> Nadeau: 09.08

Thursday, September 25, 2008


It turns out greed is not so good

A reader and Joe Bageant stare over precipice
Let's make a little wager. How long will it take before Social Security is privatized in order to "save Social Security?" Which by sheer coincidence would also pour billions more into Wall Street hands.

Pisses me off. I was counting on Social Security. I just filed for it last month. I'm sure I will get a check all right, paid in fiat currency. Source

Fortune magazine laid it out in 2007
When it comes to markets, we hold these truths to be self-evident: (1) It's never different this time, and (2) Every boom leads to financial excesses that spark its undoing. (That's why they're called business cycles.) "The necessary conditions for a bubble to form are quite simple and number only two," investor Jeremy Grantham noted in a recent newsletter headlined "The First Truly Global Bubble." "First, the fundamental economic conditions must look at least excellent - and near perfect is better. Second, liquidity must be generous in quantity and price: It must be easy and cheap to leverage." That pretty much sums up the world we've been living in, a world where prices skyrocketed for Miami condos, Indian stocks, and office towers in Dubai. Source

And, BTW, ailout isn’t socialism – it’s fascism
As Progressive Review reports:
Brady Wiseman in Bozeman MT writes to note, "Bailing out the banks is not socialism. The government and the Fed are not becoming exactly the creditors of the banks. Because the numbers are so large, they are now partners. It's not a bailout so much as a merger. What do you call the merger of government and corporations? Mussolini called it fascism."

Wiseman is quite right. We let ourselves get caught in the rhetoric of the day in which you can call anything you don't like socialism, but god forbid you use the term fascism. In the past, however, we have addressed this matter:

Sam Smith, 2006 - One needs to look not at Hitler but at the founder of fascism, Mussolini. What Mussolini founded was the estato corporativo - the corporative state or corporatism. Writing in Economic Affairs in the mid 1970s, R.E. Pahl and J. T. Winkler described corporatism as a system under which government guides privately owned businesses towards order, unity, nationalism and success. They were quite clear as to what this system amounted to: "Let us not mince words. Corporatism is fascism with a human face... An acceptable face of fascism, indeed, a masked version of it, because so far the more repugnant political and social aspects of the German and Italian regimes are absent or only present in diluted forms." Source

SQUIBS
Spengler: E pluribus hokum
OJ trial summary
Catholics allowed on British throne
Orang-utans victims of tainted Chinese baby food

posted by Tom Nadeau at 5:42 PM 0 comments

Friday, September 19, 2008

'Nervous Nellie' wasn't a woman;
he was a Republican appointee

Wall Street's bad dream

Consumers are already twitchy in America, where bank failures are rising and the nation’s deposit-insurance fund faces a potential shortfall. The failure of Washington Mutual (WaMu), a troubled thrift, could at the worst wipe out as much as half of what remains in the fund, reckons Dick Bove of Ladenburg Thalmann, a boutique investment bank. WaMu was said this week to be seeking a buyer.

No less worrying are the cracks appearing in money-market funds. Seen by small investors as utterly safe, these have seen their assets swell to more than $3.5 trillion in the crisis. But this week Reserve Primary became the first money fund in 14 years to “break the buck”—that is, to expose investors to losses through a reduction of its net asset value to under $1—after writing off almost $800m in debt issued by Lehman.

Any lasting loss of confidence in money funds would be hugely damaging. [...] Some analysts see a wave of corporate defaults coming. Moody’s, a rating agency, expects the junk-bond default rate, now 2.7%, will rise to 7.4% a year from now. Like many nightmares, this one feels as if it will never end.

The Economist | 9.18.08


Second wave coming

Banks in Europe and the US will suffer a second wave of massive losses from the credit crunch over the next few months that could leave some fighting for survival with little access to additional funds, according to a report by credit rating agency Standard and Poor's.

The Guardian/UK | 9.19.08


Graft scandal rocks Philippines bench

[Associate Justice Vicente] Roxas is the third CA justice to be dismissed by the Supreme Court. Associate Justice Demetrio Demetria was found guilty in 2001 of interceding in behalf of a suspected Chinese drug queen. In 2007, the SC dismissed Associate Justice Elvi John S. Asuncion after finding him guilty of "gross" ignorance of the law in relation to a labor case and for failure to resolve other cases within the prescribed period.

Charges of corruption have hounded the appellate court. Delays in hearings, failure to decide cases on time and questionable rulings allegedly for pecuniary gains have hurt the court’s credibility. The existence of a "mafia" in the bench is a favorite subject in legal circles.

Graft, unfortunately, has gnawed into the roots of the country’s judicial system. Weak and slow-moving is the criminal justice process. The national police, according to the Commission on Human Rights, is the principal violator of human liberties. The prosecution service is often incapable of pursuing airtight cases. The weaknesses of the courts have inspired popular battlecries like "justice delayed is justice denied" and "those who have less in life should have more in law." Life in most city, municipal and provincial jails is a throwback to the 18th century penal system.

Manila Times | 9.19.08


Squibs

de Tocqueville was uncannily correct
Ads for ‘unfeasibly large breasts’ criticized
Blue chips now cheezy
Right-wingers tend to be 'Nervous Nellies'
Gold and oil go up then down

posted by Tom Nadeau at 5:37 AM 0 comments

Thursday, September 18, 2008

Corporate pigs race to trough

The American Way: rob poor to save rich

I read the whole thing. The article from the always self-interested, system-friendly Wall Street Journal was tougher than many other articles pouring out of the mainstream news organizations , but there was clearly still a lot of bald-faced soft-pedaling going on.

For instance, there was:

-- No mention of criminal prosecutions.
-- No mention of recovering any of the inflated salaries paid to the executives who caused the collapse.
-- No mention of defunding the trillion-dollar Iraq/Afghanistan adventures to help cover the costs.

All that is quietly hinted at is the assumption that the hapless taxpayer must and will -- as night must follow day -- be the ultimate savior of the failed banks, companies and crooked individuals who who created, exploited and profited from the scam.

And that means fewer services for the public and higher taxes and cost impostions on the powerless taxpaying bottom 90 percent of of the public which, under these circumstances, is the group least able to afford to do it.

That's point blank robbery of the impoverished many to protect the enriched few.

Joseph Stiglitz offers a 6-part solution
to borrowing against pyramid scheme

The problem:
For all the new-fangled financial instruments, this was just another one of those financial crises based on excess leverage, or borrowing, and a pyramid scheme.

The new "innovations" simply hid the extent of systemic leverage and made the risks less transparent; it is these innovations that have made this collapse so much more dramatic than earlier financial crises. But one needs to push further: Why did the Fed fail?

First, key regulators like Alan Greenspan didn't really believe in regulation; when the excesses of the financial system were noted, they called for self-regulation -- an oxymoron.

Second, the macro-economy was in bad shape with the collapse of the tech bubble. The tax cut of 2001 was not designed to stimulate the economy but to give a largesse to the wealthy -- the group that had been doing so well over the last quarter-century.

The coup d'grace was the Iraq War, which contributed to soaring oil prices. Money that used to be spent on American goods now got diverted abroad. The Fed took seriously its responsibility to keep the economy going.
[…]
Finally, at the center of blame must be the financial institutions themselves. They -- and even more their executives -- had incentives that were not well aligned with the needs of our economy and our society.

They were amply rewarded, presumably for managing risk and allocating capital, which was supposed to improve the efficiency of the economy so much that it justified their generous compensation. But they misallocated capital; they mismanaged risk -- they created risk.
Now the solution.

All of them pigs, dining from same trough

It is my experience that psychiatry, Scientology and fundamentalist religions are turnoffs for genuinely critical thinkers. Critical thinkers are not so desperate to adjust and be happy that they ignore adverse affects -- be they physical, psychological, spiritual or societal. Critical thinkers listen to what others have to say while considering their motives, especially financial ones; and they discern how one's motivation may distort one's assumptions.

Quote for the day from Mark Gilbert

Investment banks won't be writing much business in the coming weeks, busy trying to unwind the trades they did with Lehman and working out where the U.S. bailout of Fannie Mae, Freddie Mac and AIG leaves them.

Belatedly, they are discovering the truth of another Buffett aphorism; unraveling a derivatives trade, the so-called Oracle of Omaha [Warren Buffet] said, is like trying to carry "a cat home by its tail." The scratches, however deep, will heal eventually; the scars, though, will linger for years.

Squibs

Brokers like to jog, fish, masturbate, study shows
Italian operas in deep $$ trouble
Killer karate gangs
One divorce lawyer for each of his 86 wifes

posted by Tom Nadeau at 4:28 AM 0 comments

Tuesday, September 16, 2008

Living cheaply; why you'll have to



The increased exercise is really starting to have a positive effect on me, though, as all those energising endorphins kick in. Studies have shown that cycling for at least 30 minutes a day gives you a level of fitness equivalent to being 10 years younger. I'm cycling nearly two hours a day at the moment, 82 miles so far this week, so if I keep this up I'll be fit as a fiddle in no time.
[…]
Living on £1 a day isn't easy, and is certainly not for those of us who enjoy life's little luxuries. But clearly there are ways to save money and escape the cycle of consumption without becoming penny-pinching militants.

The day after my challenge ends, I meet the human-rights campaigner and Green Party member Peter Tatchell at his south London council flat. In spite of his media profile and obvious earning potential, he survives on a mere £7,000 a year. "By British standards I'm poor, but by global standards I'm rich, so I count myself lucky. I've had opportunities to earn quite a lot of money, but material wealth has never been a motive. I'm driven by my idealism, not by a desire to keep up with the latest fashion or consumer durables," he says.

Tatchell sums up a point I've been struggling to get to grips with all week. "Not only is antimaterialism good for the soul and good for the planet, but it shows how we could all get by on much less if we had different priorities. I appreciate that not everyone can live my kind of lifestyle, but if we all reduced our consumption we'd be well on the way to tackling global warming and ensuring a more equitable global distribution of resources."

Meanwhile, complete US bankruptcy near
Most Americans, including the presidential candidates and the media, are unaware that the US government today, now at this minute, is unable to finance its day-to-day operations and must rely on foreigners to purchase its bonds. The government pays the interest to foreigners by selling more bonds, and when the bonds come due, the government redeems the bonds by selling new bonds. The day the foreigners do not buy is the day the American people and their government are brought to reality.

This is not the financial position of a superpower.
Will what happened to Lehman Brothers today be America’s fate tomorrow?

SQUIBS
2 videos succinctly explain financial fix we’re in
Crash! Shares tumble with Lehman
A Brit view of where collapse takes us
Rewarding failure
Kunstler had it laid out…
...but average Americans still have not a clue

posted by Tom Nadeau at 8:28 AM 0 comments

Monday, September 15, 2008


Wall Street, reality iceberg collide

In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer.

The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.

But even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group appeared to teeter. Staggered by losses stemming from the credit crisis, A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.

The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.

“My goodness. I’ve been in the business 35 years, and these are the most extraordinary events I’ve ever seen,” said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration.
[...]
Early Monday morning, Lehman said it would file for Chapter 11 bankruptcy protection in New York for its holding company in what would be the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago, the Associated Press reported.

Questions remain about how the market will react Monday, particularly to Lehman’s plan to wind down its trading operations, and whether other companies, like A.I.G. and Washington Mutual, the nation’s largest savings and loan, might falter.

Some details and opinions
Meltdown as bank collapses
Derivatives did it
Market collapse: 'no end in sight'
Expect run on other brokers, expert warns
‘Obsession with property must end’

In other good news
Vegetarians face brain shrinkage

Beer, wine and being fat don’t help, either.
Brain scans of more than 1,800 people found that people who downed 14 drinks or more a week had 1.6% more brain shrinkage than teetotallers. Women in their seventies were the most at risk.

Beer does less damage than wine according to a study in Alcohol and Alcoholism.

Researchers found that the hippocampus-the part of the brain that stores memories - was 10% smaller in beer drinkers than those who stuck to wine.

And being overweight or obese is linked to brain loss, Swedish researchers discovered. Scans of around 300 women found that those with brain shrink had an average body mass index of 27. And for every one point increase in their BMI the loss rose by 13 to 16%.

posted by Tom Nadeau at 5:45 AM 1 comments

Saturday, September 13, 2008


Today’s picks

Funeral homes in the news
This should inspire some horror movie scripts
9/11 heroes breakfast from paper plates at funeral home
Wedding, dinner, dance at funeral home

For a behind-the-scenes look at the funeral business, consider reading this.

And, for the environmentally conscientious, here are some suggestions on how to green your funeral.

Then, too, there is always composting.

Meanwhile, airlines are also dropping dead. As many as 30 are expected to go belly-up before the year’s out.

posted by Tom Nadeau at 7:59 AM 0 comments

Friday, September 12, 2008


Greenpeace verdict fallout

What is particularly galling for the backers of coal-fired power stations is that, because of the amount of damage alleged to have been done at Kingsnorth, the case went to a jury rather than a magistrate. The crown prosecution service and many corporations know that campaigners who challenge the law by non-violent action are being regularly
acquitted by juries.

In the past decade, prosecutions of protesters against GM crops, incinerators, new roads and nuclear, chemical and arms trade companies have all collapsed after defendants argued that they had acted according to their consciences and that they were trying to prevent a greater crime. Greenpeace itself has a four-nil record against the crown using the same defence and was widely known to be seeking a jury trial to present complex arguments about coal and climate change.

"They were pretty confident that a jury would listen to them more than the government," said one lawyer yesterday. "It gives them a platform. I doubt that we will see another climate change jury trial for many years."

"We are seeing a pattern emerging. The public is increasingly speaking through the courts," says Martyn Day, a partner with Leigh Day solicitors, which specialises in environmental cases. "These cases are a good guide to public mood and politicians should take close heed of them. It shows that society is greatly concerned about what is happening with the environment and that it is suspicious of government and business when they say they are acting responsibly.

"We're looking at a society which is far more in tune with the environment than in the past. Politicians and companies have not understood that most people now understand the issues. There's a feeling that government and the authorities have not been paying sufficient heed, and that the courts are righting the balance," he said.

SQUIBS

Oddball
’Terminally ill’ Briton gives savings away,
doesn’t die, now broke and suing|Herald/Australia
Older than they looked|Jonathan Turley

Religion
Pope, ‘poofter devils’ crack prosecuted|Times of London
Scientology faces fraud trial in France|Der Spiegel

Politics
Cockburn: Democrats panic over Palin|First Post
Scandal of Fannie, Freddie bail-out|First Post

Monterey memories
Bye-bye butterflies: Logging threatens monarchs|Guardian/UK
Steinbeck armed|Monterey Herald

Lifestyle
Studio hybrid

posted by Tom Nadeau at 4:30 AM 0 comments

Thursday, September 11, 2008


Jury sides with environment

This jury verdict will certainly have an impact in Britain, but also could have a psychological impact worldwide.

The Independent/UK reported Sept. 11, 2008 that:
The threat of global warming is so great that campaigners were justified in causing more than £35,000 worth of damage to a coal-fired power station, a jury decided yesterday. In a verdict that will have shocked ministers and energy companies the jury at Maidstone Crown Court cleared six Greenpeace activists of criminal damage.

Jurors accepted defence arguments that the six had a "lawful excuse" to damage property at Kingsnorth power station in Kent to prevent even greater damage caused by climate change. The defence of "lawful excuse" under the Criminal Damage Act 1971 allows damage to be caused to property to prevent even greater damage – such as breaking down the door of a burning house to tackle a fire.

The not-guilty verdict, delivered after two days and greeted with cheers in the courtroom, raises the stakes for the most pressing issue on Britain's green agenda and could encourage further direct action.

The trial before a jury of nine-women and three men lasted eight days.
The acquittal was the second time in a decade that the "lawful excuse" defence has been successfully used by Greenpeace activists. In 1999, 28 Greenpeace campaigners led Lord Melchett, who was director at the time, were cleared of criminal damage after trashing an experimental field of GM crops in Norfolk. In each case the damage was not disputed – the point at issue was the motive.

“This verdict marks a tipping point for the climate change movement,” as one participant said.

This in my opinion would fall into the category of “jury nullification” – an “of the people, by the people and for the people” concept of law governments, judges appointed by government officeholders and corporations greatly fear.

Corporations especially fear it, for it rattles them so to think that, after paying all those bribes, they might still not have total control of society.

SQUIBS:

News
Obama's prospects called ‘gloomy’|Guardian/UK
LHC: where no news is good news|The Independent/UK
The bailout, house prices, and you|David Lee Smith
2008 foreclosures will top 1 million|MarketWatch

Features
And, in closing, here’s a little song |YouTube
Now, the way it really ended|BBC

posted by Tom Nadeau at 9:13 AM 0 comments

Wednesday, September 10, 2008

New format (beta) and a hippie surprise



RATHER than send you many suggested links separately, I thought I would start sending them in one package so you would only get one email from me per day. With luck, you'll get even fewer.

This is how they would arrive (beta):

Fannie, Freddie takeover ‘farcical’|Financial Sense
The ‘board-up' guys|MSNBC
Savers are suckers|Business Week
The Harvard School of Felons|The Trumpet
Prop. 13 bars tax reductions|Lansner
Graphing the rise and fall|Knol

OH, HIPPIE DAYS! Here is a link to the eBay site where one can buy the first three issues of the San Francisco Signal magazine.

Out of the blue I thought, "I wonder what I'd get if I Googled the Signal." And there it was.

The Signal was the monthly journal Ron Jackson and I put out so long ago. That would be the early ‘70s.

I recall we eventually did about 12 issues, 11 maybe, with many modificatons in the format and style. These were the first three. They got larger in format and fatter with content.

Jim Cherry did the cover and art for the first issue and the standing heads for the inside columns. Ron did the China Clipper story, which he later expanded into a book that sold pretty well.

Over the issues we interviewed many famous people in the Bay Area. You can see by the covers we talked to KQED reporter Marilyn Baker before she broke the Patty Hearst/SLA story and to SF Chronicle columnist Art Hoppe, who advised me how to get a job in newspapers. "Go out to the boonies."

We also met, interviewed and wrote about such people as the porn producing brothers Artie and Jim Mitchell (a/k/a ‘the Mitchell Brothers') and some of their stars, including Marilyn Chambers. We covered Chambers and the premier of the classic (and now comparatively tame) movie, Behind the Green Door at the O'Farrell Theatre in 1972.

It's interesting that our 50-cent magazines are now selling on eBay for $69.99 -- Each!

posted by Tom Nadeau at 5:55 AM 0 comments