Sunday, May 31, 2009
"So what do you do when you realize that everything you've ever thought and believed no longer worked for you? Where do you go when the bubble of progressive politics bursts in your face and you're left in the leftist place on earth? ... Like many leftists who had abandoned Judeo-Christian religion, I worshipped at the altar of liberalism. ... I was programmed from birth to be a devout liberal. ... Take the anti war stance of the left. Noble and sactimonious and all that. But how easy it is to sit back and preach peace when you have an army defending you; to rail against the US when you are protected by free speech laws; to demonize Israel, when you've never lived through the murderous progroms of Tsarist Russia or the Holocaust. ... And this love affair with Radical Islam--what's up with that? ... To walk around, as I did, with utopian images that didn't match reality was to view life through the eyes of a child", Robin, 21 May 2009 at: http://www.americanthinker.com/2009/05/how_to_deprogram_a_liberal_in.html.
"The [Fed] significantly scaled back the size of the capital hole facing some of the nation's biggest banks shortly before concluding its stress tests, following two weeks of bargaining. In addition, according to bank and government officials, the Fed used a different measure of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits. ... Government officials defended their handling of the stress tests, saying they were responsive to industry feedback while maintaining the tests' rigor. ... [BofA] was 'shocked' when it saw its initial figure, which was more than $50 billion, according to a person familiar with the negotiations. ... At times, frustrations boiled over. Negotiations with Wells Fargo, where Chairman Richard Kovacevich had publicly derided the stress tests as 'asinine,' were particularly heated, according to people familar with the matter. Government officials worried San Francisco-based Wells might file a lawsuit contesting the Fed's findings. ... With the stress tests, government officials were walking a fine line. If the regulators were too tough on banks, they risked angering their constituents and spooking markets. But if they were too soft, the tests could have lost their credibility, defeating their basic confidence-building purpose", my emphasis, David Enrich, Dan Fitzpatrick and Marshall Eckblad (EF&E) at the WSJ, 9 May 2009.
"I've been thinking about stresses. Actually I've been thinking about Treasury Secretary Geithner's stress tests, rosy scenarios, the missing laugh track, the classes of 2009, households, and the automotive giants. ... You see an army of 200 federal examiners had gone over the books and calculated the impact of growing unemployment, asset (particularly real estate portfolio lending) deterioration, potential exposure on other investments, and various personal-credit/ loan write-offs. The unstated goal was to re-assure the general public that our banking behemoths were on solid ground and that there was no reason to fear any 1930's type meltdown. ... It was set up from the get go to advance all of them to the next grade level in the spirit of 'no child (or mega bank) left behind.' Well, guess what? THAT is exactly what happened! ... The worst case scenarios (of what can go wrong, will go wrong) for the coming two years suggested a 'further potential exposure' of a mere $599 BILLION in losses (roughly 5.1% of total assets)", Fred Cederholm (FC) Financial Sense, 11 May 2009, link: http://www.financialsense.com/editorials/cederholm/2009/0511.html.
"Are America's banks: a) healthy, b) insolvent, or c) being kept alive by the government but delighted to pretend otherwise? ... That any bank can sell equity is one big benefit of the stress test. By producing a credible estimate of losses over the next two years--$600 billion--officials have restored some confidence in the banks' word. ... But investors can now buy a bank's shares and be confident that its books are not being cooked flagrantly and that it is not about to be nationalised", my emphasis, Economist, 14 May 2009, link: http://www.economist.com/finance/PrinterFriendly.cfm?story_id=13665327.
"Finally, a stimulus plan Wall Street can get behind. ... But thanks to the government's stress tests, Wall Street is being flooded with fees. A number of the stress-tested 19 financial institutions, whether told by the [Fed] to raise money or to boost their capital cushions or not, are rushing to sell new shares. The 10 that have been told to plug a capital hole have a month to submit a capital-raising plan and than six months to raise the cash. ... What does that mean for Wall Street? Plenty of underwriting fees. ... Add to those offerings [GSG's] sale of $5 billion in common stock last month, and the fees that were generated from TARP bank follow-on deals in the past two months stand at more than $670 million. The big winners? The investment banks of [GSG], [MS], JPMorgan Chase, Barclays, and Wells Fargo and its Wachovia unit, which will share in this fee party, according to Dealogic", Stephen Grocer at the WSJ, 14 May 2009.
"Federal officials have pressured [BofA] to revamp its board by bringing in directors with more banking experience, as regulators place the bank under increasingly heavy government scrutiny. The move represents unusual influence by the federal government over the workings of a financial institution in which it doesn't own a stake. It's particularly significant because many of the bank's woes stem from its purchase of Merrill Lynch & Co.--an acquisition that was completed after heavy prodding by federal regulators. The Merrill deliberations were the beginning of regulators' deepening involvement in the Charlotte, NC, lender's day-to-day operations. ... Prior to those moves, federal banking regulators--the [Fed] and the Office of the Comptroller of the Currency--had signalled to the bank's leadership that such steps would be well received by the federal government. Government officials also suggested that the task of reshuffling the board be led by independent directors, and that the board needed more members with banking expertise", my emphasis, Dan Fitzpatrick and Damian Paletta at the WSJ, 15 May 2009.
Come on SE&P, you can do better than this. How do you know what Zimbabwe Ben (ZB) thinks? Would ZB make a confidence shattering announcement? What do we learn from this? Ken Lewis "rats out" ZB and Hank Paulson, the BofA gets dinged for $34 billion. GSG wants to return its TARP funds, it's fine. How can anyone take these tests seriously? Is the BofA worse off than Citigroup? I have no idea what these tests consisted of. ZB said on television they were not solvency tests. What then?
Does the Economist realize it indicted the: Big 87654, SEC, OCC and PCAOB all at once? Ye who favor more regulation, think about this.
It's good to see GSG will get something out of this.
Who does the Fed want added to BofA's board? Vikram Pandit? Lloyd Blankfein? That this is retaliation for Ken Lewis violating the Fed's "omerta" becomes more obvious every day.
Saturday, May 30, 2009
"A group of 18 financial institutions sued MBIA Inc., claiming the bond issuer's decision to split its businesses earlier this year was fraudulent and left one of the units effectively 'insolvent.' The lawsuit, filed in New York state court, was brought by US and foreign banks, including JP Morgan Chase & Co., Bank of America Corp., Morgan Stanley, Canadian Imperial Bank of Commerce, Barclays PLC and UBS AG. ... MBIA in February separated its troubled mortgage exposures from its profitable US municipal-bond insurance portfolio in an attempt to resume writing guarantees on municipal debt. The original MBIA Insurance unit was left with $10 billion in claims-paying resources to back guarantees on about $240 billion in structured-finance securities and non-US bonds, and its rating was downgraded to 'junk' by credit-rating agencies. ... Many of the banks had bought credit derivatives from MBIA that insured them against losses on securities backed by subprime mortgage assets and commerical real-estate loans. ... In mid-March, representatives of about 15 financial institutions complained to New York State Insurance Superintendent Eric Dinallo [ED], who had approved MBIA's split. ... 'Our lawsuit simply seeks to ensure that policy holders receive what they have paid premiums for: contractually guaranteed insurance protection,' said Vince DiBlasi, a lawyer at Sullivan & Cromwell [S&C], who is representing the banks suing MBIA. ... MBIA and insurance regulators have said their internal projections and estimates of future losses indicate the original insurance unit remains solvent", my emphasis, Serena Ng at the WSJ, 14 May 2009.
MBIA's split is an obvious fraudulent conveyance. How can Haines miss this? I agree with the banks here. Let MBIA file bankruptcy. Now. See my 30 April 2009 post, link: http://skepticaltexascpa.blogspot.com/2009/04/mbia-split-attacked.html.
Let's look at some numbers. At 31 December 2008 MBIA had $994 million in book equity, $233 and $554 billion in insurance in force on structured finance products and municipal bonds respectively. I looked at MBIA's financials, PWC, the guys who "audit" AIG and GSG, had no problem with MBIA's numbers for $4.6 million in fees. MBIA's financials are laughable as is PWC's opinion. I wouldn't pay $1.26 billion for MBIA at its current $6.06 per share price. MBIA should be sent to sleep with the fish. I wish the banks, yes the banks, well with their suit. If they win, they may teach ED a badly needed lesson. What did ED know and when did he know it? Well PWC, where do you stand on this, my 13 May 2009 post, link: http://skepticaltexascpa.blogspot.com/2009/05/pricewatergates-waterloo.html.
Friday, May 29, 2009
Thursday, May 28, 2009
Wednesday, May 27, 2009
Tuesday, May 26, 2009
Monday, May 25, 2009
Sunday, May 24, 2009
"Vested interests"? Like the "school teacher-expert-diversity consultant" complex? Does an "education deficit" impose "the equivalent of a permanent depression on the US", or our post-1965 immigration policies? This is another McKinsey farce. Bravely? Come on. Pretty startling, to whom? McKinsey could have asked me. I could have told it. I distinctly recollect McKinsey was the most IQ-obessesed of all potential Chicago MBA employers when I was there. How did McKinsey not see what I see, i.e., post-1965 US demographic changes caused in large part, the output gap? I refer to my 1 September 2008 post: http://skepticaltexascpa.blogspot.com/2008/09/dead-elephant-in-living-room.html. Properly understood, there is no achievement gap, my 18 September 2008 post: http://skepticaltexascpa.blogspot.com/2008/09/todays-sat.html. As to the output shortfall, La Griffe du Lion is years ahead of McKinsey, with his January 2005, "Cognitive Decline: The Irreducible Legacy of Open Borders", link: http://www.lagriffedulion.f2s.com/imm.htm. La Griffe writes, "Prodigy's Laws of Immigration. 1. A Western country may be approximated as a nation composed of two distinct populations, one indigenous, the other third-world, differing in mean IQ by approximately one standard deviation. ... 3. Per capita GDP, declines linearly with the third-world immigrant population fraction. 4. Each percentage point increase in the third-world immigrant population, will eventually cause the per capita GDP of a Western nation to drop by approximately 0.76 percent of its zero-immigrant value". If 1960 the US was 88.5% white. We had a few Asians, let's assume the NAM population was 10%. Now assume it's 27%, a 17% increase since 1960. Now multiply, .17 x .76 = .129. McKinsey gives us 9 to 16 per cent. Not knowing McKinsey's base year, I'll stand with this. Coincidence? We don't think so. I bet, if he's so inclined, Steve Sailer (SS), top blogger in this area, could take McKinsey's study apart in a few hours. Finland is of special interest. SS wrote about it on 1 March 2008, link: http://blog.vdare.com/archives/2008/03/01/wsj-wonders-why-is-finland-so-finlandy/
McKinsey, you should be ashamed of yourself. Again. As IQ-obsessed as you were and probably still are, what's your excuse? You want more HHS consulting contracts?
McKinsey please note James Fulford's 21 May 2009 post, http://vdare.com/fulford/090521_fulford_file.htm. In referring to a book by Richard Lynn, Fulford writes, "IQ has consequences". What is it McKinsey doesn't understand? It has consequences for "crime, ... immigration policy, education, and all kinds of other things". Even foreign policy! Yes!
Saturday, May 23, 2009
Friday, May 22, 2009
See Theresa Ghillarducci (TG), the market doesn't need you. I last referred to TG on 23 December 2008, link: http://skepticaltexascpa.blogspot.com/2008/12/ben-franklin-3.html. please note. Guarantees? Locked in gains? Whatever these things will be, they will look a lot like equity-indexed annuities, my 2 January 2009 post: http://skepticaltexascpa.blogspot.com/2009/01/with-little-help-from-my-friends-2.html.
Thursday, May 21, 2009
Wednesday, May 20, 2009
"Rules of engagement, most often references in the Geneva Convention, exist to separate depravity from 'civilized' warfare. Extending those rules and protections to those who consistently ignore them or openly flout them (such as terrorists who target civilians or behead journalists-on camera) is calculated to show its proponents as principled as well as having high-minded values (such as Sen. John McCain, who experienced torture after being captured as a uniformed memebr of a state armed force). ... We absolutely need to have principles, and to respect the Geneva rules for those who also adhere to them. However, I draw the line at those that descend to barbarism anbd depravity. The targeting of civilians and those with absolutely no connection to an armed force has to be condemned in no uncertain terms, and a failure to do so only encourages more of this activity", my emphasis, John Cox (JC) letter to the WSJ, 6 May 2009.
I quoted Leon Trotsky on 7 October 2008, http://skepticaltexascpa.blogspot.com/2008/10/jr-nyquist-on-crisis.html; Michael Savage on 6 February 2009, http://skepticaltexascpa.blogspot.com/2009/02/way-of-war.html.
Very nice, JC. However, these are normal Islamic warfare practices. Now what? Once you've condemned the behavior, what would you do to end it?
Tuesday, May 19, 2009
I agree with AM.
Monday, May 18, 2009
Sunday, May 17, 2009
Saturday, May 16, 2009
"Compared to what they might have had". In high school I read Charles Dickens Oliver Twist. My English teacher was a flaming pinko (FP). FP railed out against the evils of industrialization, London's black snow, 72-hour work weeks and the exploitation of the masses. I said nothing and did some research. In those days farmers frequently worked 98 hours a week. Armed with this I asked FP if London's factory workers were held at work at gunpoint. He said no. I then asked him why they didn't return to the farms. FP said nothing. I said my conclusion is: factory work was the best option they had. I then asked FP if he knew if farm or factory work had longer hours. FP didn't. He became furious as I exposed his ignorance. If I had done this today, I'm sure FP would have me sent to a re-education camp.