Later On

A blog written for those whose interests more or less match mine.

Archive for September 23rd, 2008

Something’s fishy

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Ezra Klein:

I’m very sympathetic to the point of view that says we shouldn’t be rushed into anything. And David Cay Johnston suggests that you’re not even seeing the first inklings of a spillover to “Main Street”:

Ask this question — are the credit markets really about to seize up?If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why oh why would taxpayers be bailing out banks that are continuing to sell these toxic loans?

It’s a good question, particularly given the fact that we’re dealing with a bailout that is, as Johnston, says, the “equivalent of a one-time 55 percent income tax surcharge” (of course, we’ll borrow the money, so it won’t be paid back now, but will cost even more over time). Weirder, the actions of Paulson and Bernanke don’t match the urgency with which they describe the situation.If Wall Street were teetering on the brink of collapse, their only hope of survival a $700 billion emergency action from the government, they’d be in a state of total desperation and Paulson and Bernanke would be able to dictate terms. As it is, they’re instead creating a package meant to entice firms into participating: They’ll buy assets without demanding equity, purchased the assets at “maturity” rather than current prices, protect them from congressional oversight, etc. If Wall Street is in a position to haggle, it’s hard to imagine it’s also about to collapse. The only way to square that circle is to assume that the traders in charge are betting that they can dictate terms because if they go under, the economy tumbles. If that’s true, we’re looking at a Dead Man’s Gamble — a final, career-making trade that’s leading these guys to play Russian roulette with the entire American economic system. And if that’s the case, Paulson and Bernanke should simply run them over and have Congress strip their autonomy.

Written by LeisureGuy

23 September 2008 at 3:33 pm

Interesting insights into Palin’s career

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From someone who knows her. Story begins:

Sarah Palin’s meteoric rise to political superstardom got its start thanks to Nick Carney, who soon came to regret the move.

Carney, who now lives in Ivins, Utah, has known Palin almost her whole life – his daughter went to school and played basketball with Sarah “Barracuda” Heath. He recruited her to run for office, but says her tenure as mayor of Wasilla, Alaska, was a disappointment, during which she looked out for herself and her cronies who she put in management positions.

Since Palin was nominated to be vice president, he has received countless phone calls from media outlets and he has given less than glowing reviews on his former colleague.

“I’m shocked” that she was picked to be vice president, Carney said Thursday. “And the reason I am has nothing to do with our personal relationship. As a voter, I can’t believe Mr. McCain would pick someone who has no foreign experience, someone who has . . . nothing to offer for solving our economic woes, has, frankly, far less experience in the energy field than she would like to think she does.”

Palin’s recruitment

In 1992, Carney, then president of the Wasilla Chamber of Commerce, and other business owners worked to enact a 2 percent sales tax to create a police department, and ran for city council to make sure the department got funded.

To help the cause, he recruited Palin, then 28, a political newcomer who agreed to run if she got help with the race. The sales tax narrowly passed and both Carney and Palin won council seats.

For 18 months she did a fine job, said Carney. Then she …

Written by LeisureGuy

23 September 2008 at 3:28 pm

Posted in Daily life, Election, GOP

Straight talk

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Via John Cole:

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23 September 2008 at 3:23 pm

Is it as bad as you think? It’s worse.

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Kevin Drum:

Via Propublica, here’s a history of government bailouts starting with the Penn Central bailout of 1970. All adjusted for inflation, of course. Click the link for all the gory details.

Written by LeisureGuy

23 September 2008 at 3:12 pm

Open Spaces, Sacred Spaces

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Very interesting book, it sounds like—and about an extremely interesting project.

Written by LeisureGuy

23 September 2008 at 3:08 pm

Good news

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At least some things are looking up:

Maybe gourmands are not jumping for joy. Probably they would have preferred bigger amounts to support their passion. Though the news is still good for them: 6.7 grams of chocolate per day represent the ideal amount for a protective effect against inflammation and subsequent cardiovascular disease. A new effect, demonstrated for the first time in a population study by the Research Laboratories of the Catholic University in Campobasso, in collaboration with the National Cancer Institute of Milan. The findings, published in the last issue of the Journal of Nutrition, official journal of the American Society of Nutrition, come from one of the largest epidemiological studies ever conducted in Europe, the Molisani Project, which has enrolled 20,000 inhabitants of the Molise region so far. By studying the participants recruited, researchers focused on the complex mechanism of inflammation. It is known how a chronic inflammatory state represents a risk factor for the development of cardiovascular disease, from myocardial infarction to stroke, just to mention the major diseases. Keeping the inflammation process under control has become a major issue for prevention programs and C reactive protein turned out to be one of the most promising markers, detectable by a simple blood test.

The Italian team related the levels of this protein in the blood of examined people with their usual chocolate intake. Out of 11,000, researchers identified 4,849 subjects in good health and free of risk factors (normal cholesterol, blood pressure and other parameters). Among them, 1,317 did not use to eat any chocolate, while 824 used to have chocolate regularly, but just the dark one.

Read the rest of this entry »

Written by LeisureGuy

23 September 2008 at 3:04 pm

Posted in Daily life, Food, Health, Science

Walkies

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Well, so much for monotonic improvement. Same route, hot day, 1 hour 5 minutes 52.72 seconds. But I did walk. 🙂

Written by LeisureGuy

23 September 2008 at 2:56 pm

Posted in Daily life, Health

Very interesting thought

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The financial meltdown marks an epoch. TerranceDC writes in the Booman Tribune:

I admit it, the past week has left me speechless. As I sat and read the news about how the last of the investment banks shuffled off into extinction (kinda; they’re just becoming regular old banks now), it did feel like I was sitting in front of my television again watching the Berlin Wall come down.

In this sense, the fall of Wall Street is for market fundamentalism what the fall of the Berlin Wall was for communism — it tells the world that this way of economic organization turns out not to be sustainable. In the end, everyone says, that model doesn’t work. This moment is a marker that the claims of financial market liberalization were bogus.

Only this time there doesn’t seem to be as much celebrate.

Sure, there’s vindication in the failure of deregulation.

This will come to be seen as the greatest regulatory failure in modern history. The degree of leverage that these institutions took on is indefensible. The average large securities firm was leveraged 27 to one in mid-2007. They were not regulated by any prudential supervisor. In effect, they regulated themselves. The lack of transparency was stunning. Many big lenders did not disclose off-balance-sheet risks. In some cases, they did not understand these risks themselves. More fundamentally, we allowed a second, huge financial system to develop outside the normal banking network. It consisted of investment banks, mortgage finance companies and the like. It was unregulated, not transparent and way too leveraged. But with nine separate and mostly ineffective financial regulators, these risks were ignored. That is, until this second system crashed.

There’s the failure of market fundamentalism — no surprise since, as with other types of fundamentalism, its success depends on the purity of belief and action of all participants. And there lies the irony of the coalition of market fundamentalists and religious fundamentalists under the umbrella of conservatism. They should talk more, really. Because the latter could fill the former in on the whole story of the “fall of man” resulting in a “fallen world,” where “…nobody is born truly innocent and pure, but has the inbuilt desire to sin.”

As long as people are compensated hugely for taking risks with other people’s money, and do not suffer equally on the downside, then those risks will inevitably become outrageous. Whether markets are efficient or not, I don’t know for sure. But I do know that, if there’s a way for someone to make money at another’s expense, he will.

… So where next? And, most important, what should be done? I’ve taken to comparing the current situation to “Hamlet”: We’ve had the deaths of Polonius, Claudius and Laertes – that is, the falling house prices, the rising commodity prices and the collapse of banks. As of now there is no sign of Hamlet himself, a catastrophic fall in the markets. Yet it’s difficult to believe that markets are not going to undergo a climactic implosion some time soon. If the current situation doesn’t fill investors with fear, then what are they smoking?

I believe that, to get to the root of the matter, we have to address the bad side of greed. We know from Ivan Boesky and Gordon Gecko that greed can be good. Greed makes the world go around. It makes people take risks that ultimately lead to economic or scientific advances.

But the greedy must also face the consequences of taking those risks. And thus the current system of compensation at financial companies does not lead to anything good at all.

But the greedy aren’t facing the consequences. At least not that I can see. Not when the administration is asking taxpayers for $700 billion to bail out Wall Street, after already forking over $600 billion in bailouts thus far, and with a potential $1 trillion tab hanging over our heads as a consequence of all this. And to ask for this historic bailout with no strings attached, no accountability on the part of those being bailed out, and complete immunity from any legal or administrative review beats all standing, sitting or leaping records for gall.

No, this crash carries with it none of the hope that came with watching the Berlin Wall come down. Instead, there’s the gnawing sense of dread that I felt after watching the towers come down — and the fear was not so much what outside force might strike next, but what the administration might try to push through in a moment when people were frightened, confused, and desperately wanting someone to “fix it.”

There was a “fix” all right, and the “fix” was in. The “fix” may be in now, too, if we let that gnawing fear get the best of us. …

Continue reading. It’s good. Especially the idea how to pay for the bailout.

Written by LeisureGuy

23 September 2008 at 12:57 pm

Think before acting

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Via Josh Marshall, an informative and thoughtful post on Romenesko that begins:

From DAVID CAY JOHNSTON: Journalists, start your skepticism.

In covering the proposed $700 billion bailout of Wall Street don’t repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don’t assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don’t assume there is a case just because officials say there is.

The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

Ask this question — are the credit markets really about to seize up?

If they are …

Continue reading.

Written by LeisureGuy

23 September 2008 at 12:50 pm

Excellent idea

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ThinkProgress:

The Bush administration’s $700 billion financial bailout is roughly what the United States has spent so far on the Iraq war and would raise the national debt ceiling to $11.3 trillion. Despite the enormous scale of the request, the Bush administration is demanding that Congress “place no restrictions on the administration other than requiring semiannual reports to Congress.”

Sen. Bernie Sanders (I-VT) is one of the few people questioning how the country will pay for this $700 billion package. In an interview with ThinkProgress today, Sanders said that he believes that the wealthiest Americans — who have reaped enormous benefits under the Bush administration — should foot the bill:

[President Bush] has given huge tax breaks to the wealthiest people in this country, and now all these terribly conservative folks, who pride themselves on financial responsibility, want to add $700 billion.

My view: It is the fiscally responsible thing to pay for this — and given the fact that the people on top have done well [under Bush] — through a progressive tax. […]

I’ve believed that Bush’s tax breaks for the wealthy should be repealed for some time. The middle class has shrunk; the rich have become richer. […] They are paying a lower tax rate than working class people.

Specifically, Sanders is proposing a “five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers,” which he says he would “yield more than $300 billion in revenue.”

ThinkProgress also asked Sanders about McCain’s claims that for the past two years, he has “warned” federal officials of problems such as a potential subprime mortgage crisis. Sanders said that since joining the Senate, he has heard very little from McCain on this subject:

Since I have been in the Senate, McCain has been here very rarely. He’s been campaigning, so I have never heard him suggest we’re heading toward the financial crisis we’re facing.

It’s one thing to be critical of those two institutions. It’s a leap to say from that, we’re going to be where we are today.

Written by LeisureGuy

23 September 2008 at 12:37 pm

Posted in Business, Government

More on the Keating Five

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Written by LeisureGuy

23 September 2008 at 12:28 pm

Posted in Business, GOP, Government, Video

Clarification on some aspects of the bailout

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Josh Marshall has some good emails from readers explaining what’s going on.

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23 September 2008 at 12:25 pm

Knut

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Via Cute Overload:

Written by LeisureGuy

23 September 2008 at 11:18 am

Posted in Daily life

Interesting items from ThinkFast today

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ThinkProgress:

Lobbyists are rallying to defeat Sen. Chris Dodd’s (D-CT) alternative bailout proposal, with the banking industry particularly up in arms about a provision allowing bankruptcy judges to lower mortgages for distressed homeowners. “We are vigorously opposing that,” said Steve Verdier, a lobbyist for the Independent Community Bankers Association (ICBA).

The lobbying firm of William Timmons Sr., who John McCain tapped to run his presidential transition team, “earned more than a quarter of a million dollars this year representing Freddie Mac, one of the companies McCain blames for the nation’s financial crisis.” Timmons himself has been personally “registered to lobby for Freddie Mac from 2000 through this month.”

According to 2007 data released by the U.S. Census Bureau today, more than 7.5 million people “are spending half of their income or more on housing costs.” The government considers “a homeowner spending 30 percent or more of their income on housing costs to be financially burdened”; that definition now covers almost 38 percent of U.S. homeowners with a mortgage.

The White House said yesterday that it opposed the Credit Card Bill of Rights, a bill currently being debated in the House, “saying it would constrain banks’ ability to price risk.” The proposal would end double-billing and would force companies to mail bills 25 days before payment is due, rather than the current 14 days. Read more about why the bill is so important here.

Written by LeisureGuy

23 September 2008 at 11:04 am

Billmon gives inside view of the financial crisis

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Well worth reading. Billmon is always worth reading, and this time he has an inside view. Read it. It begins:

The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to ensure that as few as possible escaped the common misfortune.

John Kenneth Galbraith
The Great Crash: 1929

I apologize for being out of radio contact of late — I work on the financial industry and the past few weeks have been, ah, eventful, which is to say, catastrophic.

I won’t bore you with the bloody details; others, such as bonddad, have already sliced open the corpse and described the basic anatomy of the crisis, which is depressingly identical to the aftermath of every other speculative bubble since Adam and Eve tried playing the apple futures market.

Bells and whistles aside (such as the fungal growth of a $10 trillion global over-the-counter credit derivatives market, or Wall Street’s blind faith in its own ability to transubstantiate subprime mortgages into AAA-rated, investment-grade paper) the only things remarkable about this bubble were how long it lasted and the scale of the recklessness.

Some mistakes look even dumber in hindsight than they did at the time: Like …

Continue reading.

Written by LeisureGuy

23 September 2008 at 10:56 am

Posted in Daily life

Oil: $500/barrel. Soon

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Fortune magazine article by Brian O’Keefe, Senior Editor, begins:

Matt Simmons is as perplexed as anyone that it has fallen to him to take on OPEC, Exxon, the Saudis, and all the other misguided defenders of conventional wisdom in the oil patch. Why should one investment banker with a penchant for research be required to point out what he regards as the obvious – that from here on out, oil supplies can’t meet demand, and if we don’t act soon to solve this crisis, World War III could be looming?

Why should a man who scorns most environmentalists have to argue that locally grown produce and wind power are the way of the future? Why should a lifelong Republican need to be the one to point out that his party’s new mantra – “Drill, baby, drill!” – won’t really fix anything and that his party’s presidential candidate is clueless about energy? That the spike in oil prices earlier this year wasn’t a temporary market anomaly and the recent retreat in prices is just a misleading calm before a calamitous storm? That we’re headed toward $500-a-barrel oil?

“I find it ironic that here we have the biggest industry on earth, and I’m one of the few people to figure out that we have a major problem,” he says, in his confident if not quite brash way. “And I did it all in my spare time. How stupid and tragic is that? I shouldn’t be one of the only folks that actually has a handful of ideas of how we can keep from blowing each other up and get through this.”

Indeed, Simmons isn’t the obvious candidate to be the bearer of bad news about oil. He’s spent his career working in the business, has lived in Houston for decades, and is such an industry insider that he helped edit the Bush campaign’s comprehensive energy plan in the 2000 election – the document that was ultimately more or less rubber-stamped by Vice President Dick Cheney’s infamous secret Energy Task Force. Over the past 35 years, his boutique investment bank, Simmons & Co., has helped finance and shape much of the country’s existing oil-services business. With profits gushing, you might expect him to be celebrating.

Not to mention that the 65-year-old banker doesn’t have the personality of a prophet of doom. He has a puckish wit, a relentlessly cheerful and enthusiastic demeanor, and the appearance of a rosy-cheeked cherub in a navy blazer. He routinely refers – in earnest – to his daily experiences as “tremendous fun.” His closest business associates have a hard time recalling him ever showing anger. But when it comes to oil and gas, his message is downright scary. …

Continue reading. And click the link for some sobering graphs. Like this one:

Rate of discovery of new oil

Rate of discovery of new oil

Written by LeisureGuy

23 September 2008 at 10:53 am

Posted in Daily life

Blast from the past

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The Keating Five. (Keating himself is a despicable creature.)

Written by LeisureGuy

23 September 2008 at 10:35 am

Posted in Business, Daily life, GOP

Top blogs for writers

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And, speaking of writing, here’s a list of the top 10 blogs for writers. Enjoy!

Written by LeisureGuy

23 September 2008 at 10:22 am

Posted in Daily life, Writing

Interesting post for maximizing flow while writing

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Take a look.

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23 September 2008 at 10:17 am

Posted in Daily life, Writing

WWF video

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Just because you make money from something doesn’t mean it’s good. Via Treehugger:

Written by LeisureGuy

23 September 2008 at 9:58 am

Posted in Daily life, Video

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