Saturday, 27 September 2008

In Passing

Masters of the universe


Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night.

The revelation sparked fury among the workers’ former colleagues, Lehman’s 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments...

A spokesman for Barclays said the $2.5bn bonus pool in New York had been set aside before Lehman Brothers filed for chapter 11 bankruptcy in the United States a week ago.  Barclays has agreed that the fund should continue to be ring-fenced now it has taken control of Lehman's US business, a deal agreed by American bankruptcy courts over the weekend.

Barclays is paying $1.75bn for the US operation of Lehman and is keen to retain its best staff.  It said it had made no promises to individual staff members about how much they will receive but that the bonus fund would be paid out...

Many of Lehman’s UK staff are particularly angry about the US payouts because it has emerged that in the days running up to the bankruptcy, some $8bn in cash was transferred out of the account of the bank’s European business into accounts at the New York head office.

There is no suggestion any of this cash was used to supplement the bonus fund, but partly as a result of the transfers, PricewaterhouseCoopers (PWC), the administrator to the European business, initially found it impossible to guarantee salaries would be paid [to the European employees].
- The Independent
So... Barclays paid $1.75 billion for a “bankrupt” company that, lo and behold!, was sitting on a pile of $2.5 billion in cash.  Which may be perfectly innocent: Those “bonuses” could be commissions due but not paid, and the like.

But the situation still stinks:  How much of that cash will go to the very executives whose mismanagement sent the company into bankruptcy?  If the $2.5 billion had instead been counted as an asset, would there have been any need for bankruptcy at all?  And, finally, there’s that convenient shell game syle cash transfer, just before the filing.

BTW, in case you missed the math:
$2.5 billion spread evenly among 10,000 people = $250,000[1] each.


Via:  Robert, writing to Chaos Manor

-----
[1] corrected 18:39, from “$2.5 million.”  Division error, I blame ragweed.  (Still wouldn’t mind getting a share of that!)

Posted by: Old Grouch in In Passing at 16:03:46 GMT | No Comments | Add Comment
Post contains 417 words, total size 4 kb.

Linkage

From a healthy bank’s perspective...


John Allison, CEO of BB&T, has published an open letter on the “rescue plan.”  Some of his points:

  • There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.
  • It is extremely important that the bailout not damage well run companies.
  • This is a housing value crisis.  It does not make economic sense to purchase credit card loans, automobile loans, etc.
  • The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks.
  • If we had Fair Value accounting, as interpreted today, in the early 1990’s the United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.
Dave Wilson has posted the whole thing.


Via: IP

Posted by: Old Grouch in Linkage at 15:16:40 GMT | No Comments | Add Comment
Post contains 158 words, total size 2 kb.

Meta

Reminder - It’s tomorrow



(Thanks again to Roberta X for the arrangements and the artwork.)

Posted by: Old Grouch in Meta at 14:21:39 GMT | No Comments | Add Comment
Post contains 15 words, total size 1 kb.

Friday, 26 September 2008

Linkage

Here’s your “dirty bomb”? Or “just” chemical weapons?


An Iran-owned ship.  Captured by Somali pirates.  Mysterious illnesses and deaths.  Evasion about the cargo.  Something wicked going down?

The MV Iran Deyanat was brought to Eyl, a sleepy fishing village in northeastern Somalia, and was secured by a larger gang of pirates...  Within days, pirates who had boarded the ship developed strange health complications, skin burns and loss of hair. Independent sources tell The Long War Journal that a number of pirates have also died. “Yes, some of them have died. I do not know exactly how many but the information that I am getting is that some of them have died,”  Andrew Mwangura, Director of the East African Seafarers’ Assistance Program, said Friday...

News about the illness and the toxic cargo quickly reached Garowe, seat of the government for the autonomous region of Puntland.  Angered over the wave of piracy and suspicious about the Iranian ship, authorities dispatched a delegation led by Minister of Minerals and Oil Hassan Allore Osman to investigate the situation on September 4.
...
Once in direct contact, the pirates told Osman that they had attempted to inspect the ship’s seven cargo containers after they developed health complications but the containers were locked.  The crew claimed that they did not have the “access codes” and could not open them.  The delegation secured contact with the captain and the engineer by cell phone and demanded to know the nature of the cargo, however, Osman says that “they were saying different things to different people.”  Initially they said that the cargo contained “crude oil” but then claimed it contained “minerals.”
So far, speculation ranges from yellowcake uranium to toxic waste.  Worth keeping an eye on.


Elsewhere:

Related:

Posted by: Old Grouch in Linkage at 17:03:42 GMT | No Comments | Add Comment
Post contains 307 words, total size 3 kb.

Thursday, 25 September 2008

The Press

John Yardley on the newspaper of the future


The Washington Post’s book critic has a plan.


Below, my reactions...

more...

Posted by: Old Grouch in The Press at 23:50:11 GMT | No Comments | Add Comment
Post contains 1144 words, total size 10 kb.

In Passing

All together, now...


Answering Rhetorical Questions department:

The media theme is Palin is unprepared and has zero knowledge of foreign affairs while Biden has decades of experience.  So why does Biden sound like a complete idiot? . . . Dan Quayle is still a punchline 20 years later.  Joe Biden gets a free pass? - JammieWearingFool
...It seems remarkable that Barney Frank can make the rounds of the television talk shows, pontificating on the current crisis, without being reminded of his own role. - John Hinderaker

Class?  “It’s Because They’re Democrats!”

Adjacent links spotted in today’s Instapundit: 1, 2.  D’ya suppose there’s a pattern?

Posted by: Old Grouch in In Passing at 16:00:42 GMT | No Comments | Add Comment
Post contains 102 words, total size 2 kb.

In Passing

One *great* reason for approving the Paulson bailout


TURNING · OF · THE · TIDE
A brokerage house receives an order to buy ten shares of Goldman Sachs.
(Caption of the 1932 New Yorker cartoon by Rea Irvin)[1]

Not.
“If I didn’t think the government was going to act, I would not be doing anything this week...  I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly.  It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.” - Warren Buffett, on why he just put $5 billion into Goldman Sachs


Elsewhere:
-----
[1] Not posting the image, because I can’t determine whether it’s still in copyright, or not.  So you’ll just have to imagine.

Posted by: Old Grouch in In Passing at 15:28:16 GMT | No Comments | Add Comment
Post contains 145 words, total size 2 kb.

Wednesday, 24 September 2008

Clipfile

Clipfile - September 24, 2008

“If you look at a market crash as a ‘looming depression’ rather than ‘a fantastic once-in-a-lifetime opportunity to buy’ — you probably shouldn’t be playing the stock market.” - S. Weasel

Posted by: Old Grouch in Clipfile at 17:08:56 GMT | No Comments | Add Comment
Post contains 36 words, total size 1 kb.

In Passing

From the Carter administration: Another “gift” that kept on giving


Today’s Investor’s Business Daily[1]:

For those looking for a real start to today’s financial meltdown and government rescue, you need to go back – way back – to 1977, and the Jimmy Carter presidency.

It was then, for the best and purest of reasons [Oh, stop! - o.g.], that well-meaning Democratic members of Congress brought the Community Reinvestment Act into being...

Initially, the CRA was supposed to not just [require that banks] lend to poor areas, but to do so “consistent with safe and sound lending practices.”  That latter key proviso was ignored...  [Not just ignored:  Voided.  See UPDATE below. - o.g.]

Banks... that didn’t pass muster could be denied the right to expand their barnches, merge with other banks, or boost lending in new markets.
So far, nothing that we hadn’t already heard.  But then there’s this...
Regulators didn’t need to do much policing; they let that job fall to radical community groups such as ACORN and NACA, which siphoned literally billions of dollars from banks and lent that money in poor communities...

The community groups booked thousands of dollars in fees for every loan. And loans often required recipients to become active in radical causes – what’s today called “community organizing.”...
Gee, pass a law that lets the leftists extort cash from business.  Which they then use to create more leftists.  How ingenious! And no one objected?
Banks became pliable, easy targets.  No bank CEO wanted to be mau-maued[2] as an enemy of the poor.  They became shakedown targets, channeling billlions of dollars to groups that had, at best, meager results to show for it...
And of course the Republicans didn’t want to get mau-maued by the Democrats and the media, either.  So when they were in a position to stop the merry-go-round, they... did nothing.  Instead they sat back, while this Carter-era activist-support device clattered onward.

31 years and $1 trillion later, the overall homeownership rate is up 5%, with homeownership among blacks still below 50%.  [Figures from the IBD article.]

Find a copy of today’s IBD, and read the whole thing.

UPDATE 0980924 17:30: The story continues (HT: Shooting The Messenger):
...In 1989... Congress amended the Home Mortgage Disclosure Act to force banks to collect racial data on mortgage applicants. By 1991, critics were using that data to paint lenders as racist by showing that minority applicants were approved at far lower rates...

In fact, they found a racial disparity only by ignoring relevant data on applicants' ability to make mortgage payments - such as their assets and credit history.

But the political pressure was intense...  And... in 1992, came a study from four researchers at the Boston Fed, which seemed to bear out the critics’ contentions.

That study was, in fact, based on quite flawed data - but the authors’ political, media and academic protectors stifled most serious criticism, smearing the reputation of one whistleblower and allowing the Boston authors to avoid answering serious academic challenges...  Other studies with different conclusions were ignored.

The very next year [1993], the Boston Fed announced new requirements for banks - rules that have now turned out to be monumentally catastrophic:  Adopt “relaxed lending standards” or risk being labeled as racists, and face serious penalties under the federal Community Reinvestment Act.[3]...

(Of course, the loosened lending standards weren’t limited to poor and minority applicants - that would be discriminatory.)



Elsewhere (added 080924 18:29):

-----
[1] Investor’s Busines Daily, September 24, 2008: “Good Intentions Paved The Road To Subprime-Stoked Meltdown • Carter-era lending act forced banks to make risky mortgage loans” by Terry Jones [article is not online]

[2] And before anybody starts ranting about this term being “insensitive,” see Tom Wolfe.

[3] Now class, who became President in 1993?

Posted by: Old Grouch in In Passing at 16:11:54 GMT | No Comments | Add Comment
Post contains 602 words, total size 7 kb.

Tuesday, 23 September 2008

In Passing

The evil wind (farms)


Not only will wind farms spoil Ted Kennedy’s ocean view (or not), they may also affect weather patterns.

Guess that means we’re gonna be stuck with building more nukes.


(Times link via Insty.)

Posted by: Old Grouch in In Passing at 15:50:00 GMT | No Comments | Add Comment
Post contains 37 words, total size 1 kb.

<< Page 2 of 6 >>
98kb generated in CPU 0.05, elapsed 0.1293 seconds.
50 queries taking 0.0981 seconds, 223 records returned.
Powered by Minx 1.1.6c-pink.