Saturday, February 28, 2009
Friday, February 27, 2009
"Twenty years ago, Andres Serrano put a plastic crucifix in a glass of urine, photographed it and called it art. ... Also 20 years ago: On Valentine's Day 1989, the Ayatollah Khomeni issued a fatwa against Salmon Rushdie, condemning him to death for supposedly blaspheming Islam in his novel, 'The Satanic Verses.' ... [GW] is being prosecuted for hate speech in his native Holland, where he faces up to 16 months in prison if convicted. His alleged crime involves making a short film, called 'Fitna,' which draws a straight line betwen Quaranic verses and acts of Islamic terror. ... As for the Rushdie affair, after some initial hesitation most of the liberal intelligensia on both sides of the Atlantic rallied to his cause. True, there were some dissenters: Jimmy Carter called the 'Satanic Verses' a 'direct insult to those millions of Muslims who sacred beliefs have been violated'. ... For liberals, the issue is straightforward. If routine mockery of Christianity and abuse of its symbols, both in the U.S. and Europe is protected speech, why shouldn't the same standard be applied to the mockery of Islam? ... But a defense of Mr. Wilders is made a lot easier if one can point to the vivid difference between a civilization that protects, even celebrates (and funds!), its cultural provocateurs, and a civilization that seeks their murder. This is no small point", Bret Stephens (BS) at the WSJ, 17 February 2009.
Uassimilable, how dare you? Does anyone remember Europe's 1989 reaction to Khomeni's fatwa against Salmon Rushdie (SR)? Disgusting.
Thursday, February 26, 2009
Suppose China's military spending was for "offensive" purposes. What would it say? What fraction, 10% or 90%?
"The Treasury Secretary seems stuck on keeping the banks we have in place. But we don't need zombie banks overstuffed with nonperforming loans--ask the Japanese. Mr. Geithner wants to 'stress test' banks to see which are worth saving. The market already has. Despite over a trillion in assets, Citigroup is with a meager $18 billion, Bank of America only $28 billion. The market has already put that the banks and their accountants haven't fessed up to bad loans and that their shareholders are toast. ... The $45 billion to Citi and the Bank of America wasn't nearly enough. Instead $306 billion and $118 billion loan guarantees were extended to cover the bad debt, which unfortunately, the market believes still weighs down the banks' balance sheets", Andy Kessler at the WSJ, 11 February 2009.
"Bank-stock investors have every reason to stress out over the Treasury's stress test. As part of Treasury Secretary Timothy Geithner's Financial Stability Plan, many banks will be subject to tests aimed at gauging whether they have sufficient capital to support lending and absorb losses under a severe economic outlook. Existing bank regulators, including the Treasury's own Office of the Comptroller of the Currency [OCC], already test banks' strength. So the new assessments will have an added rigor, or the announcement was pure theater. If the administration really does have the stomach to get tough with the banks, they could be forced to recognize credit losses more quickly. ... Incredibly, as the credit crunch has deepened, banks' loan-loss reserves have so far fallen as a percentage of non-performing loans", my emphasis, Peter Eavis at the WSJ, 13 February 2009.
Is HJ kidding? Regulatory forbearance, in part got us here. How does HJ know what serves the public interest? He sounds like a bank lobbyist Thomas Jefferson warned us about banks. I say kill these monsters, now. To think accounting entries change regulators' decisions shows banks books are cooked and HJ wants the taxpayers cost of bank bailouts disguised. HJ makes similar arguments to Citigroup's Bob Traficanti, my 17 July 2008 post: http://skepticaltexascpa.blogspot.com/2008/07/schwartzman-and-mcteer-on-accounting.html.
I agree with Kessler.
The OCC is another joke. See what it did at NCC, my 18 June 2008 post, link: http://skepticaltexascpa.blogspot.com/2008/06/occ-vs-sec.html.
Wednesday, February 25, 2009
I agree with Kay. It's more than time to break up monsters like Citigroup.
Tuesday, February 24, 2009
"Should Wall Street have spoken up? That is a key question to emerge from the Madoff scandal: whether Wall Streeters should more-readily report concerns about possible fraud to regulators", Aaron Lucchetti at the WSJ, 12 February 2009.
"A parliamentary committee examining the banking crisis claimed its first victim as the deputy chairman of the U.K.'s financial watchdog agency stepped down amid allegations he silenced the risk director at one of the U.K.'s troubled banks several years ago. ... Paul ... Moore claims his warnings that the bank was growing too rapidly went unheeded and resulted in his dismissal in 2005. Mr. Moore's allegations surfaced prominently on Tuesday during the first of two hearings before the Parliamentary Select Committee that is scrutinizing the banking crisis. My midday Wednesday, Sir. James--who has advised Prime Minster Gordon Brown on financial matters--had submitted his resignation after an onslaught of negative publicity. Following the resignation of Sir James, the FSA sent out a detailed statement saying that claims made by Mr. Moore in 2004, were 'taken seriously, and were properly and professionally investigated.' It said a review by KPMG concluded that HBOS acted appropriately", Sara Munoz at the WSJ, 12 February 2009.
"In recent years, the SEC has been seen as increasingly toothless, particularly under Christopher Cox, the Republican chairman who stepped down last month. ... Harvey Pitt [HP], former SEC chairman, called for structural changes, including to the 'fatally flawed' way companies were inspected", Joanna Chung at the FT, 13 February 2009.
Amen.Suppose they did? What would the SEC do anyway?
Monday, February 23, 2009
"If Ms. Schapiro seeks to learn from the SEC's recent history, she might start by considering the most basic lesson from the Madoff incident. Private market participants spotted the fraud, while SEC lawyers couldn't seem to grasp it. Rather than giving her staff lawyers still more automony, she should instead be supervising them more closely, while trying to harness the intelligence of the marketplace. Meantime, investors should remember that their own skepticism and diversified investing remain their best defenses against fraudsters", Editorial at the WSJ, 10 February 2009.
Yes, it would have been unusual. Which raises this equestion: why did Madoff have Freihling & Horowitz do its audit? Was it to give the Big 87654 plausible deniability as to each's knowledge of Madoff's fraud?
From 29 January's installment, "Some writing specialists excuse bad writing on the hopeful supposition that a gap exists between cognition and expression--similar to the way a stroke victim can have a complex thought, but cannot properly verbalize it. That is, students who write badly nevertheless know what they want to say, or what they have read, as well as anyone else. I have concluded that no evidence supports this postulate. Having no other means to discern congition than through its expression, one must take as a given that expression is cognition. ... The individual who cannot see things clearly cannot think about them clearly. ... My lecture hall comes equipped with all those media-wonders that higher education budgets now lavish on classrooms. ... Keeping the characters straight is an elementary gesture, formerly expected even of sixth-graders, and second nature for any habitual reader. ... The examples of defective prose that have paraded past in the previous installment of this series have exhibited pure epistemological confusion. ... They involve an unwillingness or inability to keep the good guys and bad guys straight in relation to two contending perspectives: for Homer, the Trojans are enemies, while for Virgil they are the heroes, and for him the Greeks are enemies. ... In a response to the depiction of individual moral crisis in Saint Augustine's Confessions, a different type of failure comes into view. ... The Confessions demand that a reader participate with the author in judging actions morally rather than pragmatically and insist that they turn the faculty of moral criticism on themselves. ... Oral people, as those scholars have noted, recognize prohibitions, to be sure, but they never perform moral analysis. Indeed, they see analysis as obfuscation and can show hostility to it. ... Augustine was also, as the Confessions tell us, susceptible to female attractiveness, and spent a period of inveterate brothel crawling and inexhaustible fornication. But Odysseus seeks to win back the material wealth and chattels that the squatters in his palace would steal from him. In contrast, Augustine, in spiritual revolt against worldliness, rejects power and riches for the sake of his intangible soul. This essential difference the student entirely misses. It is as though the student cannot hold the resemblance and the difference in mind simultaneously. ... The inability to make a straightforward statement along such lines as Augustine rejects self-indulgence and adopts self-control as a mandate of his conversion is much more than a funny instance of incompetence. It is a crippling intellectual deformity that will prevent a student who distantly glimpses a moral problem from adequately seeing or articulating it. ... He will lack the very notion of a deliberative resolution. ... Perhaps the only thing we can do is laugh, laugh at the irony of a society that was once the most literate that ever existed now reverting to the spiritual savagery of tribal existence. ... I see in the resentful incapacity of so many students a not-so-dim 'Shape of Things to Come' whose characteristics will be theirs: perceptive obtuseness, expressive coarseness, extreme limitation of language and therefore of concept, radical unfitness to judge complicated technical or moral problems, complete disconnetion from any meaningful past and, to borrow a term from Oswald Spengler, in a conditon utterly 'historyless.' The world will soon be dominated by such people. ... Petulance will characterize it universally. ... Many older, genuinely educated people surviving into this not-too-distant future will find the new world infantile and exasperating. ... When the educational system rejects cultivating intellect as its primary goal and dedicates iteself to fostering fellings, opinions, and baseless pride, it will discharge at the end of twelve years young people for whom the Jamesian 'buzz' of phenomena cannot resolve into a comprehensible image".
"As parents pack their youngsters off to college, they might ask themselves whether it's worth both the money they will spend and their children's time. Dr. Marty Nemko has researched that question in an article aptly titled 'America's Most Over-rated Product: Higher Education.' ... Only 23 percent of the 1.3 million students who took the ACT college entrance examinations in 2007 were prepared to do college-level study in math, English and science. Even though a majority of students are grossly under-prepared to do college-level work, each year colleges admit hundreds of thousands of such students. ... Nemko says that the worst of all is that few of these former college students, having spent thousands of dollars, wind up in a job that required a college education. It's not uncommon to find them driving a taxi, working at a restaurant or department store, performing some other job that they could have had as a high school graduate or dropout. .. First, only 40 percent of each year's 2 million freshmen graduate in four years; 45 percent never graduate at all. Often, having a college degree does not mean much. According to a 2006 Pew Charitable Trusts study, 50 percent of college seniors failed a test that required them to interpret a table about exericse and blood pressure, understand the arguments of newspaper editorials, and compare credit card offers. About 20 percent of college seniors did not have the quantitive skills to estimate if their car had enough gas to get to the gas station", Walter Williams (WW), 27 August 2008 at http://townhall.com/.
Is Bertonneau talking about our current president? I'll say again, many college graduates could not have intellectually survived my fifth-grade class.
WW is a professor of Economics at George Mason.
Sunday, February 22, 2009
Would we be so lucky. We should pay for these knowledge workers to learn Chinese. Within 24 months of their decamping to China, China will surrender.
This is rich. LB, Goldman Sachs (GSG) CEO admits GSG's 2008 10-K is wrong! GSG is mentioned in my 30 November 2008 post, link: http://skepticaltexascpa.blogspot.com/2008/11/more-good-news.html. GSG has 14 Business Principles. So? Hedged? Did these fools learn nothing from 1987's crash and portfolio insurance? Risks are not insurable to the system as a whole. Someone must bear them. LB wants GSG to transfer it to the public. SIVs? Like those Citigroup created? Will anyone go to prison over Citigroup's SIV accounting? If GSG's "risk and control functions" were not independent, did PWC, which got $56 million in 2008 scream about it? Page 130 of GSG's 2008 10-K has PWC's 22 January 2009 opinion. I saw nothing unusual in it. Page 129 has GSG's Managment Report on Internal Control. Nothing unusual there either. Why did LB and David Vinar sign the SEC certifications on 26 January 2009, exhibit 31.1 to GSG's 2008 10-K? Protecting who from the "100-year storm" LB? GSG or the public? If GSG internalized its risks and was adequately capitalized, with say 15% equity, would LB be begging? GSG's business principle 3, "Our goal is to provide superior returns to our shareholders. Profitability is critical to achieving superior returns, building our capital and attracting and keeping our best people. Significant employee stock ownership aligns the interests of our employees and our shareholders". Really? Or is GSG's goal to pay out every dime it can in compensation and have the public bear its losses? See also my 23 November 2008 post: http://skepticaltexascpa.blogspot.com/2008/11/bank-accounting.html.
Saturday, February 21, 2009
"Why did the union [Ken] Lewis lauded as the 'deal of a lifetime' spin so quickly into disaster? ... A 24-year veteran of Goldman Sachs, [John] Thain was viewed as a Wall Street wizard. ... Peter Kraus, whom Thain lured from Goldman to head strategic planning, got a guarantee of around $25 million, which he received even though he left the company after three months. ... But despite his earlier words, he did little to rein in Merrill's proprietary trading operation, which took supposedly low-risk positions in currencies, commodities, and especially bonds, and had been a reliable profit center for years. That decision would come back to haunt him. ... Merrill also bought protection from the so-called monoline insurers, such as MBIA and Ambac. But when those insurers were downgraded by the rating agencies, the protection Merrill had paid for was less valuable, and Merrill had to add to its reserves to make up the difference", my emphasis, Shawn Tully at Fortune, 16 February 2009.
RS, MBA Harvard, 1966, "former" Goldman Sachs (GSG) partner, now a finance professor at New York's Stern School. Is RS an idiot or a criminal? RS admits what I've said for decades: major commerical and investment bank cost accounting stinks, causing excessive trader compensation. Imagine, firms hire GSG and its competitors for "financial advice". Why? What do these guys know? Alternatively, RS and his fellow partners knew all along what they were doing and should be indicted for fraud, i.e., defrauding their outside shareholders. This is a disgace. Further, a "former" GSG partner was a our last TreasSec. Treasury is infested with these parasites, on 14 October 2007 I called for a 25-year moratorium on GSG personnel working for Uncle Sam, http://skepticaltexascpa.blogspot.com/2007/10/party-like-its-1929.html. That may not be long enough to purge our system of these parasites. What risk-taking is RS talking about? GSG executives are not capitalists, they are grossly overpaid hired help. Did RS scream about this at GSG? Did he tell GSG's shareholders? Why listen to RS now? Who is he protecting? Where were the compensation consultants like say Hewitt Associates and Pearl/Meyer while this went on? Who needs those guys either? See my 23 and 30 November 2008 posts: http://skepticaltexascpa.blogspot.com/2008/11/bank-accounting.html and http://skepticaltexascpa.blogspot.com/2008/11/more-good-news.html.
Friday, February 20, 2009
"Former federal prosecutor Robert Khuzami will be named the new head of enforcement at the [SEC], as soon as this week, a person familiar with the matter said, in the latest bid by the SEC's new chief to restore its credibility. Mr. Khuzami, currently a top lawyer at Deutsche Bank AG in New York, was offered and accepted the position of enforcement director, this person said. ... The appointment of Mr. Khuzami, a respected prosecutor who served as chief of the securities fraud unit at the U.S. attorney's office in Manhattan, is part of SEC Chairman Mary Schapiro's effort to reinvigorate the enforcement division", Kara Scannell at the WSJ, 9 February 2009.
Will Schapiro have the same firm that audits Citigroup audit brokerages? She brings Becker back. The SEC-BigLaw revolving door, revolves once more. From his resume at CGSH's website, "David M. Becker ... focuses on SEC and other investigations, internal corporate investigations, corporate governance issues, and on a broad range of SEC regulatory matters. ... Becker was particularly active in advising the Commission on matters related to corporate governance, and accounting and disclosure. ... Becker received a JD degree from Columbia ... in 1973, and an undergraduate degree from Columbia College in 1968". Oh goody, Becker has two Ivy League degrees. Harvey Pitt was SEC chairman from 2001 to 2003. Think about that. My take: it's open season for accounting fraud at the SEC.
If selecting a former AUSA from the SDNY US attorney's office, currently with a NY BigBank, is Schapiro's attempt to "reinvigorate the enforcement division", I don't want to know what she thinks will emasculate it. Laugh, Schapiro made a joke.
See my 6 February 2008 comments about Ahmed Ben Bella here: http://skepticaltexascpa.blogspot.com/2008/02/woodrow-wilson-upside-down.html. Talk of hypocrisy. In 1972 I knew a resident at Columbia Presbyterian hospital in New York. He told me visiting Saudis insisted on Jewish surgeons. I asked him why. He said because they know Jewish doctors are the best. What frauds. Is the 5,000 to one ratio unexpected? Our friend, La Griffe du Lion sheds some light on this. His February 2000 and September 2003 posts, http://lagriffedulion.f2s.com/dialogue.htm and http://lagriffedulion.f2s.com/ashkenaz.htm are instructive. We learn Nobel Laureates average IQ is 144, or +2.93 SD. At +2.50 SD measured IQs exhibit "fat tails" and +2.93 SD is not .9983 or one in 596 but about one in 250. With Jews IQ at one SD about the caucasian mean, 144 IQ is .9734, one in about 38 or eight times as common. We're not done. From IQ and the Wealth of Nations, I estimate the Islamic world's average IQ is 84. We're still not done. In these countries, to the extent measured, IQ SD is about 13, so 144 is 60 /13 or + 4.615 SD, roughly .999998 or one in 500,000; estimating the fat tail effect at 10X, we get one in 50,000. How many Ashkenzim are there worldwide with IQs over 144? 9 million / 38 or 237,000. How many Moslems? 1.45 billion / 50,000 or 29,000. Coincidence? We don't think so. If the Islamic world wants to advance, it should beg Jews to relocate to Islamic countries and throw the Koran's anti-Jewish passages in the garbage.
Spengler's ratios are misleading as he compared "stocks" and "flows", i.e., the number of Nobel Prizes awarded over time to numbers of people alive today. This comparison would make sense if the ratio of Jews to Moslems was stable since 1900. It was not. In 1950 there were 12 and 361 million Jews and Moslems, today there are 13 and 1,450 million respectively. The ratio changed from 1 to 30 to 1 to 111. Assuming an average ratio since 1900 of 50, we get one Nobel Prize for every 76,000 Jews alive in a given year and one per 217 million Moslems, a 2,855 to one ratio.
Thursday, February 19, 2009
"i expect that for the glitterati of the central banking community is washington, the sheer scale of the financial disaster facing western civilization has already sunk in. ... it may have surprised [Zimbabwe Ben] and his compatriots initially, to see the sum of seventy years' of economic thought regarding monetary policy smashed and tossed aside by the reality of a massive deflationary unwind; but i sincerely doubt he still denies the truth. for what its worth, bernanke has been a much less prominent figure since the failure of lehman brothers--and i think that is not an accident. ... this level of realization, though, probably still eludes the carnival of lawyers known as congress. anedotal reporting from interested financial parties regarding the competence of our legislative body in this crisis have been uniformly appalling--even the leadership on relevant banking committees apparently have utterly no understanding of what has actually happened, much less what is likely to happen or how it might be remedied. such cluelessness in combination with slavish devotion to deep-pocketed special interests has rendered congress all too easily manipulated by the agents of wall street, embodied first in hank paulson and now his successors larry summers and tim geithner. the result has been straight government handouts to the monied classes behind the banks with no prospect of a resolution to either the financial or the economic crisis. ... it gives me little pleasure to point to newt gingrich, an architect of division and fraud if one has ever sat in the capitol, as he puts record to something like the truth. ... 'Gingrich's harshest words were reserved for recently confirmed Treasury Secretary Timothy Geithner, whom he mentioned repeatedly as a symbol of the government and business class refusing to learn lessons. "Geithner is fronting for the banks. Frankly, that's what I think Paulson ended up doing. Paulson ended up being a Wall Street deal-maker who was happy to take your money to bail out Wall Street deal-makers. ... What we have to do is look at the very simple question: 'What is it going to take to succeed in the world market, how do we reset the American economy, how do we get rid of the wreckage, and how do we start growing a new generation of institutions?' ... The political class has panicked, [it did not ask], "What's gone wrong, how do you reset the system and how do you realistically expect this system to operate in the world market in the future?",'," my emphasis, gaius marius, 8 February 2009 at http://declineandfallofwesterncivilization.blogspot.com/2009/02/sinking-in-behind-scenes-in-washington.html.
Wednesday, February 18, 2009
"In the torrent of criticism that Mr. Markopolos and lawmakers heaped on the SEC and its senior staff members, some complaints were serious--that the agency lacked the expertise to tackle major fraud by big players and had no systematic way of dealing with whistle-blowers. ... [Lawmakers] had been far more riveted by Mr. Markopolos testimony, which at times seemes to enter verbal territory more often explored at organized crime hearings. He referred to his fear that he would be killed if Mr. Madoff learned of his investigation. At one point, noting his experience in military intelligence, he described an offer he made to 'go undercover' for the SEC--a proposal that was rebuffed. ... While one lawmaker asked whether this all wasn't 'a little paranoid,' others agreed that Mr. Markopolos was wise to be cautious, given the scale of the fraud he was trying to bring to light", my emphasis, Diana Henriques, 5 February 2009, at the NYT, link: http://www.nytimes.com/2009/02/05/business/05madoff.html.
Tuesday, February 17, 2009
Monday, February 16, 2009
Let's see: Obama, AB Columbia, JD Harvard; Clinton, AB Wellseley, JD Yale. Three Ivy League degrees out of four. You might think these two know something. Islam's jihad began in 622 AD, long before Marx was born. Did either of these two ever hear the term, "jiyza"? What do they think Islamists believe Western foreign aid is? Fools! Do Islamists attack India or the Phillipines because of each's great wealth? What's going on here? See also my 11 September 2008 post: http://skepticaltexascpa.blogspot.com/2008/09/foreign-policy-and-other-realists.html.
Sunday, February 15, 2009
Saturday, February 14, 2009
"Gone are the days when support for the radical right cane from neo-Nazi elements in European society; they now come from ordinary citizens, concerned not only about bleeding social welfare programs, but also from worries about the continued influx of immigration--a feeling that it is likely to worsen as recession hangs over the continent. 'I voted for the Freedom Party to stop immigrants from burdening our social welfare system,' says Lukas, a grandfatherly figure and government employee. ... Such is the dynamic in today's European race relations. A December Pew Research Center's Golbal Attitudes Project reports anti-immigrant, and especially anti-Muslim sentiments, to be growing steadily across the continent. ... As European Muslims demand more mosques, state-funded Islamic schools, and even the implementation of Sharia (Islamic law) in their host countries, the term [Islamization] refers to the gradual process by which European society is becoming increasingly and visibly Muslim. ... Sharia courts have already been adopted in many cities in the UK after persistent demands by British Muslims. ... High immigration from Muslim nations, combined with fertility advantages, means that ethnic Europeans might lose their demographic counterpoise: a fact that touches a raw nerve with many. ...The sense that Europe is under seige is further heightentd by concerns over the welfare system being overtaxed by non-natives", my emphasis, Handan Satiroglu, 29 January 2009, link: http://www.alternet.org/module/printversion/122868.