I am a CPA in Texas with an MBA from the University of Chicago. I have seen a lot and made many mistakes. Hopefully by now I will have learned something from them. Just as importantly, you may learn something from my mistakes. You can e-mail me by clicking on my "View my complete profile".
This is the DOJ's MO, see my 12 September 2009 post: http://skepticaltexascpa.blogspot.com/2009/09/csi-las-vegas.html. $64 million? That's Lloyd Anoinette Blankfein's annual bonus. While over my "Blankfein test", why bother with this? Bank fraud, 18 USC 1344. Hmm. Was the investigation which likely cost tens of millions made because the fraud was against as opposed to for banks? What did the "alleged fraudsters" do? If big enough they're called leveraged buyouts! Right? Just get a solvency opinion from say KPMG, my 18 December 2008 post: http://skepticaltexascpa.blogspot.com/2008/12/deprizio-doctrine-and-aig.html and you're good as gold. "[W]e will go wherever the facts lead", says Bharara. Even to the Vampire Squid? Is this case part of the DOJ's continuing efforts to turn bankers into fraud victims as opposed to co-conspirators, my 31 March 2008 post: http://skepticaltexascpa.blogspot.com/2008/03/real-estate-charade.html.
"The media love disaster. ... But the most obvious, perilous, and, most preventable catastrophe looming on America's horizon is one that the media and political class refuse to talk about. ... One great, avoidable evil we face is the declining quality of the American work force. The Census Bureau tells us that if immigration continues at is current rate of nearly two million people a year, whites will become a minority of the under-18 child population in just 14 years--in 2023--and will become a minority of the working population just 16 years later. ... Demographers are beginning to warn that as well-educated, white baby boomers retire and are replaced by poorly educated blacks and Hispanics, the productivity gains of the last several hundred years will be reversed, and the [US] could go into a tailspin. .... Irwin Kirsh [of ETS] ... warns that our increasingly non-white and immigrant workforce threatens not only our standard of living, but the very survival of republican government based on an informed middle class. ... However, the graduation rate slightly decreases for the second US-born generation (85.1 percent vs. 85.9 percent), so that in 2007, even after three generations in the [US], Hispanics had a dropout rate that was still 2.3 times the white rate and 33 percent higher than the black rate. ... In Detroit, only 26.8 percent of students graduated on time in 2006. The other worst performers were Philadelphia: 39.1 percent, Dallas: 40.7 percent, Los Angeles: 47.7 percent, and Washington, DC: 48.8 percent. ... Hispanics who stay in school do badly. ... Hispanics are the least likely group to go to college. ... Again, the problem is not just one of adapting to the [US]. College graduation rates for US-born Hispanics are only slightly better than those for immigrants, and Hispanics who have been in the country for three generations or more are still less likely even than blacks for graduate from college. ... This rise in income will reverse as black, Hispanic, and immigrant workers replace whites. California will be particularly hard hit because of its large Hispanic population. ... According to a 2007 report from the Migration Policy Institute, an estimated 400,000 legal immigrants and 350,000 illegal immigrants were illiterate in their native languages, much less English. ... The National Center for Public Policy and Higher Education predicts that because of declining education and productivity, average per capita income for the nation will have fallen two percent by 2020. For California, because of its heavily Hispanic population, the center predicted a real per capita income decline of $2,467 or no less than 10.8 percent, the biggest loss for any state. ... Texas faces serious problems too. ... McKenzie [sic] and Company, estimates that if black and Hispanic students had been able to close the achievement gap in 1998, American GDP 10 years later would have been larger by up to half-a-trillion dollars. ... The Educational Testing Service (ETS), based in New Jersey, predicts that all states will see a drop in reading and math ability. ... The US is slipping badly in comparison with other developed countries. ... In blacks, Hispanics, and immigrants are excluded from the American results, our performance rises from 12th, to 2nd in reading and 5th in math. This means immigrants, blacks, and Hispanics are dragging our rating down. ... The oldest age groups--the ones with the most whites--do the best while the youngest groups with the fewest whites [do] worst. ... The same racial pattern is found in student scores. ... However, if the scores only of whites were counted, the US ranked 10th, in the company of Japan, Hong Kong and New Zealand. ... By age 15, many of the worst performing American students have dropped out, which means those who are tested are not a representative sample. ... In coming decades, companies may move [white-collar jobs] offshore because they can't find Americans who can do them at any wage. ... There are about 16,000 school districts in the [US], and not one has figured out how to [close the achievement gap]--but we all keep pretending it's possible. ... What would baffle Enoch Poweel about all this is why there is so much talk about bridging the achievement gaps but so little talk about keeping Hispanic immigrants out of the country. If Hispanics are not good additions to the workforce, why let more in? ... An increasingly Hispanic workforce is, in Powell's terms, an avoidable evil. But we will fail to avoid it simply because we are unable to say to Mexicans, 'Your lot isn't working out too well here, so stay home.' Instead, we try one preposterous gap-closing scheme after another and wonder why we can't get blood from turnips", original italics, my emphasis, Jared Taylor (JT) at TakiMag, 12 October 2009, link: http://www.takimag.com/site/print/4120/
It's that old devil IQ again rearing its ugly head. Just change our "peer group" countries to: Mexico , Guatemala, Pakistan, Uganda and Haiti. The US is doing fine.
Could go? Where have our demographers been since 1973? Rise in income? Look at California. Not will be, is now. 10.8%? McKinsey, shut up. Starting with my 24 May 2009 post: http://skepticaltexascpa.blogspot.com/2009/05/mckinseys-pc-extravaganza.html. Hmm, has McKinsey heard of "left tail cutoff"? I figured out how to close the achievement gap over 40 yerars ago! Thank you JT for saving me the trouble of doing some of this arithmetic. What is California's current decrease in per capita GSP arising from its demographic changes? In my 11 October 2009 post: http://skepticaltexascpa.blogspot.com/2009/10/boskins-baaack.html, I noted California's per capita GSP excluding Hispanics was $55,300, including Hispanics its $40,000 a 27.7% decrease! That's over than 10.8% now, not in 2020.
"Roughly a year after accepting unprecedented financial aid to shore up its operations, Wall Street firm Goldman Sachs Group Inc. [GSG] posted yet another impressive quarter that further distances itself from its rivals, many of which are still struggling to overcome the credit crisis. ... 'We are very aware of what is going on in the world, but we have to trade that off with being fair to our people who, we believe, have performed admirably throughout the crisis,' said [GSG's] chief financial officer, David Viniar. ... [GSG] also has benefitted from the [FDIC's] debt-guarantee program, which means it and other banks can borrow money at cheaper rates than before. ... The firm has tried to soften the blow of its decision to set aside huge pools of money for compensation; Thursday it made a $200 million charitable contribution to the [GSG] Foundation, which has an existing $283 million in it. Still, that did little to deflect attention from the $16.71 billion in has earmarked for bonuses, which will be paid out early in 2010", my emphasis, Susanne Craig at the WSJ, 16 October 2009, link: http://online.wsj.com/article/SB125560247815487177.html.
A "charm offensive" should be easy for GSG. GSG likely employs dozens of graduates of the KGB "charm school" in Nelson DeMille's The Charm School, 1988. This is a job, not for Superman, but Michael Moore (MM). MM, please make a movie of politicians meeting GSG apparachiks then slinking away with newspapers covering their faces. GSG now sprouts the prosperity gospel of say Ken Hagin, or the now-deceased Reverend Ike. "Sow a seed" of say $10 million into Washington and have it return to GSG 100 fold! The Rolling Stone article insulted GSG. GSG would not stick its blood funnel into a money pile of less than $1 billion. Does GSG really want the American public to understand its "business model"? Go Zingales! Why need Blankfein, who makes about $60 million a year, have his actions regulated by $150,000 a year civil servants? Who is he kidding? WC Varones recently added GSG's "logo" to his blog. Take a look. I have an idea for GSG, it can add the vampire squid to its stationery and people's business cards.
Is GSG's charitable contribution admissible "res gestae" on the issue of "consciouness of guilt"? Didn't Bernie Madoff donate millions to charity? Millions of other people's money. Yes Viniar, Henry Paulson performed "admirably" for his "former" firm. $16.71 billion divided by $200 million = 83.5, you're in the "prosperity gospel" ballpark!
"The [FDIC] is questioning the generally positive conclusions in a government-mandated review of Citigroup's top management, according to people familar with the situation. Some officials at the agency have expressed doubts about the rigor of the report, which was based partly on interviews with Citigroup executives who were asked to rate the effectiveness of their colleagues, these people said. ... The review was completed last week, and Citigroup's board began discussing this week whether to make any management changes in response to the report. The FDIC began sifting through the findings this week. ... FDIC officials vetoed a consulting firm that the bank had initially porposed for the job. After vetoing the consulting firm favored by Citi, FDIC officials sent Citi 'a list of approved firms acceptable to them,' and one was [EZI], one informed individual said. ... One person close to the agency described the outside report as 'a total whitewashing.' Some agency officials also are having second thoughts about the qualifications of [EZI], which largely runs executive searches for clients", my emphasis, David Enrich & Randall Smith at the WSJ, 9 October 2009, link: http://online.wsj.com/article/SB125504371565574655.html.
"The Treasury Department's pay czar pushed outgoing [BofA] Chief Executive Kenneth D. Lewis into giving back about $1 million he received so far this year and forgoing the rest of his $1.5 million salary for 2009, say people familar with the matter. ... Kenneth ... Feinberg pushed for the deal because he thought the package of retirement benefits and unvested stock Mr. Lewis takes with him when he steps down at year's end--currently worth at least $69.3 million, according to securities filings--was large enough and possibly too big. ... Thursday's decision caps a rocky relationship between Mr. Lewis and the US government", Deborah Solomon and Dan Fitzpatrick at the WSJ, 16 October 2009, link: http://online.wsj.com/article/SB125564137421788337.html.
This is the way it looks to me.
"A senior Moody's Corp. executive said at a congressional hearing that an outside legal firm investigating claims by a former analyst has so far found no evidence of wrongdoing. ... Richard ... Cantor told the House Committee for Oversight and Government Reform that Moody's hired law form Kramer Levin Naftalis & Frankel LLP to investigate a July complaint submitted by Eric Kolchinsky, a managing director who left Moody's in mid-September", Serena Ng and Sarah Lynch at the WSJ, 1 October 2009, link: http://online.wsj.com/article/SB125432192757352625.html.
"This morning we had hoped to be able to praise House Financial Services Chairman Barney Frank, who seemed ready to break up the credit ratings racket that did so much to inflame the financial panic. But just when you think Barney will free up competition, he reinforces the cartel. ... A former Moody's employee, Eric Kolchinsky, described a 'reckless disregard for the truth' in an August memo to a Moody's official. Yesterday he tesified that those responsible for ensuring sound ratings methodology are 'routinely bullied' by management. ... Yet despite the path of financial destruction paved by the Big Three raters, Washington still won't yank their privileged status as Nationally Recognized Statistical Ratings Organizations (NRSROs). Based on the draft reform written by Mr. Frank's colleague, Paul Kanjorski (D., Pa.), the raters can expect more compliance and legal costs, but no threat to their official role as America's judges of credit risk. ... Appearing in CNBC in September, Mr. Frank said, 'We have exalted rating agencies too much.' He added, 'We need to repeal laws that mandate the use of rating agencies.' ... The bureaucrats at the [Fed], SEC and elsewhere merely need to study the issue and report back to Congress. These are the same people who wrote the flawed rules, so why would they eliminate them? ... But by bleeding the NRSROs while leaving intact rules that require their services, Mr. Kanjorski could be creating a senario in which regulators are soon calling S&P and Moody's too big to fail. This is essentially what Sarbanes-Oxley did for the accounting firms after Enron: In the name of punishing them, make then even more important", my emphasis, Editorial at the WSJ, 1 October 2009, link: http://online.wsj.com/article/SB10001424052748704471504574441273559132330.html.
"After fighting to keep his grip on the bank he helped build from a scrappy Southern outsider to the nation's largest in assets, [BofA] Chief Executive Kenneth D. Lewis said he will resign by year end. ... Even as the board backed Mr. Lewis publicly, there were signs that his interests and the bank's were diverging. Mr. Lewis has hired his own lawyers, former US Attorney Mary Jo White and James Wyatt III, a criminal-defense expert in Charlotte, while the board and the bank have separate representation on the various lawsuits and investigations relating to the bank's purchase of Merrill Lynch", Dan Fitzpatrick and Joann Lublin at the WSJ, 1 October 2009, link: http://online.wsj.com/article/SB125434715693053835.html.
We should ignore criminal justice "experts", like prosecutors and correction officer unions. Why? Do you expect them to say parole agents should have larger caseloads? It's a likely as the NEA suggesting schools increase class size.
This law should be repealed. You did your crime, you did your time. That's it. Georgia's sex offenders should seek housing wherever they want and dare Georgia to send them back for housing violations. Georgia is broke, see my 26 September 2009 post: http://skepticaltexascpa.blogspot.com/2009/09/wait-listed-by-jail-10.html.
"No state's economy, with the exception of Michigan, has careened into a deeper ditch than California in this recession. The state now has the fourth-highest unemployment rate (12.2%), the third-highest rate of mortgage foreclosures, and for two years has had the biggest budget deficit in the history of the 50 states. ... The heart of the new plan is to broaden the tax base and slash tax rates on personal income, business and sales. ... Because about 70% of small businesses pay the personal California income tax, the commission found that California's high rate is driving enterprises to the likes of Nevada, Texas and Idaho", Editorial at the WSJ, 30 September 2009, link: http://online.wsj.com/article/SB10001424052748704471504574443413742032356.html.
Brenda Walker has a 30 September 2009 post about California at Vdare, link: http://vdare.com/walker/090930_california.htm. Way to go Brenda!
B&C are Stanford professors. So? We remember Boskin. He led 1996's infamous "Boskin Commission", my 5 October 2007 post: http://skepticaltexascpa.blogspot.com/2007/10/tip-on-tips.html. As Uncle Miltie taught us 40 years ago, government spending uses real resources. 2009's Boskin Commission is as fraudulent as 1996's. Without spending cuts, California will not balance its budget. Perhaps not then. B&C's article does not mention the "I word", immigration. Hmm. California can shuffle its economic Titanic's deck chairs ad infinitum, changing percentages on its tax forms will accomplish nothing. Have California residents no longer "a rising standard of living"? Compared to who? Oregonians or Mexicans? What happened to California's schools which in the 1950s and 1960s were the US's best? Is "the tax system central to the state's economic woes"? Tax "reform" is a scam. Cut spending. Why is California hopeless? California's gross state product (GSP) is $1.55 trillion; with 38.5 million residents, say $40,000 per capita. Mexico's per capita GDP is about $10,700. Which Mexicans come to the US? Mostly those from Southern Mexico. Mexico's per capita GSP varies from $22,000 to $4,000. Assuming illegal aliens come from Mexican states with per capita GSPs of about $7,000 and their productivity doubles in the US, as the US is "capital deeper", we have 14 million people producing $196 billion in California GSP 24.5 million producing $1.354 trillion or $55,300 per capita. If California's 14 million Hispanics even consume at 1/3 the rate of non-Hispanics, that's $12,400 per capita. There's more. If they produce $14,000 per capita, they likely earn say 67% of that or $9,400 per capita, $12,400 - $9,400 = $3,000; $3,000 x 14 million = $42 billion, the difference between Hispanic consumption in California and income. If the difference is half this estimate, its still $21 billion. This money comes from somewhere.