Archive for
August, 2007
August 24th, 2007
Bloody good.
Sustained literary satire of baby George Bush and his world.
In essence a farce. Yet it often feels as somber and dangerous as Michael Radford’s 1984 with John Hurt, which had not a moment of comic relief.
Much like Brazil, come to think of it.
It may be too literary, too angry and too historically well informed for today’s Young American intellectuals, who seem to believe they’ve seen it all having been raised on television.
Stuffed with references to classic dystopias and movies (the latter voiced by the President, who spends most of his time making B-films). But the mockery lets the gas out before things get uncomfy. On the whole: a light, intelligent touch.
To plot along lines of Revolution Eats its Young is to trade in cliche. But there’s a good reason cliches become what they are.
A great debut by New Yorker Robert Edwards.
The lovely Pan’s Labyrinth, also out late last year, covers some of the same ground — but as a fairytale gone wrong. And couches talk of fascism in its faded historical context: peasants struggling for rights with their fading feudal gentry. Each aspect of the approach was immediately engaging, but in the end, limiting: a No Trespassing sign forbidding the discusison to go where it otherwise would and should.
Whereas Land of the Blind is here and now for grown-ups.
Now for trivia:
Who said: “In the land of the blind, the one-eyed man is king.”
FIRST ONE TO COMMENT with correct answer gets a full copy of the “Bush Wins!” New York Post (a Murdoch tabloid here in Fun City) — the first early edition on the streets about 5 am the morning after the attempted November 2000 election.
August 24th, 2007
When the supposed best & brightest begin to fail en masse, in thundering herds — I mean the losses and collapses of hedge funds this year — stuff flies.
Here, at Bloomberg, a troubled insurance company claims several high-flying Hedgies hired a small-time Economic Hit Man 
to slander the company in order to make good their recalcitrant shorts. Poison pen letters to churches …
Spyro Contogouris, former freelance stock analyst and founder of MI4 Reconnaissance, outside federal court in Manhattan following his hearing in early August.
August 23rd, 2007
“They’ve closed the borders, they’ve cut jobs. Today they’ve cut the electricity, tomorrow they’ll cut the air for us.”
August 21 was the fourth day of no electricity in Gaza. There’s only one power plant and when Israel closed the border the Israeli company supplying the plant its fuel stayed home.
The Nation has some thoughts about the current situation.
As does Blind John Milton, channelling the blinded Samson:
O glorious strength,
Put to the labour of a beast, debased
Lower than bond-slave! Promise was that I
Should Israel from Philistian yoke deliver!
Ask for this great Deliverer now, and find him
Eyeless in Gaza, at the mill with slaves,
Himself in bonds under Philistian yoke.
August 23rd, 2007
Seven Iraq Vets: “The War as We Saw It.”
A group of U.S. veterans fresh from Iraq describe the political debate in Washington on the war as “surreal.”
August 23rd, 2007
See similar
August 23rd, 2007
The Cyclone is a famous rickety hair-raising old rollercoaster at the beach on Coney Island. Here in Brooklyn, New York.
The Murdoch Industrials are still down 900 points from their 14,121 high in July, but they’ve been bouncing this week on bits of good news and/or rumor.
Here are three people writing as to why it may not be safe to go back in the water yet:
Yesterday morning: Todd Harrison, a local-legendary trader and founder of Minyanville.com. Outlines the recent hair-raising news stories.
This morning: Bill Gross, head of the massive bond house in California known by its acronym PIMCO. Gross is certainly one of the most influential people in the bond business. Talks about the crisis of confidence re asset-backed securities and focuses on the mortgage/housing business.
And this morning: David Callaway, editor-in-chief of the very mainstream MarketWatch.com (part of the Dow Jones media empire soon to be consumed by Rupert Murdoch’s News Corp.). About the recent “injections” (addictive?) of credit by the central banks.
This morning the CEO of the biggest mortgage originator, Countrywide (CFC), said that the $2 billion Bank of America is infusing into his company is very nice and will keep it out of bankruptcy for sure, but will not prevent the housing crash from pulling economy into recession.
A snapshot yesterday from a respected options analyst who writes at Minyanville, John Succo:
QUOTE
What the option market is saying…
11:00:45 AM
There is a huge dichotomy in the marketplace.
On one hand, the market in general is being bid back up while government officials try to reassure investors as to the soundness of the financial system. Some of the same officials that originally didn’t see a problem.
On the other, investors are paying prices in options on bank stocks and other financials that indicate bankruptcy.
We can’t have both.
This is not a “wall of worry”. I have never seen option prices this high in big captitalization financial companies. (emphasis added)
Take what you want from that.
Either the stock market in general is going to correct massively, or the buyers of this protection are really making a mistake.
END QUOTE
And finally, from Jumpin’ Jersey Jim Cramer, a relatively CALM assessment of the mortage and housing business, on video.
MY OWN TWO CENTS, based on awareness of how vast the universe of structured finance securities is, and of how confidence in the methodologies used to rate and evaluate them has been shaken, and on watching the mortgage business get dismantled daily, is that the worst is far from over. Recession, asset deflation (houses mostly), prolonged credit contraction. The Dustbowl returneth … But what do I know.
Cyclone sign says, “Hold on to your wigs and car keys!”
August 20th, 2007
Strange as it seems, one yet must read Seymour Hersh’s recent piece detailing the heroism and hazing of Major General Antonio Taguba — author of the Army report on the crimes of American soldiers at Abu Grahib prison in Iraq.
QUOTE
“Here . . . comes . . . that famous General Taguba—of the Taguba report!” Rumsfeld declared, in a mocking voice.
The meeting was attended by Paul Wolfowitz, Rumsfeld’s deputy; Stephen Cambone, the Under-Secretary of Defense for Intelligence; General Richard Myers, chairman of the Joint Chiefs of Staff (J.C.S.); and General Peter Schoomaker, the Army chief of staff, along with Craddock and other officials.
Taguba, describing the moment nearly three years later, said, sadly, “I thought they wanted to know. I assumed they wanted to know. I was ignorant of the setting.”
In the meeting, the officials professed ignorance about Abu Ghraib. “Could you tell us what happened?” Wolfowitz asked. Someone else asked, “Is it abuse or torture?”
At that point, Taguba recalled, “I described a naked detainee lying on the wet floor, handcuffed, with an interrogator shoving things up his rectum, and said, ‘That’s not abuse. That’s torture.’ There was quiet.”
…
“The whole idea that Rumsfeld projects—‘We’re here to protect the nation from terrorism’—is an oxymoron,” Taguba said. “He and his aides have abused their offices and have no idea of the values and high standards that are expected of them. And they’ve dragged a lot of officers with them.”
…
Taguba said that he saw “a video of a male American soldier in uniform sodomizing a female detainee.” The video was not made public in any of the subsequent court proceedings, nor has there been any public government mention of it.
…
The team spent much of February, 2004 in Iraq. Taguba was overwhelmed by the scale of the wrongdoing. “These were people who were taken off the streets and put in jail—teen-agers and old men and women,” he said.
“I kept on asking these questions of the officers I interviewed: ‘You knew what was going on. Why didn’t you do something to stop it?’ ”
…
A few weeks after his report became public, Taguba, who was still in Kuwait, was in the back seat of a Mercedes sedan with [General John Abizaid, then the head of Central Command]. Abizaid’s driver and his interpreter, who also served as a bodyguard, were in front. Abizaid turned to Taguba and issued a quiet warning: “You and your report will be investigated.”
“I wasn’t angry about what he said but disappointed that he would say that to me,” Taguba said. “I’d been in the Army thirty-two years by then, and it was the first time that I thought I was in the Mafia.”
END QUOTE
That the military tends to be a mafia has been reported — by insiders — across almost a century now, going back to experience in our first imperialist war, in the Phillipines, in 1898. The most highly decorated U.S. Marine in history, General Smedley Butler, wrote a famous book on the subject: War is a Racket.
Yet the Americans doing the deeds at Abu Grahib seem to have been rather normal janes and joes. Some of them even reservists. And their forever-adolescent racism and sadism are plain.
One thinks back to the citizen-army of the second world war, which, despite its breakdowns and atrocities, left all of western and mediterranean Europe with the sense of having been rescued by a civilized people.
Television, in the time since, in lieu of reading and liberal education, has transformed us into fascists. Fodder with which the likes of Perle, Wolfowitz, Feith, Rumsfeld, Cheney, have set the world aflame.
Paintings by Allessandro di Meo
August 20th, 2007
A little more than two weeks ago, Friday August 3, markets maveniac Jim Cramer went bananas on CNBC, shouting that the suits at the Federal Reserve Bank were shameful Know Nothings and demanding that they lower interest rates before the world blew up.
In particular, he repeatedly said to “open the Discount Window” by cutting the discount rate, which was then 6.25%. His comely host purred that such a move would brew panic and “cause Armageddon.”
“No,” Q-Ball replied,” we have Armageddon, it wouldn’t cause Armageddon, we have Armageddon, in fixed-income markets we have Armageddon.”
Days before, at its regularly scheduled meeting, the Fed under its new chief Ben Bernanke had barely acknowledged the credit crisis that had been rocking Wall Street and the mortgage business since June, and instead repeated its weathered 
apprehension that inflation remained the greatest threat to the domestic economy.
Almost everybody on Grub Street (except us) got down on Jimbo for behaving so badly on the national tube.
But a week later, the central banks of Asia, Europe and North America — led by the European Central Bank — started pouring hundreds of billions of dollars worth of credit into the system (via short-term loans to money center banks) to keep at least some of the bond markets and basic banking in operation.
And then a week after that (ie, last Friday, August 17) the Fed surprised a lot of people by, voila — lowering the Discount Rate to 5.75%. (The Discount Window is where big banks can borrow short-term directly from the Fed, if they’d like, usually at a higher rate than they can borrow from each other. The latter being the Fed Funds rate.)
More importantly, the Fed issued language with the rate cut that indicated it had changed its mind, expressing concern that the credit fiasco might crush the economy.
So the Fed worry “bias” seems to have shifted a bit from inflation to contraction & deflation. And everybody is now expecting a cut in the more important Fed Funds rate target (currently 5.25%) at the Fed’s September 18 meeting if not sooner.
So then. It might seem that events had justified Jersey Jim’s rant.
Nevertheless, Barron’s this past weekend devoted its cover story to the Mad Money man. 
“Shorting Cramer” points out (as had we) that when Jeremiah Jim blows his horn on his infotainment stock show Mad Money more often than not the trade don’t work out.
But perhaps he who howls last howls best.
For now we have New York Magazine publishing a Cramer feature that paints the Doom & Gloom Scenario with brio and crystal clarity.
For example, Mr Cramer writes:
QUOTE
You’re losing money right now. This very minute. You’re losing money if you own an apartment. You’re losing money if you own a country home. You’re losing money if you own a stock or bond mutual fund. You’re losing money if you have a pension plan. You’re probably losing money here or there, you’re probably losing money everywhere (except maybe from your savings account and wallet). But this is no Dr. Seuss story. It’s more of a John Steinbeck tale, and we are the victims, a new generation of Tom Joads, and it’s the damn bankermen who broke us.
…
This spring, as many homeowners stopped paying, the mortgage bonds—for the first time—starting losing value. Hundreds of billions in bonds that were thought to be worth more or less the price they were sold at, it turns out, are worthless.
That’s triggered a chain reaction: Brokers like JPMorgan, Goldman Sachs, and Merrill Lynch that lent money to the firms that bought the bogus loans—most famously, Bear Stearns—basically foreclosed on those firms to get their cash back. But the firms, which are always running full tilt, didn’t have the money to pay up.
Bear, at the direction of the now-fired former co-president Warren Spector, let one fund just go down the drain. But Spector thought the other was still worth a great deal, so he put up $1.3 billion to pay back what the fund owed to the lenders and take direct control of the mortgage bonds. 
Spector, maybe one of the best minds in the bond business, genuinely believed that these mortgage-backed bonds still had substantial value.
If someone as savvy as Spector thought these bonds were still good when they were actually worthless, that tells you that thousands of other managers are simply dreaming if they think their portfolios are worth anything near what they claim they’re worth.
In other words, we’re looking at the start, not the end, of the lending meltdown.
END QUOTE
August 20th, 2007
From the BBC:
Pet Camel Kills Australian Woman
A woman in Australia has been killed by her pet camel after the animal may have tried to have sex with her.
The woman was found dead at the family’s sheep and cattle ranch near the town of Mitchell in Queensland.
The woman had been given the camel as a 60th birthday present earlier this year because of her love of exotic pets.
The camel was just 10 months old but already weighed 152kg (336lbs) and had come close to suffocating the family’s pet goat on a number of occasions.
On Saturday, the woman apparently became the object of the male camel’s desire. It knocked her to the ground, lay on top of her and displayed what the police delicately described as possible mating behaviour.
“I’d say it’s probably been playing, or it may be even a sexual sort of thing,” the Associated Press news agency quoted Queensland police Detective Senior Constable Craig Gregory as saying.
Young camels are not normally aggressive but can become more threatening if treated and raised as pets.
END QUOTE
August 13th, 2007
A third day now of huge loans being dealt out by the central banks in Europe, Asia and North America to keep financial institutions worldwide liquid. (See story copied below.)
Such “injections” of credit are routine, and big injections are routine during a “liquidity crisis.” (Although the amounts so far this time are approximately double the amounts kicked in following the 9/11 attacks.)
The premise beneath this emergency overnight borrowing is that a liquidity crisis is a passing and irrational phenomenon. And that once it passes and the bond markets are again trading, the trillions in sound (?) investments that currently cannot be valued on the borrowers’ books because nobody is willing to buy them will bounce back to status quo ante valuations, leaving the borrower whole — and the emergency overnighters can be returned to the central bank.
But what if (as worried here in recent weeks) the problem is more substantial than a liquidity panic?
That is: What if the damage done to confidence in the methodologies that the Rating Agencies and bond traders use to evaluate the whole vast range of structured finance bonds (ABS, CDOs and similar) lasts into the mid- and long-term?
Answer: The depressed or non-existent “mark to market” values of the illiquid bonds will remain on the books. The borrowing banks will continue to show huge paper losses and continue to need new cash to run their operations. And will be carrying the cost of these emergency loans.
Thus, if this goes on for any length of time, then the strain on the banks will get worse, not better, as the illiquid investments run their lives and reach maturity or other wind-up conditions and are realized as permanent losses.
But how long will “this go on?”
How long will bonds unrelated to subprime mortgages but nevertheless illiquid and “impossible to value” stay that way? Eg, how long will it take for people to believe that a AAA-rated CDO with no subprime mortgages in the collateral pool will perform as a AAA has always been expected to perform?
How long before the stink of mortgage bonds is bleached from trading desks worldwide?
Nobody knows, but there are plenty of reasons to think the crisis in confidence re rating methodology is rational and thus not likely a passing panic. Temporary like Achilles?
See I’m not There.
ECB injects a further $65 billion into banking system
By Simon Kennedy
LONDON (MarketWatch) — The European Central Bank said Monday that it had provided around 47.5 billion euros ($65 billion) in loans as it continued to try and support liquidity in the banking system.
The latest one-day tender from the central bank came on top of a 61 billion euro cash injection on Friday and the 95 billion euros it provided on Thursday as markets continued to suffer from the effects of the subprime credit crisis.
The ECB said the tender had a weighted average rate of 4.07%. Earlier Monday the Japanese central bank added over $5 billion to markets …
