientists are working out how to put curry in space.

I volunteer as a test subject.

Economics Update

So, we have some mixed news on the state of consumers, consumer sentiment improved slightly, though it is still near historic lows, and incomes have fallen.

Since consumers are generally deleveraging, I would place more importance on the latter, case in point, is February automobile sales continuing to drop, with the replacement for the US auto fleet, fleet size divided by monthly sales, hitting 27 years.

Obviously, this is not a sustainable number, and I would expect car sales to improve at some point, though whether this in time for the Big 3 (Big 2½) is anyone's guess.

In any case, it apperas that Japan is heading back toward a deflationary situation, with their January CPI figures showing no change.

In energy and currency, the dollar is up and oil and other commodities are down.

Pakistan’s ISI Still Giving Aid and Comfort to the Taliban

I'm not sure how to deal with a spy agency that is so focused on an eventual war with India that it allies itself to terrorists, short of some of those predator strikes should hit ISI HQ.

House Health Plan to Includes Government Run Insurance

Hopefully, the idea of a government run option, one that can show similar efficiencies to Medicare or the VA, both of which consistently beat private insurance, will survive the conference committee.

Cuomo Now Going After AIG Counterparty Deals

I'll bet that he is wondering the same thing that I am, how much of this was legitimate deal making, and how much was self-dealing.

Hopefully, we will see serious criminal investigations here.

Convictions Reversed in Pennsylvania - NYTimes.com

The Pennsylvania Supreme Court has reversed hundreds of convictions of children made by judges who took kickbacks from privately owned detention centers.

Obviously, it's nice to see their records expunged, but some of the damage will be permanent.

As I said 6 weeks ago, old post This is a Natural Result of Private Prisons.

IMF Economist Compares US to Argentina and Russia

Desmond Lachman, former deputy director of the International Monetary Fund's Policy and Review Department writes an OP/ED in the Washington Post todaysays what I have been saying for some time, that we are not tossing out the incumbents who created the mess, and that we are treating an solvency crisis as a liquidity crisis.

Mr. Lachman, a fellow at the right wing American Enterprise Institute (!) basically says that both Paulson and Geithner are handling the situation in a manner consistent with the most corrupt 3rd world nations.

Your mouth to Barack Obama's ear, dude.

New EU Scraps Net Neutrality

It appears that the new EU telecommunications rules are likely to scrap network neutrality completely.

The big incumbent Telcos there are very much in support of this, because milking money out of their monopoly is really their only skill, same as in the good old USA, and the regulators believe that the market will cure everything, "This approach is backed by the European Commission, which argues that if consumers feel their content is somehow being compromised, they will switch to other providers."

Because competition in such matters has worked so well in the most free market telco environment in the industrialized world, where the speeds are the slowest, and the rates are highest, and ISPs lie about their policies.

Tell Me How This is Not Fraud and Theft of Services

It appears that the senior managers at AIG's Paris division of AIG's Financial Products, Banque AIG, wrote $234 billion in derivatives contracts so that they would likely be technically be in default if they left the firm:

The executives at Paris-based Banque AIG, Mauro Gabriele and James Shephard, have resigned in recent days but have agreed to stay on for a transition, according to people familiar with the matter. In the wake of their resignations, AIG must replace them to the satisfaction of French banking regulators.

If they don't, French regulators may appoint their own designee to manage the bank -- an outcome that could trigger defaults under the bank's derivative contracts. The private contracts say that a regulator's appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes.

Seriously, this is fraud. They essentially cooked to books to maximize the possibility that, if they left, there was a real risk of the a technical default.

We need to start throwing these folks in jail by the hundreds, and not a "white-collar resort prison," they should be going to a, "POUND ME IN THE ASS prison," to quote Office Space.

Why Cap and Trade Sucks

Because if there is a sign that a regulatory strategy is ill conceived, it is when you end up paying farmers not to grow crops, and this appears to be one of the new cash crops for the American farmers.

This is a fraud foisted on the American consumer and the environment, much like the construction of unneeded hydroelectric plants in China for carbon credits on the European cap and trade system is a fraud on the European consumer and the environment.

The solution, which is cheaper for the consumer, and keeps the Wall Street types from gaming the system, is the straight carbon tax.

Economics Update

So, the US economy contracted at a revised 6.3% annual rate in the 4th quarter of 2008 and initial jobless claims rose to 652,000 from 640,000 last week, with continuing claims jumped to 5.56 million, another record.

Additionally, we saw New York City’s jobless rate jump by 1.2% in February, from 6.9% to 8.1%.

On the other hand, truck tonnage rose in February, which implies that the requirements for goods and services increased, and the 30 year fixed mortgage rates dropped again.

Meanwhile, in energy, retail gasoline broke $2/gal for the first time this year, and oil hit a 4 month high of $54.34/bbl.

In currency, the dollar rose today.

F-22 Pilot Dies in Crash

Condolences to the family of Lockheed Martin test pilot David Cooley.

Almost Forgot, DFA Baltimore Meeting Today

At Cosi Cafe, from 7:30 to 8:30ish. I'll be there at 7 to greet people.

Not a whole bunch of people there, so your attendance is appreciated.

View Larger Map

White House "Happy" that EFCA is Dead?

I would offer the the caveat that one of the contributors to MSNBC's "First Read" is Chuck Todd, who can be one of the stupidest muthf%$#ers in the White House press room,^* but there is a report that the White House is "happy to have this debate out of the way" because, "sticking a finger in business’ eye wasn’t something the White House was looking forward to."

This is about the most politically opportune time to do this, with the public attitude toward businesses being rather low, AIG is a symptom, not the trend.

I cannot for the life of me think of anyone in the White House who would even hold this opinion, except for economic adviser, and poster child for sex without partners, Lawrence Summers, who is on record saying that unions cause unemployment,^† but even he isn't stupid enough to mouth off to a reporter, or for that matter a co-worker, about this.

I'll call bullsh%$ on this for now.

^*Cases in point were his questions at the first two press conferences, would Obama veto something that doesn't get any Republican votes in the interest of bipartisanship, and how Americans should sacrifice to address the financial meltdown (like millions of people out of work and losing their homes isn't enough) because he does not understand the difference between a foreign war and a domestic economic downturn.
^†Yeah, I know, with "Democrats" like him, who needs Republicans.

Jake DeSantis, Go Cheney Yourself

Mr. Desantis used to work for AIG, but quit, and published his letter or resignation in the New York Times.

So, why am I down on the gentleman? Because anyone who writes such a self-important letter, then goes about having it published in the most influential publication in the United States, and wants us to feel sorry for him, despite the fact that, "I received a payment from A.I.G. amounting to $742,006.40, after taxes," something in the range of $1.2 million pre-tax, is simply an asshole.

AIG F#@$ed Up Yet Another Perfectly Good Business

This time, it's International Lease Finance Corp. (IFLC), the largest aircraft leasing operation in the world, which was fabulously profitable when they bought it from Stephen Udvar-Hazy in 1990, and it looks like they are angling for a government bailout, at that's the subtext that I read into the article.

Isn't the idea of successes in their own financial niche moving into areas in which they have no clue such a wonderful idea?

Great Googly Moogly!!! 3 More Years of Her!

Oh crap. Sarah Palin's PAC is robocalling in Iowa and New Hampshire, which means 3 more years of national news coverage about her.

Clovis's lobotomy scar, I don't think I can take it....Please, make it stop.

Bush and His Evil Minions&trade at Their Finest

Remember Bush's HOPE home foreclosure prevention program?

Truth be told, I don't much either, and I didn't expect it to hit its goal of preventing 400,000 foreclosures, but the current total surprises me, just ONE foreclosure has been prevented by this program.

That's an epic fail even by the standards of George W. Bush.

Whiners

Specifically the New York Times reporters covering the press conference:

This was Mr. Obama as more enervating than energizing, a reminder of the way he could be in his early days as a presidential candidate, before he became defined by rapturous crowds.

Hmmm...I wonder why they are so down on the press conference>

He showed his usual comfort with a wide array of subjects, even as he excluded the nation’s big newspapers from the questioning in favor of a more eclectic mix.

Oh my God! He did not ask a New York Times reporter a question. We are masters of the universe! How dare he!

What a bunch of self absorbed pratts.

Larry Summers in a Nutshell

CONGRESS PASSES WIDE-RANGING BILL EASING BANK LAWS, the New York Times, November 5, 1999:

"Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century," Treasury Secretary Lawrence H. Summers said. "This historic legislation will better enable American companies to compete in the new economy."

And folks who got it right:

"I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010," said Senator Byron L. Dorgan, Democrat of North Dakota. "I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness."

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had "seemed determined to unlearn the lessons from our past mistakes."

"Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis," Mr. Wellstone said. "Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place."

So, I'm so glad that Lawrence Summers' astonishing brilliance and foresight are at the disposal of the President of the United States of America.

Economics Update

Well, we have some good news today, with both durable goods orders and new home sales up in February on a monthly basis, though on a year over year basis, durable goods are still down 22%, and home sales are still down 41% year over year, so it may mean nothing, or it may be, to quote paraphrase Churchill, the end of the beginning as opposed to the beginning of the end.

The spike in mortgage applications may reinforce this news, or it may just be a lot of people refinancing their mortgages.

Certainly with California home prices down 41% year over year, this end game is likely to to be ugly anyway.

In the mean time, in the world of government finance, the Fed has started buying US treasuries to further push down interest rates, and across the pond, a U.K. bond auction has failed for the first time in 7 years.

There were not enough buyers there.

In energy, oil was down slightly, and in currency, the dollar was mixed against other major currencies.

$180 Million Up in Smoke

An F-22 has crashed near Edwards Air Force Base at around 10:00am mountain time. The status of the pilot has not yet been determinedd.

Senator Whitehouse Shows Us Why It's Better to Elect a Democrat Than the Best Republican

Case in point, Lincoln Chaffee, defeated for the Senate by Sheldon Whitehouse in 2006, and now Whitehouse is putting forward a bill to protect consumers from abusive credit card companies.

Among its provisions in his Consumer Credit Fairness Act:

• Lenders (not just credit cards, but also payday loans, auto loans, layaway, and overdraft charges) would be prohibited from making claims in bankruptcy if their interestrate were more than the yeild of the 30 year bond interest rate +15%.
• The interest rate would be figured including all charges and penalty fees.
• Removal of the means test for bankruptcy that was included in the 2005 "screw the consumer" bankruptcy law.

Electing Democrats make a difference.

OK, I May Be Wrong About Geithner

Kevin Drum just raised an interesting point about what Geithner has been doing so far

If, several weeks ago, you had charged a task force with figuring out how to successfully nationalize a big bank, what do you think they'd say you had to do? Three things, at least: (1) you have to figure out a widely acceptable way to value the toxic assets on bank balance sheets, (2) you have to set up a fair and consistent test for evaluating bank solvency based on those values, and (3) you need to make sure you have the legal authority to take over a huge, multinational financial conglomerate in an orderly way. Is it just a coincidence that these are precisely the things Tim Geithner has set in motion over the past month? I wonder.

It's an interesting point, and just today, while testifying before Congress, Geithner called for the power to place large bank holding companies into government receivership, backed up by Ben Bernanke.

So Mr. Drum's thought that recent activities of Geithner and Bernanke, and by extension President Obama being a ploy is a possibility, though but I'm inclined to agree with Yves Smith the proprietoress of Naked Capitalism, whose beat is economics, and who knows more about economics, and the major players the economic community, than either Drum or me, and she thinks that the Office of Thrift Supervision (OTS)already has the authority to place AIG in receivership, and already answers to him.

Additionally, she notes that his request for additional power does not include any request for a receivership protocol, and concludes that this request is actually an attempt to give him more power to shovel more taxpayer dollars to the financial industry.

I would also note that Geithner, and his mentor, Larry Summers, have a history that stretches back decades, and there is nothing in what they have done, or are doing now, which would indicate that they would be inclined to do this...ever!

So, while Kevin Drum has an interesting wheels within wheels theory, I am more inclined to go with Nobel Prize winning economist Joseph Stiglitz, and simply say that Geithner's plan is robbing US taxpayers.

But that's my gut, and my sense that past is prologue.

The Upside of the Financial Meltdown: Mindless Imprisonment Edition

It looks like the financial meltdown, and the reduction in tax revenues for local and state authorities have lead to a reevaluation of incarceration policies, which have led the US to have the largest prison population of any society in history: (Gulag nation)

For nearly three decades, most U.S. states have dealt with lawbreakers in two ways: Lock more of them up for longer periods, and build more prisons to hold them. Now many governments, out of money and buried under mounting prison costs, are reversing many of those policies and practices.

Some states, like Colorado and Nevada, are closing prisons. Others, like Kansas and New Jersey, have replaced jail time with community programs or other sanctions for people who violate parole. Kentucky lawmakers passed a bill this month that enhances the credits some inmates can earn toward release.

Obviously, it's depressing that it's taken a fiscal crisis to interject some sanity on the entire issue of over imprisoning our population, but I'll take what I can get.

Hopefully this can make a dent in the "prison-industrial complex."

Political Scabbing and Management Threats Against Labor

So Arlen Spector has decided to cave, again, because of his fears of being primaried, and he has
announced that he will vote against cloture on the Employee Free Choice Act, and Federal Express has said that it will cancel its contract to purchase Boeing aircraft if the EFCA passes.

I am not surprised at Spector, who has never seen a principled stance that he couldn't weasel of, though I am surprised that FedEx, which has a long history of virulent and nasty anti-union activity, put a clause in their aircraft purchase contract that allowed them to cancel if unionizing there gets easier,^* is a surprise.

Needless to say, if I need to send anything, I will use the use the US Post Office or UPS, rather than those C*cks*ck*rs.

^*The EFCA would change how FedEx organizes, moving it from the National Railway Labor Act to the National Labor Relations Act, which means that parts of the company could unionize, as opposed to the whole company at once.

Senator Dodd Sees Joint Regulator for Systemic Risk

He says that creating a council of the Fed and the Comptroller of the Currency concentrates power too much, and I would agree.

And as I said before, we do not want another Greenspan in a position like this with no checks.

Labor Joins Israeli Coalition

Benyamin Netanyahu and Ehud Barak have come to an agreement for a coalition government, and the Labor Party central committee voted to approve the deal, so it appears that there is now a governing coalition is Israel.

It appears that Netanyahu gave labor much more than just the Defense portfolio:

• 5 Cabinet posts, including the Defense and Trade and Industry Ministries.
• 2 Deputy ministry positions.
• A fairly liberal economic policy, which includes:
• Money for retraining workers
• Funding for child care
• A commitment not to cut salaries in the public sector
• A commitment to increases in benefits for pensioners
• An increased political role for the Histadrut, Israel's organization of trade unions.

It's clear from this deal that Netanyahu was desperate to have this, given Labor's poor showing (only 13 seats), and it also represents a return by the Labor Party to the interests of, well, (small l) labor, which may go a long way towards distinguishing themselves from Kadima.

I think that Netanyahu could have gone right for the coalition, but the idea of actually having to follow up on his hard line rhetoric during the campaign scares him.

Vermont Senate Passes Marriage Equality

By a 26-4 margin (!), so it goes to the state house, where it is almost certain to pass, the governor, Republican Jim Douglas, says that he does not support the bill, though it is not certain whether he will veto it from the story.

China Calls for Currency Basked as Reserve Instrument

This would replace the US dollar as a reserve currency.

It would obviously weaken the US dollar in the long run, which is not necessarily a bad thing, the "strong dollar" policy of Robert Rubin (and Larry Summers, and Timothy Geithner, and Ben Bernanke) benefits Wall Street at the expense of main street, and is long term unsustainable.

It is unclear to me as to whether this is a real move for change, or simply an attempt by China to assert itself on the world economic stage, though.

Opposition Figures Arrested In Georgia

It appears hat Mikheil Saakashvili is feeling threatened, so he is unleashing the state security apparatus in advance of an opposition rally.

Economics Update

So the latest investor confidence survey is down, no big surprise there, things are still not looking good.

Case in point, Fitch ratings is warning on prime grade residential mortgage backed securities (RMBS) created between 2005 and 2007 because so many of the mortgage holders are under water.

In energy, oil fell, though it's still above $50/bbl, on profit taking from yesterday's price increase.

In currency, the Dollar rose as people went back to it as a safe haven, and the Yen fell, because yields are so low in Japan.

Return to Your Undisclosed Location

This appears to be what House Republicans are saying to Dick Cheney, and I agree with them.

They think that he's so unpopular that he costs them political capital (probably true), while I feel that even if it is to the advantage of the Democratic Party, the man is such a cancer on public discourse that he should never again be given a seat on the Sunday morning shows.

Still, it leaves me amused

Banking Industry Threatens Obama Administration

That's the subtext of this Wall Street Journal article on how Obama is dealing with the financial industry.

The bankers are saying, "If we don't get our bonuses, we will destroy our companies and the economy."

As Ezra Klein notes, patriotism is a joke for the super-rich bankers who run Wall Street:

But whenever it comes up in conversation, I'm shocked at the depth of my own fury. And here's why: Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. It is no exaggeration to say that they will cost us more than 9/11.

And you cannot negotiate with terrorists.

Rival Insurance Companies Claim AIG Used Bailout to Undercut Their Prices

So, we have the AIG bailout undermining the rest of the insurance industry now, because of the federal money and implicit federal guarantee.

Delightful.

I think that the Geithner plan will do the same thing to the smaller more responsible banks out there.

The federal bailout is squeezing out the good actors in these industries.

Yoo May Have Tenure Revoked

Basically, the question is whether the legal opinions that John Yoo supplied to Bush and His Evil Minions^&trade are so outrageous as to justify the termination of his tenure at UC Berkeley law school.

I am of the opinion that Yoo actually broke the law, using the Nuremberg precedents for trying judges and lawyers.

One caveat about this article, ignore Alan Dershowitz, who has actually been a big supporter of torture, going so far as to suggest that judges should authorize it, and not an opponent of Yoo's position as the writer states.

Barney Frank Walks Away from Fed as System Risk Regulator

It looks like there will be some real good coming from the AIG bonus fiasco, as Barney Frank is taking a few steps back from his idea of the Federal Reserve as the über regulator of the economy:

A proposal to put the Federal Reserve in charge of market oversight is losing congressional support after its main backer, Barney Frank, said criticism over American International Group Inc. “undercuts” his proposal.

“There’s still a need for a systemic-risk regulator,” Frank, a Massachusetts Democrat who chairs the House Financial Services Committee, said yesterday. “The argument for the Fed alone has lost a lot of political support. I think that’s now got to be re-looked at.”

Senate Banking Committee Chairman Christopher Dodd and Richard Shelby, the panel’s top Republican, said March 19 they are reluctant to expand the Fed’s role, faulting the central bank for lapses leading to the financial crisis.

When one considers how opaque the operations of the Federal Reserve are, and how, of all the regulatory agencies, it was the one that failed the worst, the others being hamstrung through legislation or executive initiative, Dodd and Shelby are right to be dubious of the fed.

Just ask yourself this question: Do you want Alan "Bubbles" Greenspan to be the systemic risk regulator for the economy?

US Tried to Silence Detainee to Cover Up Torture

US Government lawyers attempted to get Binyam Mohamed, the Ethopian detained at Guantanamo, to sign an aggreement not to discuss his treatment as a condition for his release.

Since Mohamed is alleging illegal torture, and the lawyers in question had reason to believe that there was a possibility of criminal prosecution, I do not see how this could be anything but a slam dunk case of obstruction of justice:

U.S. government lawyers tried to get a British resident held at Guantanamo Bay to sign a deal saying he had never been tortured and that he would not speak to the media as a condition of his release, according to documents presented in Britain's High Court.

U.S. lawyers also wanted Binyam Mohamed, an Ethiopian citizen held at Guantanamo for more than 4 years, to plead guilty to secure his freedom, even though he was never charged with a crime, according to documents released by two judges who ruled in the High Court case.

The documents, relating to a ruling the judges made last October, reveal the U.S. military wanted Mohamed to agree not to sue the United States or any of its allies, and that any rights to compensation should be assigned to the U.S. government.

Any lawyers among my reader(s) want to weigh in on this?

Scatological Explanation of the Geithner Plan

So, I was on a private BBS formed out of the ashes of Netslaves, and someone asked the following:

CNN keeps talking about it raising the DOW today, but I have no idea what it actually is supposed to do.

So I quickly riffed on this, and the response was very positive, so I thought that I should share my (somewhat profane) explanation with the world:

---

Short:

• Place your hand in your pocket.
  
• Remove wallet
  
• Hand to Wall Street Executive.

Longer version:

• The Treasury/FDIC/FED will make non recourse loans to allow investors to buy into the big sh@#pile of mortgage backed securities (MBS), credit default swaps (CDS) and other alphabet soup so that they buyer will put down about 3% for a 20% stake in this sh@#.
  
• A non recourse loan means that if the investment fails, the lender (i.e. the taxpayer) takes back the sh@#, and the loan is settled, basically, they are only out their 3% (or less) down payment.
  
• Basically, it's a subsidy to the big banks and investment houses, who created the sh@#, because the small investor cannot get the sh@# for cash deal without going through the big banks and investment houses, and paying a sh@# load of commissions.
  
• This has the effect of creating a taxpayer subsidy for the sh@# that is (at least, there are other programs that feed in) of at least 30%.
  
• So eat your sh@# sandwich, and know that somewhere a Wall Street banker is spending your money on some prostitute to sh@# on him.

What can I say but sh@#?

Netanyahu is Terrified of His Campaign Promises

Benyamin Netanyahu is aggressively pursuing a coalition with Labor, and strange as it sounds, it might happen because Ehud Barak really wants to stay on as head of the Defense Ministry, though some of his fellow Laborites are aghast at the prospect.

I would also take issue with one of the points that the author of the second link, Jeff Barak, has with Avigdor Lieberman being the Foreign Minister: It's actually one of the two positions where his positions are least likely to cause a problem, because his three basic planks are a two state solution (and as FM he won't get to draw those boundaries), hostility to the Arab population inside the Green Line, and staunch secularism.

I'd much rather see him being the Minister of Religious Services, but when all is said and done, the FM position keeps him away from internal Israeli politics.

Bernie Sanders Blocks Gensler as CFTC Chairman

I wholeheartedly approve of the distinguished gentleman's decision to place a hold on the nomination of Gary Gensler to be chairman of the Commodity Futures Trading Commission.

Gensler (along with Geithner and Summers, but those guys are water under the bridge) fought long and hard for the Commodity Futures Modernization Act of 2000, first as Assistant Secretary of the Treasury, and then as Undersecretary of the Treasury, which deregulated derivatives and swaps, and is one of the architects of the current meltdown, and Sanders is 100% correct in objecting to his having a any role in further regulation of derivatives.

Then there is also the matter of his brother being hip deep in Wall Street too, running a fund for T. Rowe Price, and Gary Gensler himself is another Goldman Sachs alum.

Enough is enough. We need people who aren't the ones who created the problem in the first place in charge of policing those who were.

Un-dirtyword-believable, and good for Sanders to stand up for a semblance of competence and honesty in Barack Obama's economic team.

Common Sense on Pakistan

It looks like the White House will be linking future aid to Pakistan to their performance fighting the Taliban and limiting cross border incursions.

This is a very good idea.

There are elements in Pakistan who are still supporting the Taliban, because they see it as a way of offsetting Indian influence in Afghanistan, and much of the military establishment that isn't doing this is completely focused on a future conflict with India, so they do not spend resources to assert a level of control in the "tribal regions."

If they realize that spare parts for their F-16s is contingent on their performance in keeping the Taliban from using northern Pakistan as a staging area, maybe elements of the Pakistani security apparatus will get on the ball, as opposed to spending most of their time and energy on planning for an apocalyptic conflict with India.

Economics Update

Since we've already covered the Geithner political suicide pact economic plan, let's lead off with housing.

Happy, happy, joy, joy, home sales rose 5.1% in February relative to January, seasonally adjusted, though people not so closely attached to the realty industry have noted that it's
really a pretty modest rise, or note that home sales have fallen year over year, and that about 45% of these sales are distressed in some manner.

I would say that year over year is the only metric to apply, because the so called "seasonal adjustment" if it ever were valid, has become meaningless in the current collapsing market.

Internationally, we have another member of the 0% benchmark club, as the Bank of Israel has cut its benchmark rate to 0.50%.

In currency and commodities, the dollar is down, because people are less concerned about safe havens, so there is less dollar flight to safety, and copper and oil rose.

It appears that these markets like Geithner's plans, because, they are over paid and over bonused trader types, I guess.

Governor Paterson Gets Clue

So, we now have a New York Post reporter breathlessly reporting that he is planning a "secret" tax hike on the rich.

Well, considering the fact that the Wall Street masters of the universe upon whom he hoped to fund his reelection bid are now less popular than either Dick Cheney or a case of the clap,^* this is not surprising, though according to Dicker, Paterson wants to appear to be against the tax hikes while pushing them through, which indicates once again that he has the political instincts of Kathleen Kennedy Townsend, or a packet of Fleishmann's active dry yeast.^*

My guess is that he's flailing around because the polls show him being crushed by Andrew Cuomo in the primary, and by Rudolph Guiliani in the general by numbers that exceed what a banker can supply to him by the way of campaign funds.

^*For some reason, I always confuse the two.^†
†I love it when I get to "twofer" footnotes.

Geithner's* Plan

So, the plan has been announced, and it's pretty much what I said over the weekend: A massive subsidy to big investment firms, and the little guy can't get in on the "3% down and that's all you lose" deal.

It's the buy the sh%$pile with taxpayer money thing all over again....and again....and again.

Geithner has an OP/ED in the Wall Street Journal,^† where he rolls out the Treasury's new weasel words for financial toxic waste, "Legacy Assets."

I'm sure that he thinks of Chernobyl as an "accelerated sunshine facility" too.

We know that the financial masters of the universe love the subsidies, because players like BlackRock and Pimco are falling all over themselves to get in.

I won't go over the problems with the plan here, you can look at my Saturday post for that, but the short form is that Wall Street is mugging you.

^*Really Barack Obama's plan, because he is where the buck stops, though a lot of the blame goes to Larry Summers too.
^†Which, considering the WSJ's editorial page reputation for outright deception, is utterly appropriate.

Reality Sets In

It appears that the economic Calvanism^* of the past 3 decades is on the wane.

Michael Hiltzik notes that one of the characteristics of the AIG scandal is the reemergence of the concept of the "undeserving rich" in the public discourse:

That the point is even open for discussion suggests that a sea change is taking place on the American political scene. For decades, the wealthy have been held up as people to be admired, victors in the Darwinian economic struggle by virtue of their personal ingenuity and hard work.

Americans consistently supported fiscal policies that undermined middle- and working-class interests partially because they saw themselves as rich-people-in-waiting: Given time, toil and the magic of compound interest, anyone could retire a millionaire.

That mind-set has all but been eradicated by the damage sustained by the average worker's nest egg, combined with the spectacle of bankers and financial engineers maintaining their lifestyles with multimillion-dollar bonuses while the submerged 99% struggle for oxygen.

Here's hoping that this is a generational change, and not a 15 minute fad.

^*Traditional Calvanism sees profit, and wealth, as a sign of God's grace.

Bush Appointee Incompetent and Corrupt: Afghan Edition

It looks like the US and its NATO allies are looking to appoint a Prime Minister to bypass and diminish Hamid Karzai's role in the day to day operations in the Afghan government.

The US and its European allies are ­preparing to plant a high-profile figure in the heart of the Kabul government in a direct challenge to the Afghan president, Hamid Karzai, the Guardian has learned.

The creation of a new chief executive or prime ministerial role is aimed at bypassing Karzai. In a further dilution of his power, it is proposed that money be diverted from the Kabul government to the provinces. Many US and European officials have become disillusioned with the extent of the corruption and incompetence in the Karzai government, but most now believe there are no credible alternatives, and predict the Afghan president will win re-election in August.

Hooccoodanode that George "Heck of a job, Brownie" Bush would appoint people completely inept and corrupt to critical positions?

New York Times OP/ED Asks if Geithner/Summers/Bernanke is Obama's Katrina Moment

Frank Rich, who I generally find unobjectionable, but also unmemorable, asks this question, and I believe that he may be right.

I believe that Wall Street is being run by, and for, a corrupt class of overpaid crooks, and most of the country agrees with this, but Geithner/Summers/Bernanke believe that these folks posses the unique genius to fix the problem that they have created.

They are wrong, and unless, and until, the campaign to fix these things becomes a campaign against these folks too, a bit of reality that even perennial light weight Maureen Dowd gets, things will get worse.

These people don't work for their banks or brokerages, they work for their own benefit at the expense of those banks or brokerages.

Credit Union Failures Too

U.S. Central Federal Credit Union, Lenexa, Kansas, and Western Corporate (WesCorp) Federal Credit Union, San Dimas, California.

They are commercial credit unions, which means that they do things like serve as check clearing houses for retailers, they do not hold personal accounts.

Assets, %57 billion.

NCUA Link.

Body Armor for the Judean People's Front Crack Suicide Squad

Judean People's Front Crack Suicide Squad!
What, you haven't seen Life of Brian? Rent it now!

You may, or not, be aware of the concept of reactive armor.

It's used on a fair number of armored vehicles out there: It's a box with explosives in it, and when struck by a round, it explodes, dissipating the jet from a shaped charge or altering the path of a kinetic energy penetrator dart.

Well, someone has taken the next forseeable step, and submitted a patent application for an exploding bullet proof vest:

As Dave Barry would say, "I am NOT making this up!"

Check out patent number 6474213, Reactive stiffening armor system, which proposes:

A reactive armor structure having an outer layer and a reactive element adjacent to and integral with the outer layer is provided. The reactive element provides an amount of support to the outer layer effective to restrain movement of the outer layer and to delay fracture of the outer layer when the outer layer is impacted by a projectile.

I wonder what happens when a limb is in the path of the detonation of:

10. The structure of claim 1, wherein the explosive material has a detonation velocity of from about 2 km/s to about 5 km/s.

...

24. The structure of claim 15 wherein said reactive material comprises a material selected from the group consisting of TNT, RDX, Comp-B, Octol, and nitromethane.

I'm not sure if it would be worse to be the guy in the armor, or the guy standing next to the guy in the armor.

A400M Troubles Continue

Best evidence of this is that the seven partner nations in the program have agreed to a moratorium on cancellation until July.

They are not agreeing to continue, they are just saying that they won't cancel in the next 4 months, because the program is 4 years behind schedule, and well over budget.

I think that the new lesson of defense procurement is never buy anything unless you can cancel it when costs escalate and schedule slips.

Geithner's New Plan: Same Old, Same Old, Failure

So, we now have a definitive leak of the features of Geithner's plan to help the financial system, and it's the same old, same old: The problem is not that the banks are insolvent, or that their assets are worthless piles of crap, it's that the markets are just undervaluing them.

The basic provisions:

• An auction of the big sh#@pile, which is a bad thing, because it only serves to expand taxpayer exposure.
• The FDIC will lend about 85% of the money to buy this.
• These FDIC loans will be non-recourse loans, which means that if those assets bought with that particular loan would be used to repay. Any further losses would be eaten by the taxpayer.
• The Treasury will match, "the private money that each of the firms [4-5 investment firms hired by the Treasury, meaning Goldman and the rest of the usual suspects] puts up on a dollar-for-dollar basis with government money," which means that the 15% that they have to buy to get the assets is now 7½%
• The Treasury/Federal Reserve TALF lending program will be used to further expand lending to buy this toxic waste.

This is what Geithner has been pushing for a long time, some sort of program to overvalue assets at taxpayer expense, all while, "firmly against imposing any restrictions on pay for companies investing money in the rescue effort rather than receiving money from it," except, of course, any participants in this are receiving federal money because of the subsidies.

Dean Baker notes that the that unlike Timothy "Eddie Haskell" Geithner and Lawrence "Shoggoth" Summers and their Evil Minions^™, the current market values of the securities are probably accurate, because real estate prices remain 20% above the historical trend, and if houses fall another 20%, these mortgage backed securities now selling for 30¢ on the dollar, which are the very top tranches, would be near a dime on the dollar.

Paul Krugman correctly calls it, "an open invitation to play heads I win, tails the taxpayers lose," policy, and Calculated Risk and Yves Smith are similarly disparaging, though John Cole is the one who best nails the situation:

The Illness- reckless and irresponsible betting led to huge losses
The Diagnosis- Insufficient gambling.
The Cure- a Trillion dollar stack of chips provided by the house.
The Prognosis- We are so screwed."

Seriously, tag team of Geithner/Summers may very well be worse for the economy than Hank Paulson.

For your amusement, here is Rep Brad Sherman (D-CA) opening up a can of whup ass on the CNBC Wall Street apologists

More Friday Night FDIC Bank Closings

Happened after I shut down for Shabbos.

TeamBank, National Association, Paola, KS

Colorado National Bank, Colorado Springs, CO

FirstCity Bank, Stockbridge, GA

Full List

Bank failure numbers18, 19, and 20 in 11 weeks.

People With Too Much Time On Their Hands

Clips of actors who appeared both in Star Trek and Wild Wild West.

Boeing Unveils LO F-15

It appears that Boeing is looking to extend the life of the F-15 Eagle with a technological update (also here and here) called the Silent Eagle.

The two most obvious changes are creating weapons bays in the conformal fuel tanks and the canted tails, though it is also reported that there is a fair amount of radar absorbent material (RAM) added, including a frangable gun cover that hearkens back to how armorers treated the guns in WWII.

There are apparently no radar blockers in the inlets, even though Boeing has extensive experience with them in the F/A-18 E/F, because of potential export issues.

This implies that Boeing has decided (correctly IMHO) that they have no chance of selling these to the USAF, who have eyes for nothing for the F-22 and F-35.

They are suggesting a $100m unit price, though it is not made clear in any of the articles as to whether this is unit price, or fly-away cost.

The implication is that $100m will be cheaper than the F-35 JSF, and perhaps this is less an exercise to sell more F-15s than it is to sell more F/A-18E/Fs by implying that the JSF will break 9 figures in cost.

If they are implying this, they are probably right. The JSF shows a lot of signs of cost escalation and schedule slippage.

Powerpoint courtesy of The DEW Line, video of missile actuator courtesy of Boeing.

Russia to Deploy MIRVs When Start-1 Expires in December

This may be a negotiating ploy because while they have announced plans to activate regiment of RS-24 missiles with MIRVs, they are also saying that they want to negotiate a new arms control agreement.

Not sure how much is solid plans, and how much is gamesmanship.

US Submarine and LPD Collide in Strait of Hormuz

The collision between the USS Hartford (SSN 768) and USS New Orleans (LPD 18) happened on Thursday, see here and here.

Reports of 15 minor injuries, and a fuel oil spill from a ruptured tank.

Potential Rafale Sale to Libya

It makes sense.

Khaddafi has signed a deal for 6 months exclusive negotiations for the Rafale.

This purchase actually makes sense for Libya, because they have a reasonable chance of being able to continue to operate the aircraft even in the face of an embargo by the US, such as the sort that grounded the Venezuelan F-16s, and the competitors, the Eurofighter Typhoon, and SAAB Gripen, both have significantly more US content.

This would be the first foreign sale of the Rafale, and I'm sure that the French foreign ministry and Dassault are both drooling at the prospect.

The Navy is Doing This Because the USAF Can't Be Bothered

After years of ground troops begging for something lower, slower, and with more short field capability, it is the US Navy that is considering a solution, the Super Tucano turboprop trainer configured for the light attack mission.

You could probably buy 50 of these aircraft for the price of one JSF, and it can loiter over the battle area for a much longer period of time, and spot things that the fast movers would miss.

Shades of the A-1 Skyraider, which wasn't a USAF idea either.

Naval aviation is fighting it, because, well, has a propeller and all, but it looks like this will actually be used, because it's what the guy on the ground needs.

Yadda, Yadda, Yadda

Another flying car. This one from Terrafugia.

It appears to be very much on the "roadable plane" side of the roadable plane/flying car divide, and I rather expect that it will be like the rest: single digit production followed by an exit of the business.

In any case, here is a vid of their first flight.

It really appears to love the ground a lot, but that may be because of its relatively long wheel base relative to dedicated aircraft, requiring more force to rotate.

Worldwide War Pigs: Drop Tank IRST Tests Well For Supers

About 1 ¾ years ago, I wrote about how Boeing was looking into putting an Infra-Red Search and Track (IRST) on the F/A-18 E/F Super Hornet by fitting it to the front half of a center-line drop tank.

Well, Boeing has completed successful flight tests on the system, which is supplied by Lockheed Martin Missiles and Fire Control^*.

There hasn't been an aircraft in the US inventory with an IRST for air-to-air since the F-14 Tomcat was retired, but Russian and European fighters have embraced this technology.

The advantages of going passive are real, though I would wonder about the reliability of the system under the very turbulent and vibration laden environment beneath the Super Bug.

My original post on this.

H/t Worldwide War Pigs

^*Full disclosure, I worked at Lockheed Martin Missiles and Fire Control in the late 1990s.^†
†Yes, I have worked everywhere. Maybe I can't hold down a job, but more likely this has been my role as "technical hit man", where you are parachuted in to take care of a specific need.

China’s Chengdu J-10 Modified

It appears that there have been some upgrades and/or fixes to China’s Chengdu J-10 canard-delta fighter.

If you look at the top (newer) image it appears that an Infra-Red Search and Track (IRST) unit has been added just forward of the cockpit, and that the inlet has been modified from the original aircraft (bottom).

Douglas Barrie thinks that there may have been vibration or air flow instability issues with the original inlet, but it looks to me more like an attempt to reduce RCS in the forward aspect.

Or maybe it's a buff with photoshop.

Them Rooshans Make Good Bang Seats

Watch this crash of an SU-24 at what I think is an Iranian air show, and you will believe, as Stephen Trimble notes, that the performance of their ejection seats in impressive (crash at about 1m30s):

Trippy Helo Concept

It's a coaxial tilt rotor, and Baldwin Technology is pitching it as a cargo UAV capable of carrying a 3000 lb capacity pallet.

The first is more the test models, the 2nd more operational concept.

From America's Premier News Gathering Organization

I loves The Onion.

Are Violent Video Games Adequately Preparing Children For The Apocalypse?

Oh Lord, Won't You Buy Me a Mercedes Benz (Zimbabwe Edition)

So it now appears that foul play has been ruled out in the Tsvangerai crash, and MDC official Roy Bennett has been released from custody.

That being said, Mugabe's attempts to maintain his political power have gotten truly surreal:

On his first day as education minister in a government so broke that most schools were closed and millions of children idle, David Coltart said he got a startling invitation.

“Come and get your brand-new white Mercedes,” an official told Mr. Coltart, a veteran opposition politician, as President Robert Mugabe peered down from a portrait on the minister’s office wall.

The offer of an E-Class Mercedes to every minister in the month-old power-sharing government was vintage Mugabe, an effort to seduce his political enemies with the lavish perks he has long bestowed on loyalists.

(I would have offered him silver, or metallic blue, myself.)

I'm an optimist, and see this as a sign of weakness.

Mugabe had previously dismissed the MDC entirely, and how he is trying to bribe them.

Great Googly Moogly: Larry Summers Wants to be Fed Chairman

It appears that Barney Frank and Chris Dodd have differences in the future course of regulation.

Specifically, Frank favors giving the Federal Reserve the job of managing "systemic risk" under any new regulations, and Dodd thinks that the Fed, with its history of unresponsiveness and opacity is ill suited to the task.

Well, it now appears that much of the smear campaign against Dodd may have come from Larry Summers, who would be first in line to be Federal Reserve chairman if Obama does not reappoint Bernanke, and so he went after Dodd in order to strengthen Frank's hand in making the Fed the chief regulator.

I'm beginning to think that anyone who has "friend of Robert Rubin" on their resume should be barred from any position of authority.

Un-dirtyword-believable.

The Stupid, It Burns Us!!!!!

It looks like Senate Republicans have decided to do whatever is possible to slow the AIG bonus bill.

Why?

I'm not sure, but never stop your opponent from stepping on his own dick.

Former Head of AIG CDS Terrorists Hires Lawyer

It looks like US and British authorities are investigating possible criminal activity.

Here's hoping they find some, and send him away for a very long time.

The Cemeteries of the World are Full of Indispensable Men*

The former chief economist of the IMF has an Op-Ed in the New York Times, and he makes the point that removing the "geniuses" who created the problem has to be the first step of fixing the problem:

A.I.G. can hardly claim that its generous bonuses attract the best and the brightest. So instead, it defends the payments by arguing they’re needed to retain employees who are crucial for winding down transactions that are “difficult to understand and manage.” In other words, only the people who stuck the knife into the American International Group can neatly extract it for a decent burial.

There is no reason to believe this.

Similar arguments made during the 1997 Asian financial crisis, when currencies and stock markets collapsed in much of Southeast Asia, turned out to be a smokescreen to protect the executives who were partly responsible for the mess. Recovery from that crisis required Indonesia, South Korea and Thailand to close or consolidate banks. In all three countries, bankers protested, claiming that their connections with borrowers were critical to recovery.

...

The lesson of all this is that when insiders have broken a financial institution, the most direct remedy is to kick them out. Traders are hardly in short supply, and you don’t need to rely on the ones who made the toxic trades in the first place. Companies must always plan around the potential departure of even their star traders, or they are certain to fail. A.I.G. does not need to keep all of its traders, especially since it takes far fewer people to unwind a portfolio than to build it up.

The longer that we put this off, the worse it will be.

^*Charles de Gaulle, a man not known for his own sense of personal dispensablity, coined this bon mot.

Cows...Barn Doors...And the US Government

So, we have the government looking to legislation giving them the authority that the FDIC does when it shuts down banks for not bank entities, such as bank holding companies and hedge funds.

And in related news, the FDIC is looking for additional authority to acutally write regulations, a function which is currently does not have.

It has strong enforcement powers, but, "but only the Federal Reserve, Office of Thrift Supervision and National Credit Union Administration can write the regulation it enforces."

It's about time.

What Prima Donnas

Well, it appears that Senator Evah Bahy's (DINO-IN) new moderate caucus is getting some pushback from their constituents, and they are crying like a bunch of "girlie men", to quote the governator.

It appears that Rachel Maddow covered this, and called them "conservadems", and they are getting some calls from voters in their states telling them to get with the program.

How many calls are they getting?

Maddow's five-minute "conservadem" segment last Thursday provoked at least 20 calls Monday to Udall's office and more than a dozen e-mails to Democratic Party headquarters in Colorado.

So now they are crying about how awful people are to them.

Seriously, these folks are used to obstructing progressive programs, and then getting a pat on the head from villagers inside the beltway, but now, with someone pointing them out as trying to stifle change, they get 20 phone calls and more than a dozen emails, and they are whining about how people are mean to them.

Listen, if you suck up to Wall Street, who destroyed our 401(k)s, and you suck up to large food processors, who put poison in our peanuts, because they contribute to your campaign, you deserve whatever flak that you catch.

Cry me a fracking river.

Economics Update

So, the commodities markets surged as a result of the Fed's quantitative easing, which means that they are expecting inflation there, which has, among other things, put oil at a 4-month high,


The fact that the 2009 US budget deficit has just been revised higher may also be contributing to traders' positions.

Of course, Bernanke is primarily interested in preventing deflation, so this is a good thing, though I wonder how effective he will be.

Case in point: investors requested only $4.7 billion out of $200 billion available for the Fed small business and consumer lending program, the TALF.

It's a confidence problem, and I really think that the first step to restoring confidence needs to be removing the malefactors in finance who screwed this up in the first place.

The dollar rose today, largely on the belief that yesterday's drop indicated a time for profit taking.

Madoff Stays Locked Up Pending Sentencing

His bail was denied.

Let's Give Texas Back to Mexico

Bill Would Allow Texas School to Grant Master's Degree in Science for Creationism



Seriously, just how stupid are some Texas legislators.

[on edit]
I don't mean to say that all Texas legislators are mind boggling stupid, just that when a Texas legislator decides to do "te stupid" he goes all Texas sized about it.

Cuomo to Get Merrill Bonus Recipient Names

Andrew Cuomo just got a ruling to compel Bank of America to turn over all the names of Merrill Lynch big bonus recipients.

He's also looking to do the same with AIG.

As a matter of public policy, maybe any bonus or salary more than 40 or so times the median wage should be public information.

Because Samuel Clemens Was a Freaking Genius

Quoth Mark Twain:

In the first place, God made idiots. That was for practice. Then he made school boards.

I wish that I had half his wit.

And Some Public Floggings Would Be Nice Too

Yves Smith at Naked Capitalism calls for aggressive criminal investigations, and I agree.

It's clear that there was a lot of outright criminality, and the broken window theory of law enforcement works with white collar criminals too:

Of course, it isn't clear whether deterrence works against white collar criminals, but the flip side is William Bratton style zero tolerance policing was successful in seemingly ungovernable New York. The theory was that allowing minor infractions, like window breaking, to go unpunished sent a very visible signal that misdeeds were tolerated. Of course, zero tolerance wasn't the only technique used by Bratton (he also was big on flexible deployment, shifting officers to neighborhoods that suffered an increase in crime), but it is considered to be an effective policing tool. And Wall Street is so far from having any meaningful policing that it's a joke.

It seems anything short of regulatory or legal moves that limit career options (read future earning power) is an insufficient disincentive to risky trader and investor behavior.

I would argue that the Wall Street crooks have more to lose than a corner dope dealer.

After all, if they get caught, thrown in jail, and their assets,and possibly those of their spouses and perhaps their children's college funds, are forfeit, that's a lot more to lose than getting 3 to 5 in a prison when you had nothing before.

Ellen Tauscher Confirms that She Will Accept Foreign Service Post

She has accepted the offer to be the undersecretary of State for arms control and international security, and this means that a line is already forming for the special election.

This is a safe Democratic district, so let's hope that she is replaced by a member of the "Democratic Wing of the Democratic Party."

Six Democrats to Run Serious Primary Challenges Against

Because they voted against taxing the AIG bonuses, and they are among the most right wing Democrats in the house of representatives:

• Melissa Bean (IL-08)
• Larry Kissell (NC-08)
• Walt Minnink (ID-01)
• Mike McMahon (NY-13)
• Harry Mitchell (AZ-05)
• Vic Snyder (AR-02)

Challengers, start your engines, you have an issue that they won't be able to avoid.

Geithner Fesses Up

Well, I suppose that it's an improvement that we now have people in cabinet positions who, when caught in a bald faced lie, will, when absolutely forced to, tell the truth.

Compared to Dick Cheney, or Alberto Gonzalez, the fact that Timothy Geithner is now admitting that it was the Treasury that demanded the bonus loophole is a step forward.

Of course, this followed 24 hours of "pin the bonus on Chris Dodd," and only when people went back to contemporaneous news reports, and his fellow senators pushed back against the smear, did they change their tune, but considering the fact that Ari Fleischer accused Saddam Hussein of planning 911 just 6 days ago, this is a step forward, but still, Geithner needs to realize that he works for Barack Obama, who works for us, and not the banks.

House Passes Bonus Tax Bill

Just over half of the 'Phants voted against it, and all but 6 Democrats (I'll post who and what should be done later) voted for a 90% tax on bonuses of companies getting bailed out by the government.

On some level I understand just how this is really a very small part of the bailout, but from news, to outrage, to bill passing the house is about 4 days, and it means something, though I'm not sure who gets that yet.

Workplace Fun W/ Magnets and Post-It

Captured on my cell phone camera from work:

More Nails in Eddie Haskell's Coffin

I think that Geithner will be gone by June....He should have rented a house, because we now have a report that Treasury was informed of the bonuses two weeks before Geithner says that he knew, which makes him either a liar, or incompetent.

Me, I'll go with liar, as it is clear that the Obama administration is lying their asses off about Dodd's role in proposed bonus restrictions in the bailout legislation, and the logical people lying about it right now are all on the Geithner/Summers "axis of weasels":

After the recent furor relating to the AIG payments, lawmakers returned to make a forensic examination of the provision seeking to assign blame for what some called a secret agreement to spare the tottering insurance giant, which has received more than $170 billion in federal aid. The provision and its genesis consumed Capital Hill Wednesday.

"The president goes out and says this is not acceptable and then some backroom deal gets cut to let these things get paid out anyway," said Sen. Ron Wyden, (D., Ore.), author of an earlier, alternative pay amendment, told the Associated Press.

The Obama administration had not tried to hide its concern about the moves to clamp down on executive compensation. Both Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers lobbied Mr. Dodd to make changes.

Administration officials said the Treasury didn't suggest any language or say how the amendment should be changed. They said they noted legal issues that could likely lead to challenges, but was the end of their involvement. The official said Mr. Dodd and Congress made the final changes on their own.

At issue were competing provisions in the stimulus bill that capped executive compensation for recipients of bailout funds. One, drafted by Sens. Wyden and Olympia J. Snowe (R, Maine), would have capped bonuses at $100,000, retroactive to 2008. Companies awarding bonuses above that level would face the choice of returning those funds to the Treasury or having them taxed at 35%.

"Administration Officials" means someone under Geithner's or Summers' control here.

What's more, the rest of the world does not have any confidence in Geithner either, as evidenced by the IMF criticizing his plan as "lacking detail."

The IMF never criticizes a Secretary of the Treasury, and the fact that they are now indicates that there are a number of foreign nations that are sick of him, and signed off on this statement.

We need someone who will hold the financial industry to account, and Geithner still has knee pads on.

I'd Say It's Self-Evident, Only Not

Nemo at Self Evident makes a convincing case that Bernanke and Geithner are not doing anything but trying to protect the incumbent banking giants.

I agree. While we need a functioning credit system, there is no need for the current banks to continue to exist in their current form, and the Fed and Treasury's frantic effort to keep these banks on life support is a detriment to the rest of the economy:

If I were in charge and I wanted to prevent banks from failing at all costs, what might I do?

I might relax mark-to-market accounting. This would allow assets to be carried at inflated valuations, both for purposes of regulatory capital requirements and for purposes of getting loans from the Fed.

I might provide non-recourse loans to private equity to create inflated marks where mark-to-market still applies.

I might try to convince the FDIC to exercise forbearance in seizing banks. Of course, the primary day-to-day mission of the folks at FDIC is to preserve the integrity of their insurance fund. So they might object to my suggestion. I might have to give them assurances that they will have the necessary resources should my great plan fail. A $500 billion credit line from the Treasury, say.

If the FDIC agreed, they might suddenly go from 3-4 bank seizures per week to 0-1 per week.

Once my plan leaked to certain troubled banks, they might suddenly halt their attempts to raise capital at $0.20/share.

And of course, once Wall Street got wind of it, shares in financial companies would rocket higher.

Let me know if you notice anything like this happening.

Good point, and good snark.

If These Guys Are So Smart, Why Are They Complete Morons?

It looks like Citi Chief Executive Officer Vikram Pandit and his merry band of stupids have decided to spend $10 million on redecorating their executive digs.

Hello, this is a clue!!!! Do you remember the name John Thain, the former head of Merrill until his gold plated office spending came out?

What Have They Got To Hide

In this case, it's the Federal Aviation Administration, which has a proposed rule to block public access to raw bird strike data:

The FAA says requests for data from the public "have typically been for specific data fields, individual airports or detailed portions of the database" and that responses from the agency "have addressed each request individually and adequately".

However, the agency cautions public analysis of bits and pieces of the data could lead to inaccurate portrayals of airports and airlines, which could have a negative impact on their participation in reporting bird strikes.

So, they are saying that think that ordinary people are too stupid to understand the data.

More likely, they are covering something up, like certain airports being having a lot more problems with bird strikes, and the FAA, which is tasked with both regulating and promoting aviation, finds this information inconvenient.

Economics Update

Thursday is new jobless day, and the numbers suck with new claims falling to a still very high 646,000 and continuing claims hitting a new record of 5.47 million, which is a new record....Again.

This implies that people are still unable to find jobs, but, for a while, at least, employers have run out of people to lay off....Delightful.

We also had the Leading Economic Indicators falling, though not as badly as the consensus prediction, and the Philadelphia Fed Business Outlook Survey for March remained awful, from -41.3 in February to -35.0 this month, so we are still seeing a contraction.

In the auto industry, the bailout has been extended to parts suppliers, to the tune of %5 billion.

In real estate, it looks like Moody's might cut the ratings on some $241 billion of debt for jumbo mortgages, which means that it must suck to live in a high cost real estate area right now.

In the world of the here and now, Moody’s did downgrade insurance company Prudential, and I'm wondering how long before the rest of the insurance industry looks like AIG.

In any case, it appears that the Fed's decision to start quantitative easing (printing money) is having an effect, with the cost of borrowing falling, with 30-year fixed mortgages falling to 4.98%.

The Fed has also driven the US dollar lower, with the dollar hitting $1.36:€1.00 for the first time since January.

We are also hearing rumors that Citi is considering a reverse stock split, my guess is that this is how they want to address the worry that they might become a penny stock.

In energy, oil broke $50/bbl for the first time this year, on the falling dollar and reports that OPEC members are more-or-less keeping to their quotas.

Have I Mentioned that I Love Barney Frank?

In a completely heterosexual kind of way, as the General would say.

In any case, the distinguished gentleman from Massachusetts asks, "Is There an Antidote to the Republican Amnesia?"

Memory eventually fails us all, but apparently the decline strikes one party far more than the other.

In recent weeks, my friends across the aisle have expended a lot of breath proclaiming that the Democrats caused the present financial crisis by failing to pass legislation to regulate financial services companies in the years 1995 through 2006.

There is only small one problem with this story -- throughout this entire period the Republicans were in complete charge of the House and for the most critical years they controlled the House, the Senate, and the Presidency.

In the House of Representatives, the majority party has almost unlimited power over the minority party. The majority party owns the committee chairmanships; it controls what bills come to a vote; and it is under no obligation to consider the ideas of the beleaguered minority. When the Republicans were in the majority they ruled with an iron first; it is no accident that Tom DeLay was known as "The Hammer."

That is why I find it particularly flattering the Republicans now claim that in the years 1995 to 2006 I personally possessed supernatural powers which enabled me to force mighty Republican leaders to do my bidding. Choose your comic book hero -- I was all of them.

.....

Brutal and very funny.

This is Absolutely Clueless

And both Rahm Emanuel and David Axelrod are now saying that the AIG bonus fiasco doesn't matter, and that the people don't care about it.

In the grand scheme of the bailout, it's not a lot of money, I get that, but to suggest that this is some sort of silly, media generated phony story is simply naive and stupid.

When did the Carter administration come back?

China Moving to Shorter Term Treasuries

So, they are trading off return for the ability to get themselves out in relatively short order, or as the Asia Times puts it, "China inoculates itself against dollar collapse."

My take is that this may be the economic story that comes from "nowhere" to bite us in the butt in the next 18 months or so, but my predictive skilz suck, so YMMV.

Well, Now We Know Why Greta Van Susteren Gushed Over Sarah Palin

It turns out that her husband, John Coale, is Palin's husband is a senior figure in Sarah Pac:

Ironically, just last week, Van Susteren decried people thinking she’s “so close to the Palin family.” “The only way that I’ve met them is by interviewing them,” she said, never mentioning her husband’s relationship to Palin.

So not surprised.

Jeebus, AIG Again, Only This Time It's the Whole Company

If I'm reading Michael Hirsh right, the non financial products division part of AIG, the part that was supposed to be the well run real insurance company, may very well be insolvent too:

Thomas Gober, a former Mississippi state insurance examiner who has tracked fraud in the industry for 23 years and served previously as a consultant to the FBI and the Department of Justice, says he believes AIG's supposedly solvent insurance business may be at least as troubled as its reckless financial-products unit. Far from being "healthy," as state insurance regulators, ratings agencies and other experts have repeatedly described the insurance side, Gober calls it "a house of cards." Citing numerous documents he has obtained from state insurance regulators and obscure data buried in AIG's own 300-page annual reports, Gober argues that AIG's 71 interlocking domestic U.S. insurance subsidiaries are in hock to each other to an astonishing degree.

Seriously, we need to start sending people to jail.

I Hope So

Word is that Congresswoman Ellen Tauscher has been tapped as undersecretary of state for arms control and international security, which means that the head of the New Democrat Caucus, and a shill for the banking industry would be replaced in a special election.

The fact that this DINO in a safe Dem district would be out would be a very good thing.

Ben Bernanke Dead Pool

Yeah, it does seem to be the day for dead pools.

In this case, we have AIG CEO saying tat Fed Chairman Bernanke and dhe Federal Reserve approved the bonuses some months ago.

While Bernanke is unfirable, I think that this is another nail in his reputation, and I think that we will start seeing increasing pressure for him to resign.

Timothy "Eddiy Haskell" Geithner Dead Pool

Well, notwithstanding the obvious, that Geithner is unwilling to do the tough things, and that he keeps coming back to the bad bank, but it may very well be the AIG bonus fiasco that does him in.

Ignoring the fact that Geithner was at the center of the first AIG bailout, we are now seeing the signs of panics with Treasury department pointing the finger at Senator Chris Dodd, despite the fact that it was Treasury Secretary Timothy Geithner and Lawrence Summers who waged all out war against meaningful regulation of executive bonuses, and Dodd proposed strong regulations against excessive bonuses:

(4) a prohibition on such TARP recipient paying or accruing any bonus, retention award, or incentive compensation during the period that the obligation is outstanding to at least the 25 most highly-compensated employees, or such higher number as the Secretary may determine is in the public interest with respect to any TARP recipient;

What's more, we are now seeing that the Washington Post editorial page, in the person of Harold Meyerson is now calling Geithner the bank's bitch:

But Geithner's indulgence of bankers' indulgences is fast becoming the Obama administration's Achilles' heel. The AIG debacle is the latest in a series of bewildering Geithner decisions that threaten to undermine the administration's efforts to restart the economy. So long as it's Be Kind to Bankers Week at Treasury -- and we've had eight straight such weeks since the president was inaugurated -- American banking, and the economy it is supposed to serve, will remain paralyzed. The Geithner plan to restart the banks provides huge taxpayer subsidies to hedge funds, investment banks and private equity companies to buy the banks' toxic assets without really having to assume the risk. That's right -- the same Wall Street wizards who got us into this mess, using the same securitization techniques that built mountains of debt within a shadow financial system that remains unregulated, are the saviors whom Geithner has anointed to extricate us -- with our capital, not theirs -- from the mess that they created.

It isn't entirely fair: It was clear that this is what Timothy Geithner was when Obama first nominated him, so it is fair to say that Geithner's policies are Obama's policies.

One hopes that Obama dumps the policy, and Geithner (and Summers) shortly.

In the meantime, the Republicans are pulling their knives out with Representative Connie Mack (R-FL) and House Minority Leader John Boehner (R-OH) are directly or indirectly calling for Geithner's ouster.

I can't believe that I am saying this, but Obama should listen to them.

I Like This

Al Franken has filed paperwork with the election court for the Coleman campaign to reimburse them for court costs.

Seeing how Coleman has raised more money for his court challenge than he did for his campaign, I would really like to see the smarmy bastard soaked.

Economics Update

So, we saw a
0.4% increase in the consumer price index in February, which is the highest rate since July, even if that is just a 5% rate.

Truth be told, I'm not sure if this is good news, reduced possibility of inflation, or a sign that the dollars that are flooding our economy are creating an inflation spiral.

In either case, we have another indicator that the real estate market is no where near a turn around, the bump in February building permits not withstandint: the Architecture Billings Index remains near a record low, and this is a leading indicator.

The spike in jump in mortgage applications does not really mean much, as it is primarily refi activity driven by low mortgage rates.

Internationally, we have a number of developments:

• Foreign purchases of US debt fell sharplyin January
• The Bank of Japan kept its benchmark rate unchanged at 0.1% (so the US isn't the only central rate running up against the zero bond) and is buying bonds (printing money)
• The jobless rate in the UK rose above 2 million, this is a 12 year high in unemploy, and the delta of 138,400, which is the highest number since records started being kept in 1971.

In energy, oil fell on the pessimistic report from the Federal reserve despite assurances of the House of Saud that OPEC will really follow the quota this time....really...for sure. (I don't believe it either)

Finally, the news that the Fed is printing about a trillion more dollars pushed the dollar down.

Fed Goes Quantitative Easing

At least that's how I read their purchasing government debt and more mortgage backed securities: Printing money, about $1 trillion.

The markets appear to be loving this, but I'm more concerned about how gloomy the normally excessively cheerful Bernanke Fed is, in the first 'graph.

Full Fed statement:

Press Release

Release Date: March 18, 2009
For immediate release

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve’s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

The ExileD Online Jumps the Shark

Mark Ames just penned a post titled, "How To Find The Nearest AIG Financial Products Office , which has a picture of a murdered banker(actually from a Turkish terrorist attack), which appears to be a specific and deliberate incitement to violence.

I do not approve, even though it speaks to how a lot of us feel.

Czechs Pull BMD Treaty from Parliament

They don't have the votes right now to get approval, as they cannot convince the opposition to vote for it, though they say that they will reintroduce it later.

I'm not sure if this is an outbreak of sanity, or if it is because there are concerns that Obama will drop or move the interceptor location, and that they will be left dealing with Russian blowback.

Head of Citi Gets $38.2 M Package

In a company that's losing billions, and on top of the $80 million he got when he sold his hedge fund to Citi.

Make it stop, please.

Rachael Madoff Declared Homestead in Florida to Protect Herself From Creditors Before Scandal Broke

She's officially changed her primary residence to Florida, and as such she can declare an unlimited homestead on her $9.4 million home in Palm Beach.

This would protect this home against civil litigants, though I'm not sure what it would do against the Federal prosecutors who have already filed their intent to seize this home, though it clearly is now more difficult than their New York penthouse.

This is not surprising. What is surprising is that the Feds haven't filed some sort of conspiracy charges over this, because if this were a drug case, they would have already done so.

[on edit]I should have read the fine print more carefully, she, "applied for the tax exemption Sept. 18 and received it Jan. 12, according to the appraiser’s office."

The scandal broke on December 10, which implies that someone behind the change in residence knew that the house of cards was collapsing, and made the move to save the house.

FASB Moves Toward Giving Lunatics Control of the Asylum

Financial Accounting Standards Board (FASB) looks to have caved, and its moving to significantly weaken mark to market accounting.

This is very bad news in the long term, and, because, "would be able to apply the revised rule to their first-quarter financial statements," we are going to see a bunch of very rosy results from the banking sector, but this will all be lies.

This is a bad move.

STFU: Pope Benedict XVI

I don't deny that the Pope has a right to make statements on what he considers to be moral issues, but when he flat out lies about public health issues, as when he said that condoms would make the African AIDS epidemic worse, he needs to shut the f$#@ up.

It's wrong, and clueless, and deliberately so.

Quote of the Day

For once, I agree with Senator Jim Grassley (R-IA):

The first thing that would make me feel a little bit better toward them (is) if they'd follow the Japanese example and come before the American people and take that deep bow and say, I'm sorry, and then either do one of two things: resign or go commit suicide.

He later backed off his suicide comment, which was an exaggeration for the purpose of emphasis, but "Have you no shame," has already been said about Joseph McCarthy.

Still, I thought that it was funny.

Economics Update

Credit card defaults have hit a 20 year high, which implies to me that the unemployment numbers when they come out are going to show further contraction.

Housing Starts were up 22% from January in February, though the headline on the link, "U.S. Housing Starts Rebound," is simply nonsensical, as Barry Ritholtz notes, single family building remained flat, it was people building multi-residential properties, and even with the gain, the number is down 50% year over year.

Calculated Risk's Credit Crisis Indicators are showing modest improvement, though they all remain at troubling levels.

In energy, oil hit a new high for the year, approaching nearly $50/bbl, and in currency, they dollar was down only marginally.

Looks Like My "Amputate" Meme is Spreading

One of the better Congressional freshmen is Alan Grayson (D-FL), and he is now using the term amputate with regard to AIG:

Grayson joined fellow Democrats as well as Republicans in blasting AIG for its refusal to give up hundreds of millions of dollars in bonus payments. He painted the government's choice as a stark one, using the metaphor of treating a wound versus amputating a limb.

"It's not clear to me at all that we're taking the correct approach by allowing AIG to continue to operate, regardless of who owns it," Grayson told me. "At this point, ownership is becoming an amorphous concern when comes to a company that borrows millions and millions without any prospect of paying it back. ... Do we continue to allow the bleeding or not?"

Note that I am not suggesting that the distinguished gentleman from Florida reads my blog, merely that my suggestion of amputating diseased banks is something that other people are coming to independently.

The banking system has more than zombie banks. It has gangrenous limbs that will continue to poison the rest of the body until removed.

Red Cross Uses the 'T' Word

By the "T" word, I mean that they used the word torture to describe the treatment of detainees by the CIA:

The International Committee of the Red Cross concluded in a secret report that the Bush administration's treatment of al-Qaeda captives "constituted torture," a finding that strongly implied that CIA interrogation methods violated international law, according to newly published excerpts from the long-concealed 2007 document.

The report, an account alleging physical and psychological brutality inside CIA "black site" prisons, also states that some U.S. practices amounted to "cruel, inhuman or degrading treatment." Such maltreatment of detainees is expressly prohibited by