Tuesday, 30 September 2008

In Passing

Democrats steal the march on laptop searches *again*

Senator Feingold of Wisconsin is offering the most detailed legislative proposal yet to rein in the essentially unfettered authority customs officials have claimed to search laptops, cell phones, and other electronic devices travelers bring into or out of America.

Under a 29-page bill Mr. Feingold introduced on Friday, customs agents at airports and borders would need to document a “reasonable suspicion” before inspecting a computer or similar device carried by an American resident and could only hold on to the device for 24 hours before starting the process of seeking a warrant from a judge.

“Requiring citizens and other legal residents of the United States to submit to a government review and analysis of thousands of pages of their most personal information without any suspicion of wrongdoing is incompatible with the values of liberty and personal freedom on which the United States was founded,” a preamble to the bill declares.
Senators Akaka of Hawaii, Cantwell of Washington, and Wyden of Oregon, all of whom are Democrats, are co-sponsoring the legislation. - The Sun

Wouldn’t it be refreshing to hear the Republicans call anything “incompatible with the values of liberty and personal freedom on which the United States was founded”? Just for a change?


Posted by: Old Grouch in In Passing at 18:37:42 GMT | No Comments | Add Comment
Post contains 219 words, total size 2 kb.

Saturday, 27 September 2008

In Passing

This time it’s Wal-Mart

Have we not been here.before?
Yah, ve have been here.before!

Important Information About Your Digital Music Purchases

We hope you are enjoying the increased music quality/bitrate and the improved usability of Walmart’s MP3 music downloads.  We began offering MP3s in August 2007 and have offered only DRM (digital rights management) -free MP3s since February 2008.  As the final stage of our transition to a full DRM-free MP3 download store, Walmart will be shutting down our digital rights management system that supports protected songs and albums purchased from our site.
You’ve got until October 9th to back ’em up.  Isn’t that special!

Via:  BoingBoing

Posted by: Old Grouch in In Passing at 21:22:07 GMT | No Comments | Add Comment
Post contains 106 words, total size 2 kb.

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.

Thursday, 25 September 2008

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

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

“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

[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

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.

Friday, 19 September 2008

In Passing

“Avast! Avast!”

“A vast WHAT?”

“I dunno, but it’s pretty big!

(Stolen from Barry Took and Marty Feldman, writing for Kenneth.Williams and Kenneth Horne in “Round the Horne”)

Posted by: Old Grouch in In Passing at 16:33:44 GMT | Comments (1) | Add Comment
Post contains 28 words, total size 2 kb.

Thursday, 18 September 2008

In Passing

Did the FASB precipitate “the Worst Crisis Since the ’30s?”

Zachary Karabell has an opinion piece in today’s Wall Street Journal that, if accurate, goes a long way toward explaining how we got to where we are in the current banking crisis.  His thesis: It’s “the revenge of Enron:”

The collapse of Enron in 2002 triggered a wave of regulations, ...[including changes in]... accounting rules that forced financial service companies to change the way they report the value of their assets (or liabilities).  Enron valued future contracts in such a way as to vastly inflate its reported profits.  In response, accounting standards were shifted by the Financial Accounting Standards Board and validated by the SEC.  The new standards force companies to value or “mark” their assets according to a different set of standards and levels.

...Beginning last year, financial companies exposed to the mortgage market began to mark down their assets, quickly and steeply.  That created a chain reaction, as losses that were reported on balance sheets led to declining stock prices and lower credit ratings, forcing these companies to put aside ever larger reserves (also dictated by banking regulations) to cover those losses.

In the case of AIG, the issues are even more arcane.  In February, as its balance sheet continued to sharply decline, the company issued a statement saying that it “believes that its mark-to-market unrealized losses on the super senior credit default swap portfolio . . . are not indicative of the losses it may realize over time.”...

What AIG was saying then, and what others from Lehman to Bear Stearns to the world at large have been saying since, is that the losses showing up aren't “real.”

Now I’ll be the first to admit that “I don’t understand all that I know” about this level of accounting.  (I have enough trouble keeping my checkbook balanced, and pay somebody else to do my taxes).  But I can at least buy this part of his argument, because Wall Street Journal front page headline, September 18, 2008 it make sense: Current value of an asset is relatively meaningless, unless you’re trying to sell that asset right now.

Obviously, that isn’t absolutely true (what about your Enron stock, hmmm...?).  But haven’t we been told, time and again, that this is the rule behind buy-and-hold investing?  You buy on fundamentals, ignore the transient ups-and-downs, and plan on selling out later (often years later) at a nice profit.
The value of the underlying assets -- homes and mortgages -- declined, sometimes 10%, sometimes 20%, rarely more.  That is a hit to the system, but on its own should never have led to the implosion of Wall Street.  What has leveled Wall Street is that the value of the derivatives has declined to zero in some cases, at least according to what these companies are reporting.

There's something wrong with that picture: Down 20% doesn't equal down 100%.  In a paralyzed environment, where few are buying and everyone is selling, a market price could well be near zero.  But that is hardly the “real” price.
But the current rule requires companies to account for derivatives at those “market” prices, and the companies had signed on to other agreements that relied on the resulting figures.  The combination has produced a cascading failure similar to what happened to those who bought stocks on margin just before the 1929 crash: Mousetrapped by a momentary downward spike in prices, they had to sell out, forcing prices (and market confidence) down even more.

So is mark-to-market a bad thing?  Karabell spends several column-inches to explain how AIG’s “complex and opaque” business model was difficult to understand, and how the pricing of “derivatives based on derivatives” was even more complex.  (To me, that’s a red flag right there: What’s the old saying, “never invest in a business you don’t understand?”)  Then he argues that all this complexity militates against regulation:
Legislators and agencies would be wary of passing rules regulating how a semiconductor chip is programmed [Ha! Only because they haven’t thought of it yet! -o.g.]; they would recognize that while the outcomes those chips produce might be simple, the way they produce them is not.
Karabell obviously has more faith in the wisdom of legislators (and their regulatory-agency minions) than I, but his point that stupid regulation screws up markets remains valid.  But as long as the markets are being bailed out with public money, some form of regulation will be there.

Enron deceived investors by pricing its futures contracts artificially high.  Today we have all these firms whose assets consist of complex financial instruments that, in compliance with FASB rules, may be priced artificially low.  Those instruments will ultimately be worth... what?  Is it even possible to predict a current value based on future expectations?  When we unwind all the computer models and complex calculations, doesn’t it mean, bottom line, trusting that something is worth what someone else says it is?

Right now the market isn’t trusting any of the numbers, and I defy the “smart people” to write a regulation that would give us numbers that the market would trust.  We’re pretty safe in accepting that zero isn’t accurate, but, here and now, what is?  And if we’re going fudge the numbers, how can we insure that the fudging we do is equally fair to buyers and sellers (or borrowers and lenders)?  Short answers: We don’t know, and we can’t.

Not that there isn’t opportunity...
A few years from now, there will be a magazine cover with someone we’ve never heard of who bought all of those mortgages and derivatives for next to nothing on the correct assumption that they were indeed worth quite a bit.
But that “someone we’ve never heard of” will have most likely been risking his own money.

The complete WSJ article:

Posted by: Old Grouch in In Passing at 16:52:44 GMT | No Comments | Add Comment
Post contains 949 words, total size 8 kb.

Wednesday, 17 September 2008

In Passing

Well, it’s a start...

From Ars Technica:

Customs and Border Patrol agents can grab your laptop, BlackBerry, or external hard drive without needing so much as a reason, but a new bill introduced last week to Congress would at least put some limits on how border searches could be done.
The bill wouldn’t eliminate arbitrary searches, but it
...requires the government to draft additional rules regarding information security, the number of days a device can be retained, receipts that must be issued when devices are taken, ways to report abuses, and it requires the completion of both a privacy impact study and a civil liberties impact study. Travelers would also have the explicit right to watch as the search is conducted.
The sponsor is a Democrat, Loretta Sanchez of California.

The bill doesn’t stop (or even limit) Customs’ “no reason” searches (so the national security paranoids shouldn’t object).  What it does is give the search-ees some assurance that their data won’t be disseminated to the four winds, and that they’ll eventually get their stuff back.  It also requires some reporting, so we can find out how much of a problem this actually is.

It’s a no-brainer.  Hey Republicans, where are you?


Previously:  Why worry?

Posted by: Old Grouch in In Passing at 15:04:48 GMT | No Comments | Add Comment
Post contains 217 words, total size 3 kb.

<< Page 1 of 2 >>
109kb generated in CPU 0.12, elapsed 0.2407 seconds.
52 queries taking 0.1783 seconds, 218 records returned.
Powered by Minx 1.1.6c-pink.