BB may be writing of Mencius Moldbug's "reset". For years I've said a "discontinuity" is coming. Be patient. It will. Here's a book to read on this topic, Human Accomplishment by Charles Murray (CM), 2003. Despite what you may have learned in politically correct school, most of it was done by dead white guys. The same CM who was co-author of the Bell Curve, 1994? Yeah, that guy.
Sunday, January 31, 2010
"The Fed's 2009 earnings were up 47% from 2008, when the central bank generated a net income of $35.5 billion and transferred $31.7 billion to the Treasury", Meena Thiruvengadam at the WSJ, 13 January 2010, link: http://online.wsj.com/article/SB126333721463026795.html.
Imagine, even the Vampire Squid (VS) is better managed and has more accurate financials than the Fed.
Saturday, January 30, 2010
"Gov. [AS] of California was on the mark when he said this week that the state needed to change policies that spend more money on prisons than on the state's once-vaunted higher education systems, which are being bled to death in budget cuts. Mr. [AS] was way off the mark when he suggested that the answer was to privatize prison services or to pass yet another constitutional amendment, this time to limit prison spending. ... It would generally be impossible for the state to unilaterally lower prison spending without first cutting the prison population dramatically. ... The only real way for California to cut prison costs is to reverse sentencing policies that have filled its prisons to bursting and have driven up costs by about 50 percent over the last decade alone", NYT Editorial, 8 January 2010, link: http://www.nytimes.com/2010/01/08/opinion/08fri3.html.
"Republican Gov. [AS] asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help. ... 'It's time to enact long-term reforms that will change the way the most populous state and the federal government work together,' Mr. Schwarzenegger said. He and state legislative leaders plan to visit Washington to lobby for federal bailout money. White House budget officials weren't available to comment on the governor's request. ... The governor said California deserved the federal funds because the state sends far more tax money to Washington than it receives in return. Federal mandates, he added, 'force us to spend money that we do not have,' ... Mr. Schwarzenegger called the state legislature into a special budget session. He proposed cutting $2.4 billion from health and welfare spending and $1.2 billion from prison spending. He also called for cuts in salaries and pensions for state workers. ... State Senate President Darrell Steinberg, a Democrat, said: 'I have one reaction: You've got to be kidding me.' He and other legislative leaders said they were opposed to any more cuts to welfare and health programs. Instead they said they preferred federal help or taxes on, for example, oil drilling and tobacco sales. ... The state has delayed billions of dollars of payments and issued IOUs to keep the government from defaulting. ... 'My concern at this point is that the negotiations could go on longer than the amount of cash the state has on hand,' said Gabriel Petek, analyst at Standard & Poor's Corp. which has California on a negative ratings outlook", Stu Woo & Jim Carlton at the WSJ, 9 January 2010, link: http://online.wsj.com/article/SB126297948893221947.html.
Friday, January 29, 2010
Thursday, January 28, 2010
The documents should have been filed as Form 8-K attachments. Well Mary Schapiro, what will you do about this? Ban DPW from performing SEC services? If not, why not? If the Fed is not part of the US government it should not be able to sustain a "sovereign immunity" claim. Therefore, someone should have standing to sue it for triple damages under RICO. This case reminds me of Blake v. Dierdoff, 856 F2d 1365 (9th Cir., 1988), which introduced the "group published information" concept. Since one of Blake's attorneys was, drumroll please, William Lerach (WL), we know why the Feds had to get him. Hey Obama, here's an idea: pardon WL, then tell, not ask, tell, Preet Bharara (PB) to take WL as a special AUSA. Or are you afraid this might antagonize your Wall Street supporters? Even better, fire PB and replace him with WL. Let's plead the "group": AIG, AIG's officers, the NYFed, Vampire Squid (VS), DPW, some DPW partners and we'll see who else we can bring into this witches' brew. We know DPW, don't we? Sure, Linda Thomsen, former SEC enforcement director went from DPW to the SEC then back to DPW, my 28 April 2009 post: http://skepticaltexascpa.blogspot.com/2009/04/wsj-mistitles-article-2.html.
Wednesday, January 27, 2010
Tuesday, January 26, 2010
"Argentine President [CK] said she was firing the country's central-bank chief Thursday, escalating a battle over foreign-currency reserves into a nascent constitutional crisis. ... Some Argentine legal specialists also said the president doesn't have the authority to unilaterally dismiss the top banker, saying the dismissal decree is unconstitutional. ... The announcement came after markets closed Thursday. It was unclear how the opposition-dominated Congress would respond, but some if its leaders called for Mr. Redrado not to comply with the decree. ... Argentina's decree, signed by all cabinet members and issued late Thursday afternoon, followed two days of mounting government pressure on Mr. Redrado to transfer $6.57 billion in reserves to a fund Mrs. Kirchner unveiled in December to conver some of Argentina's debt payments. ... The opposition maintains Mrs. Kirchner and her husband and predecessor, Nestor Kirchner, are trying to steamroll the central bank, as they already have the media, the national statistics bureau, agribusiness and other institutions to seize foreign-currency reserves so they can boost patronage spending and sustain their power", my emphasis, Matt Moffett at the WSJ, 8 January 2010, link: http://online.wsj.com/article/SB126289800502920289.html.
"A federal judge blocked President [CK] from using foreign-currency reserves to pay Argentina's national debt and revoked the dismissal of the central-bank chief who opposed that policy. ... On Friday morning, federal judge Maria Hose Sarmiento granted an injunction request by two opposing parties barring the central bank from transferring money into the so-called [BF], which Mrs. Kirchner had hoped to create with $6.57 billion from the reserves. A few hours later, Judge Sarmiento ordered the reinstatement of the bank president, Martin Redrado, whom Mrs. Kirchner dismissed on Thursday for refusing the make the transfer. ... Earlier in the day he defended his action in defying Mrs. Kirchner. 'The reserves belong to all Argentines and if they are to be used for some purposed besides backing the currency, ther matter should go before Congress,' he said. ... Underlying the dispute is the Kirchner administration's need for funds to sustain the Peronist patronage machine. Last year, public spending grew at three times the rate of revenue. ... Now the whole idea of the [BF] may have boomeranged, revealing the fragility of Argentina institutions. ... Roberto Sifon Arevalo, a director in the Latin America Sovereign Ratings Group at Standard & Poor's said compromising central-bank authority is disturbing to investors. 'There is a conceptual reason why people focus on the independence of the central bank,' he said", my emphasis, M&C at the WSJ, 9 January 2010, link: http://online.wsj.com/article/SB126296529801421655.html.
"Few Argentine politicians are prepared to pay the political cost of spending cuts or tax rises to pay off bondholders. As it is [CK] may have turned the Central Bank chief into a martyr for the cause of integrity in public policy", Economist, 9 January 2010, link: http://www.economist.com/world/americas/PrinterFriendly.cfm?story_id=15213761.
My idea: let's swap Redrado for Zimbabwe Ben (ZB) and Robert Schiller! What idiocy, to welcome creating a paper fund instead of reductions in Argentine spending. This fund would have as much substance as the Social Security "lockbox". CK wanted this fund to further her confidence game.
Monday, January 25, 2010
"China has told banks to stop giving commissions to real-estate agents for introducing mortgage customers, as Beijing tries to rein in its property market and unscrupulous lending practices. ... The China Banking Association said Wednesday that the new guideline on housing-loan commissions has been in effect since Jan. 1. ... 'High commissions paid by banks to real-estate agents have seriously disturbed the [financial and real-estate] markets and impacted banks' credit business,' the association said. ... The practice isn't unique to China but has raised regulatory concerns, as banks often reduced lending rates or relaxed lending practices to secure individual mortgage loans, a lucrative sector to lenders, while real-estate agents helped borrowers forge mortgage documents to get higher commissions. ... Central-bank data show that banks extended 952 billion yuan ($139.45 billion) worth of individual mortgage loans in the first three quarters of 2009, nearly four times the amount issued in the same period of 2008. ... In December, prices of new housing in Shanghai rose to an average of 20,187 yuan per square meter, up 8% from November, government data show", my emphasis, Rose Yu at the WSJ, 14 January 2010: http://online.wsj.com/article/SB10001424052748704675104575000322691746914.html.
"Fresh steps to rein in China's booming housing market--one of the engines that has put the country on the cusp of becoming the world's second-largest economy--triggered an international selloff in stocks, as investors grew concerned about the Asian giant's continued growth. ... Wag Shi, head of China's biggest property developer, China Vanke Co., said last month his country is at risk of a Japan-style property bubble if rapid price gains spread beyond major cities. ... Bank of China Ltd. will stop making new loans for the rest of the month, while several smaller banks will have to hold more funds in reserve, according to people familar with the situation. .. Loans from state banks are the cornerstone of the stimulus programs China put in place amid global slowdown more than a year ago. ... Prices of new residential property are now rising at an annualized rate of more than 20% nationwide. ... Both November and December saw a record volume of construction starts, which are up 75% from a year earlier for the quarter. Koyo Ozeki, the Tokyo-based head of Asian credit research for bond-fund manager [PIMCO], says that comparisons of China's real-estate boom with Japan's speculative bubble are overdone, in part because Japan's economy was much more mature in the 1980s than China's is today. ... Even without a crash, a housing market that serves only a narrow slice of the urban elite could turn into a political problem for the rulers in Beijing", my emphasis, Andrew Batson at the WSJ, 21 January 2010, link: http://online.wsj.com/article/SB10001424052748703405704575014703152997616.html.
China today looks like 1989's Japan or California in 2005. From 1989 to 1999 Japanese real estate fell about 80%. Here in Houston, a 1,000 sq. ft. condominium will bring between $40,000 and $175,000 depending on the area. Compared to Beijing, Houston real estate is dirt cheap! Apartments for 80X Beijing's average annual resident income. Wow! Two apartments! Shades of Argentina years ago, when people bought two stoves or televisions not to hold Argentine pesos. "Low interest rates", hear that Zimbabwe Ben, low interest rates can cause bubbles.
Sunday, January 24, 2010
Saturday, January 23, 2010
Illinois is following California. Cut spending.
Friday, January 22, 2010
Thursday, January 21, 2010
"The sudden blow to the case against the former Blackwater security guards over a shooting that killed 17 Iraqis and wounded at least 20 may have come as a surprise to the public in Iraq and the [US], but the legal problem that the judge cited Thursday when he threw out the indictments was obvious to American government lawyers within days of the shooting. The issue was that the guards, as government contractors, were obligated to give an immediate report of what they had done, but the Constitution prevents the government from requiring a defendant to testify against himself, so those statements could not be used in a prosecution. ... The prosecutors were also concerned, even when using qwhat they called a 'taint team' to try to prevent information in the guards' compulsory statements from influencing the investigation, according to the 90-page ruling by Judge Ricardo M. Urbina of the Federal District Court in Washington. The judge said the prosecutors had failed to take 'coomon sense precautions' to avoid the problem. The ruling led to disappointment in the [US] as in Iraq. ... Judge Urbina's decision would make it difficult for prosecutors to reinstate the original charges. Information that the guards were required to give immediately after the shootings was deeply woven into the governments effort to secure the indictments, he wrote. ... Investigators did not find physical evidence of an attack by Iraqis, the judge's decision said. ... But in their presentations to the second grand jury, the prosecutors also edited out evidence that suggested that the guards were firing in self-defense, the judge said, and those omissions were improper", my emphasis, Matthew Wald at the NYT, 2 January 2010: http://www.nytimes.com/2010/01/02/us/02legal.html.
"Iraqis seeking justice for 17 people shot dead at a Baghdad intersection responded with bitterness and outrage Friday at a US judge's decision to throw out a case against a Blackwater security team accused in the killings. The Iraqi government vowed to pursue the case, which became a source of contention between the US and the Iraqi government", my emphasis, Rebecca Santana at the Houston Chronicle, 2 January 2010.
"The dismissal of charges against five Blackwater Worldwide security guards accused by the [DOJ] of recklessly shooting in a Baghdad traffic circle in 2007 potentially strains US-Iraqi relations at a critical moment and raises new questions for the Obama administration about effective legal ovesight of battlefield contractors. ... 'Investigations conducted by specialized Iraqi authorities confirmed unequivocally that the Blackwater guards committed the crime of murder and broke the rules by using arms without the existence of any threat obliging them to use force, Iraqi government spokesman Ali al-Dabbagh said in a statement, the AP reported", my emphasis, August Cole at the WSJ, 2 January 2010, link: http://online.wsj.com/article/SB126229226969112429.html.
Wednesday, January 20, 2010
"We only hope Republicans aren't foolish enough to fall down this trap door, though some are already tempted. A budget deficit commission is nothing more than a time-tested ploy to get Republicans to raise taxes. In the 2009 version, Republicans are being teed up to hold hands with Democrats and agree to become the tax collectors for Obamanomics. The deficit reduction commission is a long-standing idea that is now pushed with renewed fervor by Republican Frank Wolf of Virginia and Democrat Jim Cooper of Tennesse in the House and Democrat Kent Conrad of North Dakota and Republican Judd Gregg of New Hampshire in the Senate. ... Mr. Wolf says the commission would be 'a 16-member panel that would look at everything--from what the government is required to spend on mandatory entitlements to spending on all other programs to tax policy.' ... They're correct that current federal commitments are unsustainable, starting with $37 trillion in unfunded Medicare liabilities. ... The real goal is to get GOP cover for tax increases so Democrats aren't run out of town in 2010 and 2012 for blowing up the national balance sheet. ... In 1983 Ronald Reagan and Congressional Republicans agreed to decades of job-destroying increases in payroll taxes to 'fix' Social Security, which you may have noticed still isn't fixed. ... Democrats would agree to means-tested entitlements, which means that middle and upper-class (i.e., GOP) voters would get less than they were promised in return for a lifetime of payroll taxes. ... New taxes will only reduce the pressure to cut future spending", my emphasis, WSJ Editorial, 29 December 2009: http://online.wsj.com/article/SB10001424052748703939404574566034074899214.html.
Is Romania a better credit than Uncle Sam? Moody's gives Romania a Baa-3 rating. Why?
The GOP should tell Obama and Pelosi, "No tax increases. No hell. No way. We remember Bush the Elder's promise and won't be fooled again". As for means-tested entitlements, consider if tax and social security policy are to be reviewed, what that implies for Roth IRAs.
Tuesday, January 19, 2010
Monday, January 18, 2010
"Facing a $21 billion shortfall through June 2011, California leaders want billions of dollars in budget relief from Washington that could head off deep cuts expected to state programs. Gov. [AS] will ask the White House to waive rules that require the state to spend its own money on certain programs to receive federal funds, according to California officials briefed on the Republican's coming budget proposal. ... His message: The national economy will depend on California's recovery. ... 'Under President Clinton, we got 94 cents back on every dollar we sent,' said gubernatorial spokesman Aaron McLear, citing data compiled by the nonpartisan Tax Foundation. 'Now it's 78 cents on the dollar. It makes no sense that California should be subsidizing programs in other states.' ... If the state doesn't receive federal aid, health and welfare programs could be eliminated, the officials said", my emphasis, Stu Woo at the WSJ, 31 December 2009, link: http://online.wsj.com/article/SB126222107949110937.html.
Absent a federal bailout, I don't see how California can avert defaulting its bonds.
Sunday, January 17, 2010
Saturday, January 16, 2010
My answer: bring back quartering! Don't feed me any third amendment crap either.