Move Over Subprime. Here is Your Brother, Alt-A

These are more common than subprime loans, and while the terms are better, and the debtors in a better position to pay their loans, this bubble is deflating too.

To quote Rich Toscano, "As a matter of fact, high-risk mortgages have accounted for a comfortable majority of all San Diego home loans in recent years."

If you have a 10% drop in housing prices, you will see many, if not most, of the homeowners in the US under water, owing more than they can sell the property for.

Alt A Loans `Disconcerting,' Jumbos Weaker, S&P Says
By Jody Shenn

June 26 (Bloomberg) -- U.S. homeowners with good credit are increasingly falling behind on mortgage payments, a sign lenders have been offering ``higher risk'' loans outside the so-called subprime market, Standard & Poor's Corp. said today.

Rising late payments and defaults on so-called Alt A mortgages made last year are ``disconcerting'' and delinquent borrowers appear to be ``finding it increasingly difficult to refinance'' or catch up on their payments, S&P analysts said today in a statement. ``Serious'' delinquencies, foreclosures and seized property among ``prime jumbo'' mortgages in bonds from 2006 reached the highest among loans of less than 13 months since at least before 2000, S&P said in a separate report.

Alt A home loans are granted to borrowers with generally good credit scores who opt for unusual loan terms or underwriting standards, such as reduced proof of their pay, without enough offsetting positive attributes.

S&P, one of the two largest ratings firms, is now ``examining how the risk profile clearly increased'' in the Alt A market, it said in a statement sent by e-mail today. ``We will communicate our findings to the market,'' S&P said, in language it typically uses ahead of adjusting its rating methodology.

....

OK, Not an Accident

It has now been revealed from a number of sources that Trump's now banned "Red Triangle" ad had 14 words in the first sentence and was purchased 88 times. (See also here, here, and here.)

While I do not generally favor the use of Gamatria^* in politics, there is a significance to these numbers.  1488 is a commonly used argot of Neo-Nazis, referring to both Hitler and the "protection" of the "white race".

As the good folks at Psychology Today observe, "Once is a coincidence; twice is a tendency; three times is a rule."

As Richard Dreyfuss noted in Jaws, "This is not a boat accident."

On Thursday, June 18th, Facebook removed ads that the Trump re-election campaign began running the day earlier, citing the company’s policy against promoting organized hate. At the center of the ads and of the controversy was an inverted red triangle. The same symbol was used by Nazis to mark political prisoners–Communists, Freemasons, people who had helped Jews–in concentration camps.

If your reaction is, “sometimes a cigar is just a cigar,” consider also that the first sentence of the ads contained 14 words, and a total of 88 ads were purchased by the campaign to be run on Facebook.

Fourteen words, 14, symbolizes a popular alt-right slogan, “We must secure the existence of our people and a future for white children.” Eighty-eight, 88, stands for Heil Hitler—H is the 8th letter of the alphabet. Together, 14-88 are often used to signal allegiance to an alt-right group and the ideas of White Supremacy.

A mentor used to say, "once is a coincidence; twice is a tendency; three times is a rule." So it would seem that in this case, the red triangle may not just be a red triangle, that it may stand for something else.

………

A White Power symbol posted by the U.S. president’s re-election campaign, “Team Trump,” helps to legitimize the alt-right movement. When the symbol is shared by the U.S. president himself and by Vice President Pence, observers might wonder if many people actually condone the alt-right movement's goals and values.

This signaling may be far more sophisticated, and far more malicious, than I had previously thought.

^*In Hebrew, every letter is also a number, and Gematria is a sort of mysticism where the numerical characteristics of  sentences and word connote a greater meaning.

Economics Update

Well, we don't need to feel so alone any more, U.K. house prices Fell 0.3% in February. What the French call "Anglo-Saxon" capitalism seems to be working wonderfully.

Back in the US, the housing market is not looking up, with Foreclosures hitting an all time high:

Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.

Even if you are paying your mortgage, you are probably still losing home equity. Total home equity is below 50% for the first time ever. It was 49.7% in Q2 2007, and 47.9% in Q3 2007, and the total equity dropped from $9.65 trillion from $9.93 trillion, or about $1000 for every man woman and child in the united states.

There is not a whole bunch of confidence in real estate now, so the spread on mortgage backed bonds is at its highest level in 22 years, and S&P has downgraded WaMu to BBB from BBB+.

We don't have a stampede out of mortgages and real estate yet, but there are now rumors that UBS dumped $24 billion in Alt-A residential mortgage backed securities (RMBS). If this is reality, we could very see a stampede for the door, and Alt-A, which is for people with credit ratings above 700, will go the way of subprime.

So it's no wonder that Fannie has dropped to a 12 year low.

It looks like the world is noticing this because the Dollar hit another record low, and oil hit another high.

This may have been driven by the European Central Bank and Bank of England not lowering rates, when it is expected that the Fed will.

We do have some mildly positive news retail sales were good in February, and new unemployment claims have fallen, though continuing claims are still going up.

It seems that Ambac is going to be a laugh a minute, see here, here,
and here. Basically, they have a plan to raise much needed capital, but no one thinks that it will work, and the markets halted trading at one point due to volatility over rumors.

Finally, in a case of the weak helping the even weaker, GM will provide $3 billion in loans to Delphi in an attempt to help them emerge from bankruptcy.

If that ain't good money after bad, I don't know what is.

The Glory that is the Democratic Party establishment (There is no Democratic Party establishment)

Civis Analytics, one of the constellation of grifters sucking the life out of consultants for the Democratic Party, founded by Obama Alumni, purged their workforce of people because they were labor organizing.

Trouble found Sunny Rao early the morning of October 30. By the time the Washington State–based data scientist woke up, the group text she shared with several co-workers at the Democratic data firm Civis Analytics had already begun to buzz. “Someone said that they had been fired,” she recalls. Worried, Rao tried to log in to her work computer, only to find it locked. Then she checked her email, and there it was, the news she’d feared: She was terminated effective immediately. No one “even met with me to tell me that I was getting fired or why,” she tells Intelligencer.

………

Rao and Klem say the company gave them no explanation for their dismissals. The timing was odd, too: Civis was working on Joe Biden’s presidential campaign, and the election was only days away. On the Google Hangout meetings, managers did not give a reason for laying off so many staff members at once, according to the fired employees. With nothing else to do, the group text began to put the pieces together. By the end of the day, they’d learned that Civis had fired 11 people. All were vocal activists at work, known among co-workers for their willingness to question company practices in meetings. Instead of experiencing confusion, Klem and Rao began to feel betrayal.

………

Twelve current and former Civis employees say the company’s internal practices fell short of its public promise to be a progressive place to work. “We were working to make Civis live up to the values posted on their website,” says an employee who was fired on October 30. In December, seven of those terminated filed a charge with the National Labor Relations Board, alleging Civis had illegally fired them for organizing. Last month, the NLRB dismissed the charge. An official for the regional board said its decision owed to a Trump-era precedent, according the attorney who represented the Civis employees, that had raised the standard for workers to prove unlawful retaliation. The seven workers say they plan to appeal this week, placing their hopes in the same Biden administration they helped to elect.

………

Wagner said he was “shocked” by the NLRB charge. “Civis has worked with labor unions since we were founded, and we strongly support the rights of workers to organize. We had no knowledge of any potential union organizing efforts and no evidence of it – no emails, no request for meetings, nothing.”

Still, if Wagner is telling the truth, and Civis had no idea that anyone wanted a union, the firings could still violate the National Labor Relations Act. Workers have the right to organize, whether it’s for a union or for leading protests at work. Retaliation is unlawful, and the NLRB can order employers to reinstate workers and offer them back pay — as the company’s new attorneys could tell them. Civis retained Jackson Lewis, a law firm an AFL-CIO official once called “the devil incarnate,” to handle its case at the NLRB.

Because, of course they did.

Ethics, schmethics, there is grifting to be done.

The allegations against Civis sting more given its origins. Wagner, who was the chief analytics officer for Barack Obama’s reelection campaign, built the company to put liberals in power. The pitch was simple. Democratic campaigns needed a network of reliable number-crunchers, and rather than build new analytics teams every four years, candidates could now turn to a single company. During the 2020 election cycle, the firm earned $8.5 million for work on the campaigns of Biden, Pete Buttigieg, Cory Booker, and Elizabeth Warren and on other Democratic ventures. While political campaigns still generate much of the company’s revenue, it also works in public health and for various government agencies and, yes, labor unions, like the American Federation of Teachers, to the tune of almost $1 million since 2014.

………

On its website, Civis makes a lot of promises to prospective workers with principles. “No a**holes,” reads its mission statement. But the former workers all say a banal reality lurked behind the buzzwords: Civis was not all that different from any other corporate employer. In a 2019 incident that still rankles former employees, Wagner announced a companywide pivot — and that meant layoffs — that he called a “CTRL-alt-delete moment” for Civis in a staff meeting. The flippancy infuriated workers, who cite it in conversations with Intelligencer as a sign that portended battles to come.

Kind of like how the Obama White House was a "Genuinely hostile workplace to women." 

Talking the talk, but not walking the walk.

In March 2020, as the pandemic began and the Democratic primary hit its most frantic tempo, contract employees struggled with heavy workloads and waited for permanent jobs that had been promised but never appeared. Right after the pandemic hit and staff moved to remote work, the company introduced a controversial new policy. Members of its government team now had to hit a quota of billable hours, starting at an average of 37 and a half a week. Civis told staff the new policy would be more equitable than the status quo, which saw some employees billing at much higher rates than others. Quotas aren’t all that unusual for consulting companies, but Civis paired its quota with unlimited paid time off, which was. Workers also had non-billable job responsibilities to perform on top of the quota, and former employees say that when staff took sick leave, even in the middle of a pandemic, they had to make up the hours later. The company had several initiatives designed to improve Civis from within — like a diversity-and-inclusion working group — but, staffers grumbled, where was the time to participate?

37½ billable hours a week is the equivalent of at somewhere between 55 and 75 actual hours a week.

………

“I was the highest-level woman of color on the government team,” she says. In regular one-on-one meetings with a Civis executive, she says she repeatedly asked for anti-racism training for employees at work. The organization hosted implicit-bias trainings and donated money to five charities, but she felt that didn’t go far enough. Particularly galling for Rao was a summertime presentation by her managers, which singled her out as proof that Civis prized diversity. “When we hired Sunny, we met the Rooney Rule but only interviewed two people,” said one of the slides reviewed by Intelligencer.

………

Workers say they coordinated with each other via a private Slack channel and phone calls on how to press Civis for changes. They wanted better paid-leave policies, clearer career progression for contract workers, professional development, and an end to what they called “the progressive pay cut” — a below-market wage offered to young workers in search of jobs that don’t offend their principles. When they raised these issues in staff meetings or one-on-one conversations, three former employees say, managers thanked them for speaking up.

This is explicitly protected activity under the NRLA, and Civis CEO Dan Wagner knows this, because if he's hired the biggest union busting law firm in the nation, Jackson Lewis, they have told him that it is explicitly protected activity, and how to evade the requirements of the law.

Around the same time, in late May, a senior Civis analyst named David Shor tweeted himself into trouble. Amid mass protests over the police killings of George Floyd and Breonna Taylor, Shor shared a link to research that showed a decrease in Democratic votes after similar unrest in 1968. Critics accused him of racial insensitivity. Six days later, Civis fired him, putting the company under a harsh spotlight. Former and current employees say Shor’s firing exacerbated unease with the way Civis managed employees. While commentators dissected the Shor case and its implications for free speech, Civis employees viewed it more as a labor issue, a sign that management was capricious and everyone was vulnerable.

By the fall, the resentment inside Civis came to a boil. Early in October, four former employees recall, a co-worker learned mid-meeting that her grandmother had died. Devastated, she left the call, then asked for bereavement leave in a one-on-one meeting with her manager. It didn’t go well, she later told co-workers who spoke to Intelligencer. The woman’s manager told her that she could take leave — but only if she made up the hours when she returned, her former co-workers recall her saying. Watching the billable-hours policy directly affect a co-worker and friend “made me personally angry and motivated to organize to affect change,” one co-worker tells Intelligencer. Within days of the incident, two employees reached out to a contact at the AFL-CIO for advice on the process of organizing a union.

Separately, Civis employees asked for greater transparency regarding the way the company chose its clients. As the presidential election approached, a Civis contract with Facebook worried a number of staff, including workers who weren’t involved in any conversations about unionization. The employees felt Facebook spread too much hate and had done too little to drive the violent far right off its platform. At an October 20 meeting open to the entire company, employees wanted to know how exactly Civis chose its clients, including Facebook: What good was the Civis litmus test if staff had no say in how it worked?

………

Ten days after that Facebook meeting, Sunny Rao, Sarah Klem, and nine other people were fired. Asked whether they believed their Facebook criticisms contributed to their firings, the workers would not comment. It’s certain, though, that they’d already been vocal company critics for months. Former and current employees tell Intelligencer that the 11 people who lost their jobs were all known internally for their activism at work, though only seven filed a charge with the NLRB.

………

Though the NLRB’s Chicago office, where Civis workers filed the original charge, didn’t deliver the finding the workers had hoped for, it may not have vindicated Civis either. The employees’ former attorney says the NLRB made it clear that Trump-era precedent had tied its hands: A divided 2019 ruling from the national board raised the bar for workplace activists to prove they’d been fired as retaliation. The case, Electrolux Home Products, Inc. and J’vada Mason, made it easier for employers to invent a pretext and still slide through the board’s review process, says Brandon Magner, a labor lawyer and the author of the Labor Law Lite newsletter.

Now that the seven who filed the NLRB charge have said they will go to the NLRB’s Office of Appeals, the Civis case could end up being more influential than they anticipated. Control of the national board is about to switch parties, as current appointees see their terms expire. “If everything goes the way it should, the ‘Biden board’ will be in place,” Magner explains. If the timing’s right, there’s “a chance” Civis could become a test case for overturning Electrolux, he adds.

If the NLRB overturns Electrolux on these assholes backs, I will be amused.

 

Another Mortgage Lender Bites The Dust

It appears that American Home Mortgage will shut down Today. It's lenders have made margin calls, and it has no money left.

This is not a subprime lender. This is an Alt-A lender.

American Home specializes in Alt-A mortgages, an alternative for A-rated borrowers who can't satisfy all the terms for a regular ``prime'' mortgage. Founded in 1988 by Chairman and Chief Executive Officer Michael Strauss, the company became the 20th- largest Alt-A lender by 2006, according to trade publication Inside Mortgage Finance. IndyMac Bancorp Inc. ranked first.

This is not the first lender to go under, you can see the accellerating rate of mortgage lender failures at the Mortgage Lender Implode-O-Meter.

Support Your Local Police

The Portland (Oregon) Police Bureau, who behavior during protests was particularly heinous, including collusion with right wing terrorists is in the news again, this time for including Proud Boys memes in their training material.

And you were wondering if the PPB was one of the most corrupt and brutal police departments in the nation? 

A Portland Police Bureau training presentation on protests ended with a PowerPoint slide listing a prayer for a “dirty hippy” and the promise to send “my humble servants” with hats and bats to “christen” their “heads with hickory” accompanied by a photo of a helmeted officer raising his arm to a woman.

The last of the 110 slides in the presentation showed the “Prayer of the Alt Knight | Based Stickman” meme. “Based Stickman” refers to Kyle Chapman, the founder of a group called the Fraternal Order of Alt-Knights that formed as the “tactical defense arm” of the Proud Boys, according to the Southern Poverty Law Center. He’s a far-right Trump supporter and street brawler who earned the nickname “Based Stickman” after a video showed him hitting an antifascist activist with a wooden sign post in Berkeley in 2017.

“I am disgusted that this offensive content was added to a training presentation for our police officers,” Mayor Ted Wheeler, who serves as police commissioner, said in a statement Friday. “As soon as I was made aware of the incident, I reached out to Chief (Chuck) Lovell, who shared my deep concern and assured me that a thorough and complete investigation was underway.”

I believe that Wheeler, who ran a campaign largely based on "Support the Police" is disgusted  ……… not.

………

The mayor said it’s unclear who drafted or added the slide to the training material or if it was used in training. An initial investigation suggests it may have been created in 2018, “though further investigation is needed to confirm,” according to the mayor’s office.

An initial inquiry also suggests the training material was intended for multiple agencies that provide officers to serve as members of the bureau’s Rapid Response or Mobile Response crowd control teams.

The mayor said the training slide wasn’t made public earlier “to protect the integrity” of the early part of the police internal inquiry.

Attorney Juan Chavez, one of the lawyers representing Don’t Shoot Portland, said the slide “is only coming to light because plaintiffs stood up to the City and sued them.”

Yes, Wheeler is just as dedicated to getting to the bottom of this and making the information public as Rahm Emanuel was in finding justice for Laquan McDonald.

………

Police Chief Chuck Lovell said in a statement: “The message on the training presentation slide was contrary to PPB’s values and what we are trying to achieve as an organization.’’

The chief said the content and message in the slide “is not representative of the Portland Police Bureau and it is disappointing to all of us who work so hard to earn the community’s trust.’’

No, the problem is that it IS representative of the Portland Police Bureau.

………

A further slide says negotiated management to de-escalate confrontations “does not work with anarchists or radical groups who refused to negotiate with police” and “does not work for a spontaneous public disorder/riot.”

Who knew that PPB stood for Proudboy Police Bureau?

The PPB is not an extraordinary outlier in terms of racism, right wing infiltration, and brutality, and that is depressing, because it means they are a pretty typical big city department.

Policing in the United States is profoundly broken.

Robert J. Samuelson: F$#@ You White Man

Some background here, I belong to a membership only^* BBS called Stellar Parthenon.

On December 21, 2003, I posted a thread on SP, called We are Unbelievably Screwed, which has continued to this day, with more than 3500 posts.

5 Years before Robert J. Samuelson wrote "hoocoodanode", I said:

• US Society was entering into unsustainable debt.
• Housing prices were at unsustainable levels.
• That finance and housing were creating a phony economy.
  
• A reckoning was at hand.

While I was wrong on some stuff:

• Predicting that the dollar would fall off a cliff.
• Assuming that this would cause a spike in interest rates which would destroy housing.

That being said, I have evidence that I was predicting the problems, and their basic causes, 5 years ago (actually I was doing this even earlier, but my posts on the Netslaves BBS went away when the website got shut down).

So now Mr. Samuelson, who rarely misses an opportunity to bash labor protections interfering with free trade, and to suggest that the only way our society will ever be prosperous is to gut the social safety net, particularly Medicare, Medicaid, and Social security, is wringing his hands and asking what went wrong, and why was everyone caught by surprise.

Well, I have 4 Words to Robert J Samuelson: F@#$ You White Man!!!!!

What is this "we" shit about anyway?

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this!!!

I’m not an economist. I'm not a Wall Street type. I'm not a business writer.

I'm just an engineer with a background in design, and I recognized the problem.

Humbled By Our Ignorance

By Robert J. Samuelson
Monday, December 29, 2008; A15

It's the end of an era. We [what do you mean we, f@#$ you white man] know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best. The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today's insecurity, which in turn is now a governing reality of the crisis.

Go back to the onset of the crisis in mid-2007. Who then thought that the federal government would rescue Citigroup or the insurance giant AIG; or that the Federal Reserve, striving to prevent a financial collapse, would pump out more than $1 trillion in new credit; or that Congress would allocate $700 billion to the Treasury for the same purpose; or that General Motors would flirt with bankruptcy?

Me, that's who you pig felching soak the poor putrescence! The system was a lie, and it was created to extract savings from the poor and give them to the rich.

In 2008, much conventional wisdom crashed.

No, conventional stupidity crashed. People were willfully blind because it made them money, and it got them cushy gigs writing for the Washington Post or Newsweek.

It was once believed that the crisis of "subprime" mortgages -- loans to weaker borrowers -- would be limited, because these loans represent only 12 percent of all home mortgages. Even better, they were widely held, diluting losses to individual banks and investors.

And again, Alt-A and all the rest of the exotic mortgage products were headed for a crash, and the rent to own ratio was out of whack, while people like you and Alan "Bubbles" Greenspan (remember him?) were suggesting that people really should go with adjustable rate, negative equity mortgages from Mars.

Roubini predicted this, Krugman predicted this, Dean Baker predicted this, and I predicted this, you festering lump of pig droppings.

Wrong. Subprime mortgage losses (20 percent are delinquent) triggered a full-blown financial crisis. Confidence evaporated, because subprime loans were embedded in complex securities whose values and ownership were hard to determine. Similar doubts afflicted other bonds. Demand for all these securities shriveled. Lenders hoarded cash and favored safe U.S. Treasuries. Because investment banks and others relied on short-term debt (a.k.a. "leverage"), a loss of confidence and credit threatened failure. Lehman Brothers failed. The financial system had overborrowed and underestimated risk.

It was once believed that American consumers could borrow and spend more, because higher home values and stock prices substituted for annual savings. Consider: From 1985 to 2005, the personal savings rate dropped from 9 percent of disposable income to almost zero. But over the same years, households' net worth (assets minus liabilities) quadrupled, from $14 trillion to $57 trillion.

Which, of course, means nothing, because for 90% of the population, that net worth went to other people.

That growth in net worth was mostly going to the top 1% in our society.

What you speak so glowingly of was nothing more than the efforts of the connected to extract the wealth of those who work for a living, and put it in their back pocket.

Wrong. In recent years, consumers increasingly overborrowed, especially against inflated home values.

Wrong....People borrowed because contemptible greed heads like you have spent the past thirty years waging an assault on wages and the social safety net.

People borrowed because they could not earn the money they needed, because of a war on labor and labor rights.

With the housing "bubble" now collapsed, net worth is falling. Homeowners' equity in their homes -- the share not borrowed -- is at a record low of 45 percent, down from 59 percent in 2005. Consumers have responded by retrenching big-time. Retail sales have dropped for five straight months; vehicle sales are a third below 2006 levels.

It was once believed that the rest of the world would "decouple" from the United States. As Europe, Asia and Latin America expanded, their buying would cushion our recession. A better-balanced world would emerge, with smaller U.S. trade deficits and lower surpluses elsewhere.

Wrong. The crisis has gone global; economic growth in 2009 will be the lowest since at least 1980. Even China has slowed; steel output was down 12 percent in November from a year earlier. The crisis has spread through two channels: reduced money flows and reduced trade. Global financial markets are interconnected. Customer redemptions forced U.S. mutual funds and hedge funds to sell in emerging markets (such as Brazil or Korea), whose stocks have dropped about 60 percent from their peak. Credit has tightened, as money flowing into developing countries is expected to shrink 50 percent in 2009 from 2007 levels, estimates the World Bank. The bank expects trade, up 7.5 percent in 2007, to fall in 2009 for the first time since 1982.

So much that has happened was unexpected that the boom and bust's origins are obscured. These lie in the side effects of declining inflation that started in the 1980s and, in the process of reducing interest rates, boosted stock prices and housing values.

Only the dropping inflation was a fiction created by the BLS with the acquiescence of Alan "Bubbles" Greenspan (remember him?), who has been calling for even more extreme massaging of the inflation numbers since at least 1980.

Recall that in 1981, when inflation was 9 percent, 30-year mortgages averaged 15 percent. As rates fell (mortgages were 10 percent by 1990, 7 percent by 2001), home prices rose. People could afford more. With lower interest rates, stocks became more valuable.

Homes did not become more affordable, people buy on monthly payment, not price, so falling interest rates just raised the price of the house, and falling interest rates did not make stocks more valuable, it chased people away from other, more secure, investments because their returns fell...It's basic economics, but I guess that it's beyond you.

All the bad habits of recent years -- excessive borrowing by consumers and money managers, careless and reckless lending -- grew in a climate when gains seemed ordained. Even after the "tech bubble" burst in 2000, stock prices at year-end 2002 were seven times their year-end 1981 level. Home prices increased steadily; in the 1990s, they rose 45 percent.

Prosperity, apparently forgiving of mistakes, bred the complacency that undid prosperity. On bad mortgages, losses could be recovered by selling the homes at higher values. Thus rationalized, bad loans were made. Some stocks might decline, but over time, most would rise. Risk seemed to recede, so investors and money managers undertook riskier strategies.

People undertook risky strategy because, like the people at Long Term Capital Management, because Alan "Bubbles" Greenspan (remember him?), was always there to bail them out, and they undertook riskier strategies.

So, you were arguing that that regulation was the problem, when it turned out all you were doing was handing our economy to sociopaths with capital.

What will emerge from these shattered illusions? Will the crash stir social unrest, abroad if not here? Will Americans become so thrifty that they hamper recovery? Will economic nationalism surge? How will capitalism be reshaped? Much depends on whether the frantic policies to combat the recession succeed. Probably they will, but there are no guarantees. Our ignorance [your ignorance, not mine, I spotted this, as die Mssrs Roubini, Krugman, Baker, Ritholtz, Tanta, etc.] is humbling.

(end of OP/Ed)

No sir, you are just stupid and venal, and because you cannot see … because you refuse to see that the policy of supporting the phony economy of Wall Street and basic shelter as a revenue stream was an illusion just as certain as the Dutch Tulip mania.

You did so because because you and yours benefited from the system, even as it hollowed our society and our nation.

^*It's membership only because it was started by refugees from the old Netslaves board when it was torn apart by right wing trolls.^† SP is a chatty community with a decidedly liberal bent, with a refreshing absence of trolls, though there are still arguments, but there are good faith exchanges of opinion...Which is good...I like to argue.
^†The trolls were never dealt with because the sysop, Splat ,was getting paid off by one of the worst trolls^‡ who fed him consulting contracts.
^‡F$#@ You Lauren Bandler, aka "Uncle Meat".

Economics Update

The Big Picture looks at the sales numbers

Seeing as how I did not post on Friday, there was a tornado watch, and my kids were freaking, I'll start with the big story from last week, which was that existing home sales rose to a 2 year high.

Of course, the 1^st thing that comes to mind is that the National Association of Realtors (NAR) are supplying this data, and it's suspect.

The 2^nd thing that comes to mind is that a remarkably large portion of these sales are distressed.

The Big Picture runs the numbers more fully (chart pr0n is from this link, click to see full size), and while mentioning these two points, notes some other interesting bits of information:

• "If not for a surprise and suspect 16k increase in Northeast condo sales, Existing Home Sales would have been lower month-over-month and only up 12k units from July 2008, which was the worst year on record for housing."
• Non-seasonally adjusted data actually shows a decrease, and given the high proportion of foreclosures and short sales, seasonal adjustment is actually not going to be accurate right now; the market is just too fracked right now.
• Prices are still falling.
• Sales less foreclosure activity (bottom pic) is way down.

Furthermore, we are also seeing the effect of the housing cash for clunkers tax credit, which allows a 10% tax credit (max $8K) on purchases for "New" (not owned a house in 3 years) buyers, but the home has to close before November 30, which really means having the sale done in the next 8 weeks or so, so it's another blip, unless, as CR notes, the NAR and NAHB manage to successfully bribe lobby for an extension.

Note that the tax credit can be used for a down-payment, which further distorts the market.

He have a housing market that is really still heading down, albeit more slowly, despite massive federal subsidies.

If there were really a return to health in the housing market, then Taylor Bean, the 12^th largest mortgage company in the US, would not be filing for bankruptcy.

As to housing news for the rest of us, the rate at which mortgage holders who have fallen behind catch up on their payments, the so-called "cure rate", for holders of prime mortgages, has fallen to 6.6%, down from 45% in the years 2000-2006, and very close to the rate for Alt-A (4.3%) and sub-prime (5.3%).

Meanwhile, treasuries have risen again, driving yields down, though it is unclear how much is risk aversion increasing, and how much is the Federal Reserve buying more of the securities.

It does mean that investors believe that the Fed won't be raising rates for a while yet, though the Bank of Israel just raised its benchmark rate, which indicates optimism on their part.

My guess is that they are wrong, simply because they are the 1^st central bank to do so, and my money is on any first mover jumping the gun.

Then again, they could be right. The Chicago Fed July National Activity Index rose sharply in July, increasing to -0.74 in July from -1.82.

Even though the numbers still show contraction, the delta is impressive.

Meanwhile, in energy, crude oil is at a 10-month high on "green shoots" in the economy, and retail gasoline prices have remained basically unchanged, despite falls at the wholesale level.

The dollar was up slightly, largely in a holding pattern as traders wait for new consumer spending and housing data.

Economics Update

Yawn, another day, another all time low for the Dollar vs. the Euro, breaking the $1.53:€1.00 barrier.

The expectation of a major fall in the dollar is one of the major causes of oil prices rising again today, though the fact that OPEC his telegraphing that there will be no production increase, contributes to this.

The job market is looking increasingly grim, with
nonfarm employment declining by 23,000, and, in a good indication of an incoming recession, productivity growth is declining.

We do have some good news, the appraisal standards for Fannie Mae and Freddie Mac are not officially implemented.

It would have been better news a year, or 5 years, ago.

I have this rule of thumb when looking at the economy, which is when something happens in high finance that is truly bizarre, start by assuming that it is bad news.

That's the case with yields falling below 0% on Treasury Inflation-Protected Securities (TIPS).

TIPS are government bonds in which the principal appreciates along with the consumer price index. They are sort of inflation proofed as a result.

They are less riskier, because if inflation shoots up, you will get that back in the end, so the interest rate, which are set by auction, is lower.

Only for the past three days, the interest rate has been bid to less than zero, meaning that the bidders expect significant increases in inflation.

Paulson Sees New Capital Markets Proposals in 'Weeks'

Bush's Treasury Secretary is, after months of prodding by Democrats, coming up with a plan to close the barn door after the cow is gone, saying that, "We're looking at the mortgage-origination process, we're looking at the securitization process, we're looking at rating agencies, we're looking at disclosure issues, we're looking at capital issues and regulatory issues in the weeks ahead."

If it were done by honest decent and competent people, it would still be too late, but in this case it's being done by Bush and His Evil Minions^™, which means that it's primary goal will be two fold, preventing meaningful regulation, and benefitting Bush, His Evil Minions^™, and his campaign contributors.

The auction bond failure rate is nearly 70%, and appears to be getting worse, which means that at this critical time, with revenues falling, cities and states will find raising money for projects much more difficult.

In real estate, we now have mainstream press using phrases like, "Housing in 'deepest, most rapid' decline since Great Depression", the alt-A crash is well and truly starter (Alt-A are not quite prime, typically credit scores over 700), and we have Ben Bernanke saying that housing woes could persist for years.

Additionally, we are about to see the revenge of the 2005 bankruptcy law, with filings up 18% from January, and 28% from the year before.

We are about to see the negative effects of the law, which were predicted when it was initially proposed.

BTW, all is not quiet in the ever entertaining world of the monoliner bond insurers. Ambac has announced a reorganization, where it will exit the mortgage securities market and raise $1.5 billion in new capital.

Amazon Again

We don't care, we don't have to ……… we're Amazon.

The Monster from Seattle is engaging in a systematic program of spying on its workers and activists, because they don't care, they don't have to, they're Amazon.

Seriously, this company is ineluctably evil:

A trove of more than two dozen internal Amazon reports reveal in stark detail the company's obsessive monitoring of organized labor and social and environmental movements in Europe, particularly during Amazon's “peak season” between Black Friday and Christmas. The reports, obtained by Motherboard, were written in 2019 by Amazon intelligence analysts who work for the Global Security Operations Center, the company's security division tasked with protecting Amazon employees, vendors, and assets at Amazon facilities around the world.

The documents show Amazon analysts closely monitor the labor and union-organizing activity of their workers throughout Europe, as well as environmentalist and social justice groups on Facebook and Instagram. They also indicate, and an Amazon spokesperson confirmed, that Amazon has hired Pinkerton operatives—from the notorious spy agency known for its union-busting activities—to gather intelligence on warehouse workers.

Internal emails sent to Amazon's Global Security Operations Center obtained by Motherboard reveal that all the division's team members around the world receive updates on labor organizing activities at warehouses that include the exact date, time, location, the source who reported the action, the number of participants at an event (and in some cases a turnout rate of those expected to participate in a labor action), and a description of what happened, such as a "strike" or "the distribution of leaflets." Other documents reveal that Amazon intelligence analysts keep close tabs on how many warehouse workers attend union meetings; specific worker dissatisfactions with warehouse conditions, such as excessive workloads; and cases of warehouse-worker theft, from a bottle of tequila to $15,000 worth of smart watches.

The documents offer an unprecedented look inside the internal security and surveillance apparatus of a company that has vigorously attempted to tamp down employee dissent and has previously been caught smearing employees who attempted to organize their colleagues. Amazon's approach of dealing with its own workforce, labor unions, and social and environmental movements as a threat has grave implications for its workers' privacy and ability to join labor unions and collectively bargain—and not only in Europe. It should also be concerning to both customers and workers in the United States and Canada, and around the world as the company expands into Turkey, Australia, Mexico, Brazil, and India.

Amazon intelligence analysts appear to gather information on labor organizing and social movements to prevent any disruptions to order fulfillment operations. The new intelligence reports obtained by Motherboard reveal in detail how Amazon uses social media to track environmental activism and social movements in Europe—including Greenpeace and Fridays For Future, environmental activist Greta Thunberg's global climate strike movement—and perceives such groups as a threat to its operations. In 2019, Amazon monitored the Yellow Vests movement, also known as the gilet jaunes, a grassroots uprising for economic justice that spread across France—and solidarity movements in Vienna and protests against state repression in Iran.

………

"Like any other responsible business, we maintain a level of security within our operations to help keep our employees, buildings, and inventory safe," Lisa Levandowski, a spokesperson for Amazon told Motherboard. "That includes having an internal investigations team who work with law enforcement agencies as appropriate, and everything we do is in line with local laws and conducted with the full knowledge and support of local authorities. Any attempt to sensationalize these activities or suggest we’re doing something unusual or wrong is irresponsible and incorrect."

Levandowski denied that Amazon hired on-the-ground operatives, and said that any claim that Amazon performs the described activities across its operations worldwide was "N/A."

In a report from November 2019, however, an analyst wrote that Amazon hired Pinkerton spies who were "inserted" into a warehouse in Wroclaw, Poland, to investigate an allegation that management coached job candidates on how to complete job interviews and possibly even conducted the process for them.

………

The report refers to the Pinkerton Detective Agency, which in the late 19th and early 20th centuries in the United States supplied detectives to infiltrate unions and hired violent goon squads to intimidate workers from engaging in union activity in steel mills. Today, Pinkerton is a subsidiary of the Swedish security company Securitas AB, and has supplied operatives to monitor strikes in West Virginia as recently as 2018.

………

"It’s not enough for Amazon to abuse its dominant market power and face antitrust charges by the EU; now they are exporting 19th century American union-busting tactics to Europe," Christy Hoffman, general secretary of UNI Global Union, a global federation of trade unions that represents more than 20 million workers, told Motherboard. "This is a company that is ignoring the law, spying on workers, and using every page of the U.S. union-busting playbook to silence workers' voices."

………

Since Amazon posted job listings for two intelligence agents who could track "labor organizing threats," journalists have obtained more documents that reveal some of the sophisticated technology and strategies the company has used to surveil its workforce and gain intelligence on worker organizing. In September, Motherboard obtained evidence that Amazon had been using a social media monitoring tool to spy on dozens of private Facebook groups for Amazon Flex drivers in the United States and Europe. Last month, a report in Recode revealed that Amazon has made significant investments in a new geospatial tool that tracks threats to the company. Out of 40 or so data points Amazon that tracks at least half are labor or employee-related, including “Whole Foods Market Activism/Unionization Efforts,” “union grant money flow patterns,” “and “Presence of Local Union Chapters and Alt Labor Groups."

You know, it would be a good idea to put someone's head on a pike at the beginning of the Biden administration, and Jeff Bezos would be a particularly good guy to make an example of.

If the Feds could take down Capone, they can take down Bezos.

Economics Update

The dollar is doing better now, $1.5613:€1.0000, as I type this, which is about 3% stronger than when it was above $1.60.

I put down most of the movement over the past week to people betting on what the Fed will do in interest rates, and the consensus that it will not cut.

Oil, however, just went up again, as did gasoline, because of reports of a pipeline attack in Nigeria. The reality is that supplies are so tight that even a minor disruption causes a minor panic.

The New York Times has discovered that the housing crisis has moved to tony Greenwich, CT. And so they cover it with wringing hands, because it interests their readers.

For the rest of us, the fact that the mosts states are having financial meltdowns, and many are near broke, because of falling tax revenues, are a matter of greater concern.

Also, Consumer confidence is at a 26 year low. That's as in 1982, when we were at 10% unemployment, and so consumers are scaling way back on spending.

In a sign of the apocalypse, Moody’s is downgrading some more of the Alt-A mortgage backed slop. Who knew that a ratings firm would actually do its job.

It's been a busy day for AMBAC, the monoline insurer, with a report that it may need to seek more capital after posting a $1.66 billion dollar loss for the quarter. Further confirming this report is the fact that their interim CEO is saying that there are no liquidity issues and that its ratings are solid.

S&P is back stopping Ambac on this explicitly stating that the loss will not lead to a downgrade.

Of course if the ratings agencies, or for that matter the financial markets, were at all honest, most the monoliners would already be rated as junk.

Not a Surprise

It turns out that Naomi Seibt, the German girl put forward by the Heartland Institute as an answer to Greta Thunberg, is a white supremacist asshole.

I did Nazi that coming:

A young campaigner who has been hailed by climate sceptics as the right’s answer to Greta Thunberg has previously described a white nationalist who appeared to promote “white genocide” theories as one of her “inspirations”.

Naomi Seibt, a 19-year-old from Münster, Germany, who styles herself as a “climate realist”, has also had to deny she made remarks that could be seen as antisemitic following an attack on a synagogue last year.

Seibt has been described as the darling of climate change deniers and spoke at a small side event of the Conservative Political Action Conference (CPAC) – a high-profile annual meeting of rightwing activists in Washington that will also feature the US president, Donald Trump.

………

An examination of the young activist’s YouTube videos and interviews has revealed that Seibt has shown support for an alt-right activist.

In a YouTube discussion last year that was highlighted in a report by the German broadcaster ZDF, Seibt discussed an attack on a synagogue in Halle that killed two people who were outside the temple, and said Jews were considered to be “at the top” of groups who were seen as being oppressed. “Ordinary Germans”, she said, were “at the bottom”. Muslims, she added, were somewhere in between.

………

“It is clear that she is articulating – no matter how inarticulately – age-old tropes of Jewish power and white grievance: the idea that Jews are a privileged class and that white people are oppressed by them,” said Imran Ahmed, the chief executive of the Center for Countering Digital Hate, who studied the remarks.

………

In another YouTube interview describing her embrace of “views that were outside the mainstream”, Seibt referred to the Canadian alt-right internet activist Stefan Molyneux as an “inspiration”.

………

Seibt has been hired by a US thinktank called the Heartland Institute, which has traditionally been financed by fossil fuel and coal companies and is known for pushing radical anti-science theories about the climate crisis.

So not a surprise.

Burn in Hell

William Regenery II, who used his inheritance to bankroll white supremacists nationwide, has died of cancer at the age of 80. 

I hope that his passing was agonizing.

Just to note that he was such a complete turd that his New York Times obit, generally a model of banality, opened up a can of whup ass on him:

William H. Regnery II, a reclusive heir to a Midwestern textile fortune who bankrolled some of the leading organizations and figures behind the rise of the alt-right and championed efforts to win adherents to a modernized notion of white supremacy, died on July 2 at his home in Boca Grande, Fla. He was 80.

A cousin, Alfred Regnery, said the cause was cancer.

………

Instead, he wrote in a 2015 memoir, “Left Behind,” he saw “nascent political correctness stifling debate, unrestricted immigration changing the demographics of the country, affirmative action penalizing whites, and open housing curtailing freedom of association.”

In response, he began to lay the intellectual groundwork for a new movement built around strengthening what he believed was America’s founding white identity, embracing eugenics, sharp immigration restrictions and even the splintering of North America into racially pure “ethnostates.”

………

Buzzfeed called him “the most influential racist you’ve never heard of.”

………

Mr. Regnery was not the only member of his family active in conservative politics. His grandfather, William H. Regnery, was a founding member of the America First Committee, which sought to keep the United States out of World War II. His uncle Henry founded Regnery Publishing, which produces books by a range of conservative voices, including William F. Buckley Jr., Ann Coulter and Mr. Trump.

 It appears that being a racist dirt-bag is something of a family tradition.

………

Five years later, he convened a Who’s Who of white supremacists for a conference in Florida, where he delivered a speech, “For Our Children’s Children,” in which he said the only way to save America’s white identity was for it to break up into several smaller countries, one each for the country’s various ethnic groups.

His racism grew more explicit. He announced plans in 2004 to start a whites-only dating site. It never happened, but he continued to worry that white people were in danger of extinction: In 2006 he delivered a speech in Chicago in which he said, “The white race may go from master of the universe to an anthropological curiosity.”

This is a man who did nothing in his life but make the world a worse place.

I Called for Amputating the Financial Sector Years Ago

See here.

JD Alt at New Economic Perspectives has just called for the same thing:

All this talk about the 99% versus the 1%? I say the easiest—and likely the most useful—thing to do is just forget the 1%. Write them off. Let them have their gated communities, their mega-yachts, their island retreats and off-shore bank accounts. What do we need them for?

For one thing, we DON’T need their money. Even if we could get it—which we can’t because they steadfastly refuse to use it for anything other than casino gambling in their private and secretive financial networks. We wonder why we have a “jobless recovery”? Does it have anything to do with the fact that such a large percentage of our “capital” has, for all practical purposes, been removed from the economy?

Even when the 1% decides to invest some of their Dollars to manufacture or build something, they rarely decide to manufacture or build anything we really need—only things we really don’t need. Like strip-mines in the Bristol Bay salmon fishery, or pipe-lines across Nebraska’s freshwater aquifers, or rocket-planes for space-tourism. Thanks, but we really don’t need—or want—any of it. We’d much rather have fresh wild salmon (rather than the artificially colored hatchery-stuff) than more copper and gold, fresh water instead of tar-sands oil, and the good-old week-at-the-beach is just fine for a vacation.

He then gives the example of the huge transformers that are essential to our electrical grid.

We do not, and can not, make them in the United States, because the casino finance class doesn't care, because they can always get them from Korea, with a a 2 year lead time.

If that's a problem, they can always move to their summer house on a Greek island.

Here is how he poresents it going:

This little tale is made even more interesting by the fact that these very-large transformers—usually situated inside a compound protected by chain-link fencing—are easily destroyed with a few rounds of fire from a semi-automatic assault rifle. Thankfully, semi-automatic assault rifles are difficult to come by in the U.S., otherwise there might be cause for concern. The seventeen transformers recently shot to death in California (we can’t explain how this actually happened, since the NRA is only marginally active on the West Coast) are a cautionary tale: If this were repeated on just a little bit larger scale, the Department of Homeland Security has determined, our entire electric grid could be down for months—or even longer. (Come on South Korea, hurry it up…. We’re waiting!)

So my example is this: Why doesn’t President Obama propose that since the 1% have no interest in doing it, the U.S. sovereign government build a plant to manufacture very-large transformers, hire engineers to train unemployed people to do the labor, pay those unemployed trainees for making the effort to learn how to make a giant-sized transformer, then hire those newly trained workers to run the manufacturing process? We could build a backup supply of these critical electric grid components so that in the (increasingly likely) event some crazy, anti-government sociopath seizes the opportunity to turn out America’s lights, we could turn them back on in fairly short order.

It's an interesting mental exercise, and I am not sure how serious this proposal is,it has a Jonathan Swift — A Modest Proposal snarky feel to it.

Still, breaking the lock of the "Washington Consensus" of so-called free trade and the continuing financialization of our economy is a non trivial task.

That's why my calls for amputation involve a zero tolerance criminal prosecution policy. 

This Explains a Lot

Twitter has successfully set up algorithmic filters to stop posting by ISIS and al Qaeda, but they have not done the same for Nazis, Klansmen, and other violent white supremacists.

No we know why: It turns out that white supremacists are indistinguishable from Republican Politicians:

At a Twitter all-hands meeting on March 22, an employee asked a blunt question: Twitter has largely eradicated Islamic State propaganda off its platform. Why can’t it do the same for white supremacist content?

An executive responded by explaining that Twitter follows the law, and a technical employee who works on machine learning and artificial intelligence issues went up to the mic to add some context. (As Motherboard has previously reported, algorithms are the next great hope for platforms trying to moderate the posts of their hundreds of millions, or billions, of users.)

With every sort of content filter, there is a tradeoff, he explained. When a platform aggressively enforces against ISIS content, for instance, it can also flag innocent accounts as well, such as Arabic language broadcasters. Society, in general, accepts the benefit of banning ISIS for inconveniencing some others, he said.

In separate discussions verified by Motherboard, that employee said Twitter hasn’t taken the same aggressive approach to white supremacist content because the collateral accounts that are impacted can, in some instances, be Republican politicians.

The employee argued that, on a technical level, content from Republican politicians could get swept up by algorithms aggressively removing white supremacist material. Banning politicians wouldn’t be accepted by society as a trade-off for flagging all of the white supremacist propaganda, he argued.

………

Though Twitter has rules against “abuse and hateful conduct,” civil rights experts, government organizations, and Twitter users say the platform hasn’t done enough to curb white supremacy and neo-Nazis on the platform, and its competitor Facebook recently explicitly banned white nationalism. Wednesday, during a parliamentary committee hearing on social media content moderation, UK MP Yvette Cooper asked Twitter why it hasn’t yet banned former KKK leader David Duke, and “Jack, ban the Nazis” has become a common reply to many of Twitter CEO Jack Dorsey’s tweets. During a recent interview with TED that allowed the public to tweet in questions, the feed was overtaken by people asking Dorsey why the platform hadn’t banned Nazis. Dorsey said “we have policies around violent extremist groups,” but did not give a straightforward answer to the question. Dorsey did not respond to two requests for comment sent via Twitter DM.

………

Though Twitter has rules against “abuse and hateful conduct,” civil rights experts, government organizations, and Twitter users say the platform hasn’t done enough to curb white supremacy and neo-Nazis on the platform, and its competitor Facebook recently explicitly banned white nationalism. Wednesday, during a parliamentary committee hearing on social media content moderation, UK MP Yvette Cooper asked Twitter why it hasn’t yet banned former KKK leader David Duke, and “Jack, ban the Nazis” has become a common reply to many of Twitter CEO Jack Dorsey’s tweets. During a recent interview with TED that allowed the public to tweet in questions, the feed was overtaken by people asking Dorsey why the platform hadn’t banned Nazis. Dorsey said “we have policies around violent extremist groups,” but did not give a straightforward answer to the question. Dorsey did not respond to two requests for comment sent via Twitter DM.

………

“Most people can agree a beheading video or some kind of ISIS content should be proactively removed, but when we try to talk about the alt-right or white nationalism, we get into dangerous territory, where we’re talking about [Iowa Rep.] Steve King or maybe even some of Trump’s tweets, so it becomes hard for social media companies to say all of this ‘this content should be removed,’” Amarasingam said.

………

Any move that could be perceived as being anti-Republican is likely to stir backlash against the company, which has been criticized by President Trump and other prominent Republicans for having an “anti-conservative bias.” Tuesday, on the same day Trump met with Twitter’s Dorsey, the President tweeted that Twitter “[doesn’t] treat me well as a Republican. Very discriminatory,” Trump tweeted. “No wonder Congress wants to get involved—and they should.”

I understand why any algorithm would flag some Republican politicians as white supremacists, it's because some Republicans ARE white supremacists.

I am not sure if this is Twitter's problem, or everyone else's problem.

Investment Bank Solution to Toxic Financial Instruments: Rename, Repackage, Resell

Remember the toxic Collateralized Debt Obligations (CDO) that no one wants to buy anymore?

Well, investment banks are repackaging them and selling them as Re-Remics (REsecuritizations of Real Estate Mortgage Investment Conduits):

Goldman Sachs Group Inc., JPMorgan Chase & Co. and at least six other firms are repackaging unwanted mortgage bonds as sales of CDOs composed of asset-backed securities fall to less than $1 billion this year from $227 billion in 2007 because of the global credit crunch. Re-Remics contain parts that are structured to guard against higher losses on underlying loans than most CDOs, allowing holders to sell or retain other sections at lower prices that can translate to potential yields of more than 20 percent.

So this stuff is so toxic that sales have dropped by more than 99.6% year over year, and the solution is a new name and a new obscure mathematical model.

Of course, the banks will claim that Re-Remics are different, because they don't have subprime loans, just Alt-A.

Of course, as I've noted repeatedly, those are swirling around the bowl on their way down too.

It should be noted that there is a discount, but it still sounds like another CDO shell game:

While CDOs are backed by more than a hundred bonds, Re- Remics typically combine fewer than a dozen, allowing holders to more easily analyze the debt.

...

A bond trading at 40 cents on the dollar could be split into a piece worth 80 cents and another piece that could then be sold cheaply enough to offer returns as high as 20 percent, Dachille said. Banks advised by First Principles bought lower-yielding senior pieces and some are also considering buying the bonds for their pension funds, he said. The firm is also starting a fund for pension clients that would invest in the debt, Dachille said.

If you are willing to take the investment houses' word on this, you are too stupid to be trusted with any device more complex than a bowling ball.

Of course, the likely idiot customers would be pension funds, municipalities, and, of course, investment bankers.

Aristophanes Wrote This Play 2435 Years Ago

There is something called the 4B movement, and there are people considering it in the United States.

The short version is that this is a movement, which originated in the Republic of Korea, where women are swearing off men.

This is not an attempt to create a change in policy, as the sex strike for peace in Aristophanes comedy Lysistrata was in 411 B.C.E., rather it is an attempt by women to assert personal autonomy in a patriarchal society.

The 4 "B"s are no marriage to men, no child bearing, no dating men, and  no sex with men. (The "B"s are in the Korean terms for this.

I don't see it going anywhere in the United States, but it's interesting:

In the week since Trump’s election victory, between the numbness and overall dread, maybe you’ve heard or read the phrase “4B movement” and thought, Movement of any kind feels difficult at the moment. Hey, no judgment, that was many of us last week. But now that some of the immediate panic has settled into a more concrete and permanent apprehension, you hopefully have the capacity to learn more about the phrase and why it’s being thrown around so much. 

First of all, you wouldn’t be alone in your curiosity. Searches for the “4b movement,” which originated in South Korea in 2016, spiked nearly 100% in the last seven days. Social media is ablaze with users explaining it, decrying it, or suggesting the U.S. get on board with it. “Women are refusing to have kids until they’re treated equally,” Drew Afualo explained on Rainn Wilson’s podcast. That is certainly part of the movement. In general, the nature of online discourse and the reactionary buzz following Trump’s re-election has simplified the 4B movement into merely being a sex strike—which in turn has allowed it to become more of a punchline. But I think the question to grapple with isn’t how effective a U.S. 4B movement would or wouldn’t be, but why some women feel it’s a worthwhile endeavor at all.

But let me back up…The 4B movement is a South Korean feminist movement that centers around four main tenets: “Bihon” (no heterosexual marriage), “Bichulsan” (no childbirth), “Biyeonae” (no dating), and “Bisekseu” (no heterosexual sexual relationships). It began to emerge around 2018 when gender tensions reached a fever pitch after years of a growing cultural demonization of feminism. In 2014, Ilbe, an online alt-right, misogynistic community began to grow more and more popular among young men. In 2016, a young woman was murdered in a public bathroom in Seoul by a young man who was angry that women kept ignoring him. (Despite his alarming reasoning, police did not label the murder a hate crime.) That same year, triggered by the low birth rate, the government released a “National Birth Map,” which showed where all the women of reproductive age lived. (Women, understandably, were furious to be labeled like livestock.)  In 2018, another movement emerged called “escape the corset,” which rejected the laborious beauty efforts expected of Korean women. 

 ………

But don’t interpret the aforementioned spike in interest as support. Search the phrase on TikTok and you’ll have to dig through thousands of videos of American women mocking the movement, calling it a disgrace, and declaring that they won’t be shaving their heads anytime soon, before you’ll get to anyone saying they’re opting into it. (Again, even in South Korea, 4B is considered fringe.) 

I don't think that this will go anywhere, not even in Korea, where misogyny is an even more entrenched political force than it is in the United States, but this is interesting.

Mortgage Resets Will Be Getting Even Scarier

Here is the chart:

As the folks at calculated risk explain, the subprime resets will be done with in a year or two, but then the Alt-A and Option ARM mortgages kick in.

Alt-A may not be that bad, it's basically the bottom end of prime, kind of like being slightly pregnant, but the Option ARM mortgages are a different story. A lot of these folks are paying the minimum, which means that they are going deeper and deeper into debt as we speak.

This will get uglier before it gets better.

Baltimore Just Got Smaller

It's alt-weekly, The Baltimore City Paper, will be closed down by the end of the year:

The Baltimore Sun Media Group plans to close City Paper later this year. No official end date has been announced for the alt-weekly, now in its 40th year.

"Like many alternative weeklies across the country, declining ad revenue at City Paper continues to be a challenge," BSMG's director of marketing, Renee Mutchnik, said in a statement. "It became clear to us this past fall that we would cease publishing City Paper sometime in 2017. Details about the closing date are still being discussed. This is a difficult decision and we are mindful of how it affects our employees, the readers and advertisers."

Editorial staffers found out about the news in June during a meeting with senior vice president Tim Thomas, who cited declining ad revenues and future projections for those numbers as reasons for the closure.

City Paper editor Brandon Soderberg offered the following: "This is Brandon Soderberg, City Paper editor reporting live from the deck of the Titanic. Yes, we're being closed by BSMG/Tronc/and so on. We were told this news last month and there isn't a clear date but what we've been told is no later than the end of the year. We were trying to hold off announcing it because, well, it's very sad, but also because I'm not sure about how this is all going to play out and I'm half-convinced this won't be the end of the paper and someone will swoop in and buy us."

The Sun bought the paper from Times-Shamrock Communications, which had owned the paper for more than two dozen years, in early 2014. In an announcement of the purchase, BSMG's then-publisher, president, and CEO Tim Ryan praised City Paper's independent streak. 

(emphasis mine)

That last bit, about The Sun is the most important bit: The fate of the City Paper was sealed when The Sun bought it.

As A. J. Liebling noted in his seminal book The Press, the only way to make money by buying a newspaper is to be a competitor in the market, and the profit comes from shutting it down, which allows the survivor to increase its own advertising revenue.

Even if only 10% of the ads in The City Paper go to The Sun, they will get a non trivial amount of revenue from this.

I think that Baltimore is too large and too dynamic not to have an alt-weekly.

I'm considering starting a crowd funding effort to buy them from the Tribune Company.

Any advice/aid would be appreciated.

Economics Update

Well, Fannie Mae just posted a $2.3 billion loss, cut its dividend, and is will no longer buy and resell Alt-A mortgages.

That sound you hear is the housing market seizing up, and it does look like mortages will be getting more expensive, and given that the spread between LIBOR and Treasury Bills, the so called "TED Spread", remains at near historic highs, I don't really see any unfreezing in the near to medium future.

However, the the US dollar is on a tear right now, and a strong dollar attracts investment, which means that there is more money out there to lend, which might make loans cheaper.

I still think that current interest rates are unsustainably low, but YMMV.

Oil and gasoline are down, as are commodities like copper, silver, and gold.

This points to declining inflation, good news, but only because there are real signs of a deep, hard recession, which is bad news.

The fact that Productivity growth has slowed points to a slowdown too.

I wonder what the moderation in commodities will do to wholesale inventory numbers, which have been up because of price appreciation in said commodities.

BTW, a monoliner insurer just went belly up. ACA Capital Holdings Inc. just terminated $65 billion in credit default contracts, and turned itself over to creditors.

BTW, as a result of the IndyMac implosion, people are starting to split their bank accounts among multiple banks, to ensure that they are all completely covered by FDIC insurance.

I think that we are seeing a generational shift in the attitudes of people about finance and investing.