Chrysler vs. $25B

Just as a friendly reminder, the current CEO of Chrysler is Bob Nardelli. The same Bob Nardelli that actually got ran out of Home Depot a few years back for sending their business into the ground. He got a $210M severance for his troubles. Caused quite an uproar a few years back.

I'm sure that bailout money will be well spent, no?

Quotes on Truth

Everything we hear is an opinion, not a fact. Everything we see is a perspective, not the truth.
Marcus Aurelius

The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is.
Winston Churchill

Proverbs are always platitudes until you have personally experienced the truth of them.
Aldous Huxley

The truth knocks on the door and you say, go away, I’m looking for the truth, and it goes away. Puzzling.
Robert M. Pirsig

One fool will deny more truth in half an hour than a wise man can prove in seven years.
Coventry Patmore

People say they love truth, but in reality they want to believe that which they love is true.Truth does not do as much good in the world as the semblance of truth does evil.
Duc de La Rochefoucauld

More at The European Rationalist

W as Cause of Mortgage Collapse

Lots of you "dead enders" still deny W had any role in the Mortgage Collapse. For you and others that like things spelled out, the "liberally biased" AP goes the distance:

AP - US diluted loan rules before crash

By MATT APUZZO

WASHINGTON (AP) — The Bush administration backed off proposed crackdowns on no-money-down, interest-only mortgages years before the economy collapsed, buckling to pressure from some of the same banks that have now failed. It ignored remarkably prescient warnings that foretold the financial meltdown, according to an Associated Press review of regulatory documents.

"Expect fallout, expect foreclosures, expect horror stories," California mortgage lender Paris Welch wrote to U.S. regulators in January 2006, about one year before the housing implosion cost her a job.

Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way.

"These mortgages have been considered more safe and sound for portfolio lenders than many fixed rate mortgages," David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.

The administration's blind eye to the impending crisis is emblematic of its governing philosophy, which trusted market forces and discounted the value of government intervention in the economy. Its belief ironically has ushered in the most massive government intervention since the 1930s.

Many of the banks that fought to undermine the proposals by some regulators are now either out of business or accepting billions in federal aid to recover from a mortgage crisis they insisted would never come. Many executives remain in high-paying jobs, even after their assurances were proved false.

In 2005, faced with ominous signs the housing market was in jeopardy, bank regulators proposed new guidelines for banks writing risky loans. Today, in the midst of the worst housing recession in a generation, the proposal reads like a list of what-ifs:

_Regulators told bankers exotic mortgages were often inappropriate for buyers with bad credit.

_Banks would have been required to increase efforts to verify that buyers actually had jobs and could afford houses.

_Regulators proposed a cap on risky mortgages so a string of defaults wouldn't be crippling.

_Banks that bundled and sold mortgages were told to be sure investors knew exactly what they were buying.

_Regulators urged banks to help buyers make responsible decisions and clearly advise them that interest rates might skyrocket and huge payments might be due sooner than expected.

Those proposals all were stripped from the final rules. None required congressional approval or the president's signature.

"In hindsight, it was spot on," said Jeffrey Brown, a former top official at the Office of Comptroller of the Currency, one of the first agencies to raise concerns about risky lending.

Federal regulators were especially concerned about mortgages known as "option ARMs," which allow borrowers to make payments so low that mortgage debt actually increases every month. But banking executives accused the government of overreacting.

Bankers said such loans might be risky when approved with no money down or without ensuring buyers have jobs but such risk could be managed without government intervention.

"An open market will mean that different institutions will develop different methodologies for achieving this goal," Joseph Polizzotto, counsel to now-bankrupt Lehman Brothers, told U.S. regulators in a March 2006.

Countrywide Financial Corp., at the time the nation's largest mortgage lender, agreed. The proposal "appears excessive and will inhibit future innovation in the marketplace," said Mary Jane Seebach, managing director of public affairs.

One of the most contested rules said that before banks purchase mortgages from brokers, they should verify the process to ensure buyers could afford their homes. Some bankers now blame much of the housing crisis on brokers who wrote fraudulent, predatory loans. But in 2006, banks said they shouldn't have to double-check the brokers.

"It is not our role to be the regulator for the third-party lenders," wrote Ruthann Melbourne, chief risk officer of IndyMac Bank.

California-based IndyMac also criticized regulators for not recognizing the track record of interest-only loans and option ARMs, which accounted for 70 percent of IndyMac's 2005 mortgage portfolio. This summer, the government seized IndyMac and will pay an estimated $9 billion to ensure customers don't lose their deposits.

Last week, Downey Savings joined the growing list of failed banks. The problem: About 52 percent of its mortgage portfolio was tied up in risky option ARMs, which in 2006 Downey insisted were safe — maybe even safer than traditional 30-year mortgages.

"To conclude that 'nontraditional' equates to higher risk does not appropriately balance risk and compensating factors of these products," said Lillian Gavin, the bank's chief credit officer.

At least some regulators didn't buy it. The comptroller of the currency, John C. Dugan, was among the first to sound the alarm in mid-2005. Speaking to a consumer advocacy group, Dugan painted a troublesome picture of option-ARM lending. Many buyers, particularly those with bad credit, would soon be unable to afford their payments, he said. And if housing prices declined, homeowners wouldn't even be able to sell their way out of the mess.
...

Sarah Palin's "Fear"

Scott Horton at Harper's

In a speech in Des Moines, Iowa, on Saturday, Republican Vice Presidential candidate Sarah Palin told the crowd that an Obama presidency would present the specter of a socialist state in which fundamental American freedoms are undermined.

...

Does Sarah mean a state:

* That snatches its victims off the street, denies them all form of legal process and whisks them away to secret “blacksites” where they can be tortured using all the techniques described in Arthur Koestler’s Darkness at Noon?
* That arrests and prosecutes its political adversaries for imaginary crimes so as to eliminate them from the running in election cycles in which they could do some damage?
* That destroys the careers of professional military men because they got promotions under a prior regime and therefore considers them disloyal?
* That believes it can detain and hold its enemies forever without any charges or any evidence against them, denying them access to courts to prove their innocence?
* That constantly manipulates the population’s fear whenever its public popularity slips and elections begin to approach?
* That believes that it can make no errors, and that those who point to its errors are traitors?
* That systematically spies on millions of its citizens in direct violation of a criminal statute which forbids such surveillance?
* That signs new laws with its fingers crossed in the form of signing statements, so that no one knows whether the laws—or any part of them—will actually be enforced?
* That lies to its people about threats from abroad in an effort to build popular support for a series of wars and then cites the existence of those wars as a reason to suppress dissent?
* That nationalizes the debt of predatory capitalists so they suffer no punishment for their misconduct and then nationalizes major financial institutions, converting the nation’s free market system into a socialism in which crony capitalists are a privileged elite?

Sarah, you have no need to fear the future.

The Monkey Analogy

Once upon a time, in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each.

The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them.

The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort.

The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching.

The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one.

The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf.

While the man was away the assistant told the villagers, 'Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each.'

The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again, and once again there were monkeys everywhere.

Welcome to Wall Street

CodeWeaver Frustration

Love this:

Codeweaver.com

Press Releases
CODEWEAVERS' SOFTWARE FREE FOR DOWNLOAD THANKS TO GEORGE W. BUSH AND FALLING GAS PRICES
Giveaway Triggered in CodeWeaver's Great American Lame Duck Presidential Challenge; "We take full responsibility for global economic collapse," says CEO

SAINT PAUL, Minn. (October 27, 2008) – The catastrophic cratering of the global economy, falling gas prices and President George W. Bush's recent executive activities have indirectly prompted Saint Paul gadfly software developers CodeWeavers, Inc., to provide free software for every American on Oct. 28, company officials reluctantly announced today.

In July, CodeWeavers – whose software lets Mac OS X and Linux users run Windows programs without having to Microsoft for a Windows OS license – launched the Great American Lame Duck Presidential Challenge (lameduck.codeweavers.com) to encourage President Bush to make the most of his remaining days in office by accomplishing a major economic or political goal by January 20, 2009.

The goals focused on President Bush making specific positive accomplishments in areas such as the economy, home values, the stock market, the war on terror and other key issues. Specifically, one goal called for President Bush to help down bring average gasoline prices in the Twin Cities to $2.79 a gallon.

On Monday, Oct. 14, gas prices in Minneapolis and St. Paul did just that.

"That morning, I was filling my tank at Big Steve's Gas Palace in St. Paul," said Jeremy White, president and CEO of CodeWeavers. "I had just finished my morning corn dog and 64-ounce Dr. Pepper when I looked at the pump and noticed gas was at $2.79. I screamed ‘Woohoo,' then I yelled ‘Oh, crap!' as I realized every American can now have my software for free. Kind of upsets my fourth quarter revenue projections..."

White admits this is not how he foresaw the Challenge unfolding.

"I launched the campaign to inspire President Bush to make the most of his final days in office. Who knew that our Challenge would have this kind of impact on the country?" White said. "On the other hand, who knew that the economy would implode, causing oil demand to drop into the abyss and gas prices to plummet as well. Clearly, investigating Bear Stearns, AIG and those guys is misplaced – CodeWeavers is responsible for this mess. So it's free software for all!"

How to Get the Free Software
On Tuesday, Oct. 28, 2008, any one visiting the CodeWeavers' Web site (www.codeweavers.com) will be given a deal code that will entitle them to one free copy of CodeWeavers' award-winning CrossOver software. Each copy comes complete with support.

"I realize that by giving away all my software, I've caused horrific damage to my company's bottom line," White said. "In fact, our vice president of sales wretched Starbucks all over his shirt when he learned the news. But, I figure, the way the economy is going, in a few months everyone might be out on the streets, wearing potato sacks and standing in line for squirrel soup, so why not?"

White also noted that if other Great American Lame Duck Presidential Challenge goals are met, CodeWeavers will once again provide free software. Goals include:

* Return the stock market to it's 2008 high
* Reduce the average price of a gallon of milk to $3.50
* Create at least one net job in the U.S. this calendar year
* Return the median home price to its Jan. 1, 2008 level
* Bring Osama Bin-Laden to justice

About CodeWeavers

Founded in 1996 as a general software consultancy, CodeWeavers today focuses on the development of Wine: the core technology found in all of its CrossOver products. The company's goal is to bring expanded market opportunities for Windows software developers by making it easier, faster and more painless to port Windows software to Mac OS X and Linux. CodeWeavers is recognized as a leader in open-source Windows porting technology, and maintains development offices in Minnesota, the UK and elsewhere around the world. The company is privately held. For more information about CodeWeavers, log on to www.codeweavers.com.

The Sanctity of Religion Amendment

On the way to a ballot box near you:




California Proposition 3 - The Sanctity of Religion Amendment

Due to the popularity of Proposition 8, the Sanctity of Marriage amendment, California will be introducing next year the Sanctity of Religion amendment to the California constitution.

Proposition 3 is simple and straightforward. It states simply that "Judaism is the only religion that is valid or recongnized in the state of California."

Voting YES on Propostion 3 does 8 simple things:

It restores the definition of religion to what God originally meant.

It overturns the outrageous decisions of activist judges and politicians that ruled that other cults call themselves a religion.

It protects our children from being taught in public schools that other cults are the same as the one, original, traditional religion and prevents other consequences to Californians who will be forced to not just be tolerant of the other, newer cults but to face mandatory compliance regardless of their religious beliefs.

It will increase funding for math education in our schools.

Please vote YES on Proposition 3, coming to your town November 2009.

Sub-Prime Crash

Remember when we all sat around and laughed when Japan invested in billions of dollars of US commercial real-estate? Remember how funny it was to watch the market decline and see the smug Japanese lose billions?

Weren't those the days?

Good times.

Of Canaries

I've worked hard all my life. Went to school, studied hard, kept my nose clean.

I've been laid off twice in the last 8 years. Typical response? Go back to school. Re-train yourself to the "new economy". Outsourcing is the new reality. Get used to it. The economy's fine.

So please tell me why the hell I should get so worked up when dozens of $100M plus types fuck themselves and the rest of us out of all our money? Don't I understand the importance of this bailout?

Look Johnny-come-latelies, I've been at this for *years* and not a single one of you fuck managed to give a shit. Everybody was fine with our jobs being shipped to India. Everybody was fine that we were becoming a "service (servant?) economy".

Welcome to my world everyone. I screamed for years that this economy was going into the shitter and nobody cared.

Pardon the hell out of me if Wall St. sliced its own throat. What does it take to get you people's attention anyway? You elected this president *twice*? Once... everyone makes mistakes... but twice?

I've got an idea. Why don't we just outsource Wall St.? It worked for everyone else's jobs. I'm sure there's someone in India that will be willing to lose billions of dollars for a measly $100M paycheck.

Let Wall St. go back to school and re-train themselves.

Halloween Ice Cream

I've heard of people making Liquid Nitrogen (LN2) Ice Cream. Since ice cream creaminess is a function of ice crystal size and ice crystal size is a function of how fast a liquid freezes, LN2 ice cream is theoretically about the pinnacle of ice-cream...um... creaminess.


So it's 8 p.m. tonight and the family and I are on our way back from running errands. Zacky had ice-cream for dessert and we got... to watch him eat it. (It came with his kid's meal for free and at the time we weren't interested enough to pay for it ourselves. At least until we watched him almost literally wallow in vanilla ice cream for nearly 10 minutes. It really is incredible the amount of pleasure a child can get out of ice cream.

Aaaannnnyhooo, so we're driving home and the thought of ice cream is popping into my head repeatedly. Of course any sane person would say, "Hey hon, let's drop by the store on the way home and pick up a quart of Bryers" and call it a night.

But the rest of us aren't satisfied with something so simple and want to "make it from scratch" because we know it will be "better". That's when I get an idea.

Like the rest of us, when I "get an idea" it is usually best kept to myself, as admitting I have an idea is akin to the proverbial redneck bellow, "Hey ya'll, watch this!"

Not so much out of intelligence or cunning, but more out of being afraid that the missus will be smart enough to put the kibosh on it immediately, I don't say, "I have an idea" but rather, "Would you like me to make some ice cream tonight?". She replies, "Isn't it kind of late?", to which I reply "don't worry". I can tell she's immediately starting to worry. Smart woman.

So liquid nitrogen is not exactly readily available near us, nor do I know where to find it unreadily available at 8 p.m. on a Friday night. I *do* recall, however, the local foodstore carrying dry ice. Frozen nitrogen, frozen carbon dioxide, what's the difference?

I'll skip to the chase. When you decide to make ice cream, there are two long waits: The first is waiting for the hot custard to cool enough to be put into the ice-cream machine. The second is the wait for the final ice-cream to harden in the freezer. We're talking *hours*. Dry ice should shorten both of those enough -- methinks -- to enjoy ice cream before bedtime!

I get the custard made and it's just hit 170F. Normally I would put it in an ice bath to cool enough before porting over to the fridge. I'm impatient, so I decide to pound the dry ice into bits (suprisingly easy, but don't do this while the kid's sleeping ... FYI) before pouring it into the hot custard.

Did I mention that one should not attempt this if the pot is over half full? Surely most of you would know better than that, so I didn't need to tell you. What I can pass along is that pouring a bunch of dry ice into an almost full pot at 170F is the equivalent of putting a jet engine under a pot of silly putty and turning it up to '11'.

The pot immediately starts boiling like crazy and sputtering (ok, spraying) hot custard all over the cooktop, the counter tops, the floors and the cook. Rather than resting on its laurels, the new devil custard then decides to deplay some sort of cloaking device in the form of gaseous CO2. The stove is immediately so full of fog I can't even see the custard boiling over and filling up the burners, which I had luckily already turned off. Turning off the flame (again) to lower the violence quotient has no effect as the cooktop has long since stopped putting energy into this little dynamo. No "off" button available there.

Eeek! Quickly, I think to pour the custard/dry ice combo out of the hot pot and into the ice cream mixer (which has been in the freezer overnight) and will be much cooler than the hot pan the custard's currently occupying. Mission accomplished. The demented custard calms down quickly.

Ok, everything's cool now (almost literally) and I decide to go ahead and put the beater in and start mixing. Everything's fine until some of the dry ice starts getting agitated again and now the custard is boiling over in the stand mixer. The little beater is blowing a steady column of smoke that circles the pot as the paddle spins. Think Thomas the Train Engine meets the Dementers from Harry Potter. The mix then solidifies enough to start climbing up the beater paddle. Somehow this iniquitous liquid is managing to take over the *top* of my mixer just as fast as the bottom. What the hell is this, some sort of superfluid?

After a while it calms down a bit and I build up the courage to approach it, using a spoon for defense. Take my word for it, having ice cream *hiss* at you like some pissed-off jungle lizard is not a pleasant experience. I screw up my nerve and take a spoonfull.

All I can say is "wierd". It has a built-in effervesence very similar in feeling and taste to a root beer float... only no root beer. The only good experience so far tonight.

Rather than lose what little soft-serve progress I have made, I dismantle the mixer and scoop what I can into a tupperware bowl. The beater itself has frozen into a solid mass and has to be chiseled off.

Ten seconds after popping the lid onto the tupperware, the possesed ice-cream pops it back off. Great, it's still trying to escape. It dawns on me that the escaping gas is pressurizing the contain enough to blow the lid. Fine. Whatever. Who needs a lid? I put it in the freezer, slam the door shut and retreat.

So, long story short, don't try to make ice-cream with dry ice unless you make a batch *way* smaller than your equipment can handle. And also do it when the family is out of town and you don't have to explain why the kitchen looks like a science fair project.

Firstly, read the instructions that come with the dry ice. Instruction number 40-something says, "Don't store in a working freezer". It gives no reason.

Great. Maybe the shit takes over freezers too. I'm afraid to go check. Maybe I'll let it have the fridge. We've been wanting a new one anyway.

Taxes are too high! (Diatribe)

Jesus Christ! Will this red herring never die? Lower taxes! Lower
taxes! What do you idiots smoke?

Lowering taxes is no better than raising taxes. Stop the bullshit.

While Republicans have you ninnies running around screaming "lower
taxes" and "Libruls raise taxes" they're raping all of us blind.

If taxes are so Goddamned important, perhaps you should all sit down
and tell us unenlightened WHAT THE FUCKING CORRECT TAX RATE IS. Don't
say, "0" or "there is no level" or "no one knows" or "it depends".
GIVE US A FUCKING NUMBER OR SHUT UP. If you don't know what the
correct level of taxes is, then you can't say they're "too high".

And while all of you are running around parroting this fucking
Republican talking point, you're completely ignoring the idiots that
are in power and WHAT THEY'RE DOING WITH YOUR MONEY.

Don't like "high" taxes? THEN STOP GIVING TAX BREAKS TO OIL
COMPANIES, HALIBURTON, FARMERS WHO GROW NOTHING, DEADBEAT ON WELFARE,
etc. Most importantly, STOP POURING MONEY BILLIONS INTO THE SAND.

Jesus fucking Christ, always with the "lower taxes", "libruls raise
taxes" horseshit while never uttering a peep of "oh, maybe *my*
politician is one of the thousands who are building bridges to
nowhere, paying Congress a huge retirement fund or giving money away
to every croney he can find through outright corruption". Gosh, why
do we need such high taxes to begin with, huh?

If you want to talk about our politicians, what they are doing wrong
and how we can work together to fix it, please share. If you're just
gonna bellyache about how all of our problems are due to some
fictional rival political group, save it for the Rush call-in hour or
sod off.

Coercion Via Mob

These tactics are not limited to the domain of dictators.


The Times Online

On Saturday night the radio sprang to life in the kitchen. It was my father-in-law. “There's a chanting mob outside the pack-house,” he said.

My heart was throbbing already. I pushed the transmit button: “OK. Keep us informed,” I replied.

Laura, my wife, went to try to phone people and get them to pray. Why had our workers not told us about this pungwe, I thought? It must be a mob from outside our area. I could hear them chanting a mile down the road from our house. I wondered, as I had done so many times before, if this was it.

The mob moved on towards us and then past. We were given another night's grace.

Last weekend we had a big pungwe - a political indoctrination meeting - on the farm. It was after Mugabe had come to our little town of Chegutu, southwest of Harare, and addressed the crowd with threats of “war”. A pungwe starts when the shadows lengthen and the sun goes down and darkness falls over the land. It does not stop till after the sun has risen again.

All our workers had to go, as well as all their wives with babies and any children over the age of 12. Some of them didn't go; so the mob sent little bands of chanting youth militia with sticks to fetch the absentees, drag them out of their houses and beat them for non-attendance. Through the night we heard the chanting and the slogans and the re-education speeches ringing out into the cold darkness for hour after hour after hour. On and on it went, striking fear into my heart. I got up and paced around in the cold night, listening.

When the first birds began to sing, I thought: “How can these birds sing after such a night as this?” Then the birdsong was drowned out. There was a terrible noise like a swarm of bees. I knew the beatings had begun again and I listened helpless, tormented, in fear but praying fervently.

I spoke to our workers later. “Mount Carmel workers were all made to stand to one side,” Amon said. “We were shaking because we were so afraid of what was to happen to us. Those that had been polling agents for MDC had water poured over them.”

It was a frosty morning. “The major [Major Tauye, brought in from the Army to run pungwes in Chegutu district] was waving his gun around everywhere,” he went on.

I learnt that the MDC polling agents were made to put their forehead on the ground and lift their whole bodies up on their toes and then hold the position as they shook in the cold. After some time they were given sticks and had to beat each other.

The Major then said: “You say we beat you! We don't beat you! You are the ones that beat!”

“Will the people vote?” I asked.

“We are in pain but we cannot speak because we do not know who will tell. Even if we make a report the police will not help,” Amon said.

I had seen the hope for a better future draining out of him. He had been kicked off one farm already and I sensed he was worried we would throw in the towel too.

“I will not leave,” I said. “They must shoot me if they want me off.”

I remembered another friend whose workers were sobbing when she was forced to pack up a couple of weeks ago after three generations on the farm. They knew they were on their own then, voiceless in the wilderness.

On Friday morning I went to see James Etheridge. He had been evicted in the darkness earlier in the week by Senator Madzongwe's men and the local hit man, Gilbert Moyo, with a large mob. James was in a borrowed shirt because all his clothes had been stolen. We were trying to see if there was anything that hadn't been looted left in the houses.

We drove through the gate and down the drive. Straight ahead there was a line of large rocks blocking the road. As we got closer, men wielding sticks got up and started coming menacingly towards us. Our presence had the effect of a stone thrown into a hornets' nest. Soon the rocks started to fly in our direction. I saw figures running through the bush to try to get around behind us and cut us off. “OK, let's get out of here,” I said and reversed as fast as I could.

Between the Etheridges and ourselves we have spent nearly 30 hours at the police station this week making reports and failing to get a reaction.

Yesterday we finally saw our first observers. We met them at the police station. Having the observers there worked like magic: police reacted and even moved quickly after we reported that all the Etheridges belongings - the ones that had not yet been stolen - had been dumped on the side of the main road.

When the observers left to come to my house, James's wife Kerry and his brother were ambushed and started getting beaten with sticks. The police stood by because they had not brought bullets for their guns and the senator's men were armed. They had to run for it and managed to get away.

While I was on the way back to my family with the observers, our workers were rounded up by youths with sticks going to the pungwe. They started demanding that Laura come out of the house and they beat one of our dogs with a stick at the gate. Then before I got there they headed off again, running across the veldt like a pack of wild dogs seeking their next prey.

The observers didn't know about pungwes; and they have been advised not to go out after dark, so I suppose they will never see them. Almost all Mugabe's campaigning goes on after dark. The pungwes have spread like a great cancer even to town.

Owen, one of our workers in Chegutu, said he has had to go to all-night pungwes for the past three nights.

“Will you be an MDC polling agent again?” I said to Lorence, another worker, this morning.

“Ah no.” he said. “We are too afraid for that. We need to get out of here before the pungwe tonight because they are going to beat us.”I got them into town and gave them fifteen billion dollars each for their bus fares to a “safe” house 80km away.

As I went around town I talked to people. It was tense. They were full of fear and terrible stories about atrocities taking place; but we were together. I could sense a strong undercurrent of solidarity in the common load of suffering that we are all bearing.

None of us knows what will happen next. Dictators like Mugabe do not step down. Like Hitler, they go on till their country is in ruins and their people are in rags. World leaders tut-tut as the crimes against humanity go on unhindered; but their perpetrators live on and travel the world with impunity.

A Species Immersed in Fantasy

Homo sapiens is a bizarre literary ape - one that, outside of working and sleeping, may well spend most of its remaining hours lost in landscapes of make-believe. Across the breadth of human history, across the wide mosaic of world cultures, there has never been a society in which people don't devote great gobs of time to seeing, creating, and hearing fictions - from folktales to film, from theater to television. Stories represent our biggest and most preciously varied repository of information about human nature. Without a robust study of literature there can be no adequate reckoning of the human condition - no full understanding of art, culture, psychology, or even of biology. As Binghamton University biologist David Sloan Wilson says, "the natural history of our species" is written in love poems, adventure stories, fables, myths, tales, and novels.
Jonathan Gottschall

I would argue that this is a big reason why humans so often get detracted into (nay, even manytimes demand) forays of folly. It's a species that enrobes itself in fatasy every day, so it is easily duped into believing that the current dubious scheme will magically solve its problems where other (or perhaps even the same one) has failed every time before.

People's Response to the Approach of Great Danger

"With the enemy's approach to Moscow, the Moscovites' view of their situation did not grow more serious but on the contrary became even more frivolous, as always happens with people who see a great danger approaching.

At the approach of danger there are always two voices that speak with equal power in the human soul: one very reasonably tells a man to consider the nature of the danger and the means of escaping it; the other, still more reasonably, says that it is too depressing and painful to think of the danger, since it is not in man's power to foresee everything and avert the general course of events, and it is therefore better to disregard what is painful till it comes, and to think about what is pleasant."

--Leo Tolstoy, "War and Peace"

Orwell: When a False Belief Bumps Up Against Solid Reality

". . .we are all capable of believing things which we know to be untrue, and then, when we are finally proved wrong, impudently twisting the facts so as to show that we were right. Intellectually, it is possible to carry on this process for an indefinite time: the only check on it is that sooner or later a false belief bumps up against solid reality, usually on the battlefield."--George Orwell, In Front of Your Nose

Airlines Closed for Maintenance

Here we have yet another example of how BushCo's "deregulation" has in reality been exposed as simple "you donate to us and we won't enforce any regulation on your industry"-style corruption.

For the fifth(? Really, who counts instances of Bush Admin corruption anymore?) time in less than two weeks, another airline cancels thousands of flight to perform inspections that had been skipped before they were exposed. Reuters: American Airlines cancels over 900 flights
Whistleblowers tell of airlines failing to perform required inspections and when the inspectors attempt to report this up the chain of command, they are threatened with losing their jobs.

John Stewart had an interesting observation:

"It’s all sort of ironic, when you think about it. When you fly, you are inspected quite thoroughly. Whereas the plane itself is perhaps occasionally vacuumed. See, with this administration, if a passenger blows up a plane, it’s a failure on the War on Terror. But if a plane just blows up on its own, eh, that’s the market self-regulating."

Derivatives Not Worth Re-Possessing?

The Big Picture posits an interesting question: What if the amount of money required to determine the value of all these derivatives makes it to expensive and thus not worthwhile to do? Will they just be discarded as unsaleable?

There is an elephant in the room that I haven't yet seen discussed: The UnTradeables.

In our discussion last week on SFAS 157, there was a subtext not articulated: The broad category of items that are actually too illiquid to trade. These include "one offs" such as Dry Cleaning stores, non-chain restaurants, Mom & Pop shops.

They are untradeable because the amount of research into each item, relative to their market cap/size, makes it too inefficient. No one will spend $100k for the due diligence on a $200k store.

For a while, Pez candy dispensers were an UnTradeable -- until eBay created a market where these can be effectively bought and sold. However, the total value of all the Pez dispensers in the world wasn't measured in the trillions, or even 100s of billions. Even tho they are relatively illiquid, their small capitalization makes it viable. And don't forget, there is no leverage involved in any of the eBay items. Hence, no margin calls.

Now consider the size of the derivative marketplace based upon mortgages: Everything from RMBS to CDOs to CDC. It runs into the trillions.

If they cannot be effectively priced, are these products essentially untradeable?

Consider these factors:

• The price relative to the requisite cost of research/due diligence;

• The size of the market relative to the overall regular and ongoing demand for that investment product;

• The buyers and sellers with an expertise and knowledge of this paper.

This may be the crux of the issue with subprime/derivative problem: The paper is, or at least should be, Untradeable . . .

Presidency 2008 As Political Cartoon

Geez, I wish I had drawing skills. I don't, so I will have to rely on the 1,000 words.

The following scene came to me this weekend as I attempted to go back to sleep between bouts of cramps from a stomach flu. (I'm sure that had no bearing on the subject.)


Imagine that you are adrift in the ocean.

Rescue Option 1: USS Obama - US Coast Guard-ish vessel, moving slowly at first, but more swiftly by the minute. As she gets closer, you see that she's an old girl, with lots of recent battle wounds, but her decks are manned by your countrymen. They work steadily and eagerly to repaint the hull and decks, to repair battle damage, neglected parts and replacing outmoded equipement. As she nears you, a well-organized crew hurls a life-preserver your way. You're hauled aboard, given medical treatment and returned to shore swiftly.

Rescue Option 2: USS Clinton - The same vessel as above, but not much repair is taking place. Actually, most of the crew that's not involved in bickering, backstabbing or outright fistfights have relegated themselves to opposite sides of the vessel. On a bright note, there is one attractive deckhand that seems above the fray. It's the Chief Officer, Bill! He's expressing his desire to help you, but somehow gets distracted by a female deckhand and fails to do anything to help you as the vessel lumbers by.

Rescue Option 3: USS McCain - The hind-most portion of the vessel is a modern ship, but for some reason deckhands from every country seem to be fitting strange, wooden appendages marked "Made in China" all over the ship...they seem to be converting it to an 18th-century British Man O'War...

The few Americans you can see are manning the guns, which are firing madly in all directions while ship changes course erratically, giving a sense of having no clear target in mind. A few of the shells whiz by and you hope out loud that their firing doesn't kill you before they can rescue you.

As the ship occasions closer, you can see that the decks are lined with fat, white businessmen, lounging, telling jokes and smoking cigars. Occasionally, a business man will pick up a flaming $100 bill that has flown from the ship's stacks and uses it to light a new Havana Gold. The businessmen don't seem fazed by either the blasting of the guns or the smouldering mess of burning currency that flies from the stacks and litters the decks.

Large holes keep appearing in the hull. More businessmen, only smaller and thinner than those lounging on deck busily cut holes through the hull and have formed a thriving market of selling the pieces of hull to each other.

The ship's PA alternates between describing the yet invisible land ahead (a paradise to hear him tell it!) and telling you not to worry as God is going to save you.

As the ship draws near, you can that the bridge is lined with pictures of George W. Bush in royal attire. You hear someone mutter a profanity from the rear engine room ("So"?) but the figure disappears before you can make out his identity.

As the ship passes, the deckhands raise what appears to be an anchor, its top portion painted into the shape of a golden cross. They yell something to you, but you can't make it out (Spanish? Chinese?). Before you can deduce their meaning, they drop the anchor on you and the ship continues on.

Credit Crunch Explained

Courtesy Interfluidity

Credit Crisis for Kindergarteners

David Leonhardt notes that it's pretty hard to explain what's going on in the financial world these days (ht Felix). Here's how I'd tell the tale to a child:

Alice, Bob, and Sue have ten marbles between them. Whenever one kid wants another kid to take over a chore, she promises a marble in exchange. Alice doesn't like setting the table, so she promises Bob a marble if he will do it for her. Bob hates mowing the lawn, but Sue will do it for a marble. Sue doesn't like broccoli, but if she says pretty please and promises a marble, Bob will eat it off her plate when Mom isn't looking.

One day, the kids get together to brag about all the marbles they soon will have. It turns out that, between them, they are promised 40 marbles! Now that is pretty exciting. They've each promised to give away some marbles too, but they don't think about that, they can keep their promises later, after they've had time to play with what's coming. For now, each is eager to hold all the marbles they've been promised in their own hands, and to show off their collections to friends.

But then Alice, who is smart and foolish all at the same time, points out a curious fact. There are only 10 marbles! Sue says, "That cannot be. I have earned 20 marbles, and I have only promised to give away three! There must be 17 just for me."

But there are still only 10 marbles.

Suddenly, when Bob doesn't want to mow the lawn, no one will do it for him, even if he promises two marbles for the job. No one will eat Sue's broccoli for her, even though everyone knows she is promised the most marbles of anyone, because no one believes she will ever see those 17 marbles she is always going on about. In fact, dinnertime is mayhem. Spoons are placed where forks should be, and saucers used for dinner plates, because Alice really is hopeless in the kitchen. Mom is cross. Dad is cross. Everyone is cross. "But you promised," is heard over and over among the children, amidst lots of stomping and fighting. Until recently, theirs was such a happy home, but now the lawn is overgrown, broccoli rots on mismatched saucers, and no one trusts anyone at all. It's all a bit mysterious to Dad, who points out that nothing has changed, really, so why on Earth is everything falling apart?

Perhaps Mom and Dad will decide that the best thing to do is just buy some more marbles, so that all the children can make good on their promises. But that would mean giving Alice 19 marbles, because she was laziest and made the most promises she couldn't keep, and that hardly seems like a good lesson. Plus, marbles are expensive, and everyone in the family would have to skip lunch for a week to settle Alice's debt. Perhaps the children could get together and decide that an unmet promise should be worth only a quarter of a marble, so that everyone is able to keep their promises after all. But then Sue, the hardest working, would feel really ripped off, as she ends up with a much more modest collection of marbles than she had expected. Perhaps Bob, the strongest, will simply take all the marbles from Alice and Sue, and make it clear than none will be given in return, and that will be that. Or, perhaps Alice and Bob could do Sue's chores for a while in addition to their own, extinguishing one promise per chore. But that's an awful lot of work, what if they just don't want to, who's gonna force them? What if they'd have to be in servitude to Sue for years?

Almost whatever happens, the trading of chores, so crucial to the family's tidy lawns and pleasant dinners, will be curtailed for some time. Perhaps some trading will occur via exchange of actual marbles, but this will not be common, as even kids see the folly of giving rare glass to people known to welch on their promises. It makes more sense to horde.

A credit crisis arises when many more promises are made than can possibly be kept, and disputes emerge about how and to whom promises will be broken. It's less a matter of SIVs than ABCs.

Mission Accomplished!

The Fed makes $200B in loans to US banks, secured by sub-prime debt: The Big Picture

This effectively transfers $200B (not counting similar loans in the recent past as well as future ones that are undoubtedly on the way) of worthless debt on the shoulders of the US government.

Grover Norquist infamously stated, "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub."

Old Grover must be already printing the next "Mission Accomplished!" banner.

Who knew that he wanted to include world financial markets as well?
BBC: Northern Rock Get Bailout
IHT: IKB Bailout

We Have Arrived

The Republicans have now had complete control of the government (for all practical purposes) for 6 of the past ~8 years and since November have been challenged only by the most Milquetoast of congresses.

Arguably, we now stand ready to receive the full glory promised to us by the blessed Republican theology.

What do we have?

- An economy is shambles and headed further downward quickly.
- An unregulated lending market for housing has resulted in ~20% drops in housing prices with no end in sight. Foreclosures approaching levels from the Great Depression.
- Oil is trading for $104 per barrel and increasing every day.
- The dollar is dropping like a rock with $1000 gold and rising.
- A unnecessary quagmire of incompetence financed by debt. [Which one? Ed.]
We lost Vietnam, but we'll get 'em this time! [Oh, that one. Ed.]
- A former American metropolis still reeling from catastrophic losses.
- A paranoid Decider searching our mail, tapping our phones and smirking endlessly while pushing for the One More Tax Cut that will land us in glory. (Here's $300, go spend it on something nice!)


(Cue Blondie) Raaapture!