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Politics
We know how to kill.
We must learn to win.
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Julemry
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Does IMF Stand for Impressive Macroeconomic Flexibility?
So the IMF is holding a meeting on rethinking macroeconomic policy (I was invited but couldn’t make the timing work.) And the Fund’s chief economist has already made it clear that he’s open to some serious revision of the prevailing paradigm.
http://hat4uk.wordpress.com/2012/01/20/news-ketchup-10/The man believes in gold.http://www.nakedcapitalism.com/"Friday, January 20, 2012
Call Your Attorney General Today to Oppose Big Obama Push to Get Mortgage Settlement Deal Done
We put up a few more stories on themortgage mess tonight for a reason. It isn’t that we had a sudden explosion of new information on mortgage abuses. It is instead to remind readers that we could turn this blog entirely over to covering mortgage chicanery and not even scratch the surface.
And the latest bit of corrupt behavior is that the Obama administration has a full court press on to push the heinous “multi-state” settlement deal over the line. We’ve pooh poohed previous reports from Iowa state attorneygeneral Tom Miller that a deal is just around the corner, since he’s been doing his variant on a Chicken Little act for a full year. But it appears the President wants a talking point, ideally for the State of the Union address or as shortly thereafter as possible.
So this time is different: the administration is putting far more pressure on the dissident and skeptical Democratic attorneys general. And precisely because Tom Miller’s efforts have appeared to be going nowhere, particularly after California AG Kamala Harris left the talks, the grass roots effort to oppose the talks has slackened off. The lack of active opposition leave the AGs feeling more exposed, particularly in light of often misleading press stories (for instance, the Wall Street Journal implied over the summer that Harris was wavering when all it was doing was repackaging stale information under a new headline). Similarly, the Administration is ramping up “a deal is almost cinched” reports with Obamabot news outlets like NPR. This is a classic deal/salesmans’ tactic: to create the impression of momentum when there is fact is often none.
The Democratic attorneys general have been invited to meet in Chicago on Monday, and Shaun Donovan of HUD and a member of the Department of Justice will be putting the heat on. The Republican AGs are getting the same documents the Democrat AGs will receive and will confer by phone.
We posted that the Democratic AGs unhappy with the deal has actually enlarged, with 14 apparently meeting (a Huffington Post story said “up to 15″ and we gather that Oregon and Montana participated in addition to the dozen named. However, only 5 so far have officially left the talks: New York, Delaware, Nevada, California, and Massachusetts. In addition, there are at least four Republicans who have said they will not join in any settlement.
Here are some of the reasons to oppose a settlement:
1. There have been virtually no investigations, and the Administration has engaged in cover-ups rather than trying to get to the bottom of the mortgage mess
2. The big argument made in favor of the deal, that it will help borrowers, is patently false. Remember, Countrywide entered into a deal with attorney generals just like this, where they agreed to do mods in return for a settlement on abuses. Guess what? They didn’t do the mods. To add insult to injury, they actually abused homeowners who should have gotten mods. Nevada AG is suing Countrywide now over its failure to comply with the terms of its settlement. And even if some mods miraculously did get done, the settlement is designed to have banks hit a dollar amount. That means they will focus on the biggest loans, which means any relief will go to a comparatively small number of people in (originally) big ticket houses.
3. The Administration has only one chance to get this right. Now you might argue that Team Obama has no intention of getting the mortgage mess right, but the tectonic plates suddenly seem to be moving in elite circles. The Fed realizes that housing is a BIG problem and has even started making noise about it. Yet Obama is moving forward with a plan cooked up in late 2010 that is completely out of whack with the urgency and severity of the problem. Note that this settlement will NOT stop private actions, such as borrowers fighting foreclosures. And we will continue to banks refuse to take losses and drag out foreclosures to maximize fees. That will lead to continued pressure on housing prices in many markets as buyers stay on the sidelines, fearful of buying before a large shadow inventory clears.
Leaving the AGs free to investigate and increase the pressure that is already building up in the system is the best chance we have to deal with widespread fraud.
The attorneys general really need your support. It helps them to hear that their constituents appreciate them standing up to the banks and the Obama administration.
PLEASE call them TODAY. Here is a list of phone numbers. If you can’t get through, send an e-mail.
Please also sign this petition from Campaign for America’s Future (it has some talking points if you need them for the AG calls). Note you can opt out of being put on their mailing list (I know that has been a sore point with some past petitions). I know it is futile to ping Obama, but they will collect the number of people who sign, and that will in turn bolster the dissident AGs.
Please call today. Unlike Congresscritters, who get a lot of constituent mail and phone calls, AGs get much less in the way of messages from state citizens, so your calls will make a difference.
Thanks for your help."
http://krugman.blogs.nytimes.com/2012/01/20/george-washington-was-a-hypocrite/
George Washington Was A Hypocrite
OK, that’s not what I believe. But it’s apparently what Scott Brown believes.
Via Steve Benen, Brown’s campaign is going all out on the proposition that Elizabeth Warren is a big hypocrite. You see, she has been crusading to help the endangered middle class — but she herself is a well-paid Harvard professor, who would end up paying higher taxes as a result of the policies she advocates. See the hypocrisy?
Neither do I.
I’ve written about this before; somehow the notion has entered our politics that supporting a cause that isn’t in your personal financial interest makes you a hypocrite. It’s really bizarre.
As I suggested in the title of this post, think of what this says about Washington. The fact is that he personally was doing very well under British rule — he was a big landowner, a man of stature in the colonies. His life was just fine; yet he took huge personal risks to lead a rebellion for the cause of liberty. He was a hypocrite!
Or, maybe, he was a man of civic virtue, who placed the needs of his nation above his own comfort.
Part of the reason this plays on the right is that the right’s response to any attempt to talk about inequality and the tax system is met with claims that it’s all about envy; supposedly, anyone who thinks that the capital gains tax should be higher only says that because he or she hates rich people. So how can they be affluent themselves?
Strange to say, however, it’s possible to have no special animosity toward rich people as people, and still believe that they should pay more in taxes, that their workers should have more bargaining power, and in general that policies that would make them not quite as rich would make this a better nation.
But then as a liberal, well-paid professor/journalist myself, I would say that, wouldn’t I?"
http://blogs.reuters.com/felix-salmon/2012/01/18/greeces-game-plan/
"Greece’s game plan
Greek prime minister Lucas Papademos gave an important interview to the NYT on Monday night. Think for a minute about the natural fractiousness of bondholders, and then read this:
Mr. Papademos said that if Greece did not receive 100 percent participation in a program in which bondholders would voluntarily write down $130 billion from Greece’s unwieldy $450 billion debt, the country would consider passing a law to require holdouts to take losses.
This is a pretty clear message: if the bondholders don’t agree to Greece’s terms, then Greece can simply force them to join the exchange. Greece’s bonds are issued under Greek law, and Greece can change its own domestic law any time it wants.
“It is something that has to be considered in the light of expectations about the degree of the participation to be achieved,” Mr. Papademos said. “It cannot be excluded. It is contingent on the percentage.”
My guess is that this is exactly what’s going to end up happening. Papademos has two sets of advisors: its bankers, Lazard, and its lawyers, Cleary Gottlieb. Lazard’s Greece team is headed by Mark Walker, the former managing partner at Cleary Gottlieb, and Cleary’s Greece team is headed by the dean of sovereign debt advisors, Lee Buchheit. Bondholders, in general, have a lot of experience going up against Walker, Buchheit, and Cleary generally. And whenever that’s happened, the sovereigns have won, and the bondholders have lost. Just ask anybody who held Russian domestic debt in 1998: Russia’s lawyer, back then, was Mark Walker.
Meanwhile, the lead negotiator on the creditor side is the IIF’s Charles Dallara, an amiable buffoon whose main purpose in life is to try to make sure that everybody likes him and thinks that he’s important. When faced with hard-nosed and single-minded Cleary types, he’ll be useless — especially given that the banks have already cut him off at the knees by refusing to let him negotiate on their behalf. He can wave his hands around and agree in principle to a deal, but he can’t actually commit any bondholders to participating. Which means that the “negotiations” are really just an opportunity for Dallara to talk a lot (he likes doing that), and for Greece to flatter him into “agreeing” to whatever it is they’re going to do in any case.
In her interview with Papademos, Rachel Donadio says that “European leaders are set against” the idea that Greece’s credit default swaps should be triggered, on the grounds that it “could ignite a chain reaction with unpredictable and potentially catastrophic results for the world financial system”. She’s wrong about that: it couldn’t. The only thing a CDS trigger does is make sure that people who bought insurance on a Greek default get paid when Greece defaults. It would mean that the people doing the insuring lose money, of course. But anybody writing an insurance policy has to be willing to pay out on it — especially when you’re insuring a credit as risky as Greece. A CDS trigger would not be catastrophic at all, and there’s really no reason to try to avoid one.
The real negotiations are the ones which are certainly going on behind the scenes, between the troika (the EU, the ECB, and the IMF) and the Greeks. The one thing which Greece needs is for the troika to keep on funding Greece’s deficits. And so it’s the troika — the organizations who are actually providing money, here — which holds all the cards. As in any bankruptcy, if you put up cash, you call the tune.
So the only thing that needs to happen here is for Greece to quietly find out from the troika what kind of bond-restructuring terms would be acceptable to them. Greece then puts those terms into a formal offer, and makes acceptance of that offer effectively compulsory for bondholders. The troika declares a successful bond exchange — because it happened on exactly the terms that they wanted — and continues to lend Greece the money it needs to function as a viable sovereign. Game over, at least for the time being.
Now politically, the EU would very much like to have a bunch of smiling bankers going around saying that they’re happy with the bond exchange, rather than a group of extremely irate creditors who feel railroaded into a dreadful deal. So everybody’s going to try to be as nice to the bankers and Dallara as they possibly can be, to try to get as much good PR for the deal as possible. And maybe, at the margin, the banks can extract some concessions in return for their smiles — perhaps the new bonds will be issued under London law rather than Greek law, for instance.
But the big-picture game plan is clear. Greece is going to default, on March 20, and there’s really nothing the banks can do to stop it. If you’re not willing to accept whatever deal Greece comes up with, you probably shouldn’t be holding Greek bonds at all."
http://www.spiegel.de/international/topic/austerity_measures/
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milad_barmaki@yahoo.com
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California's Disappearing State Parks
“California's Disappearing State Parks - http://nyti.ms/mpJh9i (Trouble in paradise? Who'da thunk it!?)”Jerry Brown just has to pass some taxes.A graduated income tax for choice.
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nody_2888199@yahoo.com
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U.S. Subpoenas Twitter Over WikiLeaks Supporters
“U.S. Subpoenas Twitter Over WikiLeaks Supporters - http://nyti.ms/ie4kFj”This prosecutor wants a name.I can think of some.
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inherit.the.win@gmail.com
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U.S. Subpoenas Twitter Over WikiLeaks Supporters
“U.S. Subpoenas Twitter Over WikiLeaks Supporters - http://nyti.ms/ie4kFj”A lock on an empty barn.
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Salah Maker
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Gadgets in Emergency Vehicles Seen as Peril
A discredited and now defunct Soviet state -- decidedly far right wing -- worked tirelessly on revising history to enhance its image.
"There is never time to do it right. There is always time to try to do it over."
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Vasile Stoica
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Cold-Brewing Coffee and Tea - The Curious Cook
“Cold-Brewing Coffee and Tea - The Curious Cook - http://nyti.ms/r31ACg”I like the result.At some point coffee just ruins my temper. 02:30 seems to be it.
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Boris Anthony
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California's Disappearing State Parks
“California's Disappearing State Parks - http://nyti.ms/mpJh9i (Trouble in paradise? Who'da thunk it!?)”
"Thats not a bug; it's a feature!"Now the very rich can build there.
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Michael Gomez
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Manning Marable, African-American Studies Scholar, Has Died at 60
“Rest In Power Manning Marable http://nyti.ms/fJCHtH”Malcolm X deserves his biography.
"He had been hospitalized with pneumonia last month, and last summer had a double lung transplant meant to relieve him of sarcoidosis, a lung disease from which he had suffered for a quarter century."http://en.wikipedia.org/wiki/Sarcoidosis"Sarcoidosis (from sarc meaning flesh, -oid, like, and -osis, diseased or abnormal condition), also called sarcoid, Besnier-Boeck disease or Besnier-Boeck-Schaumann disease, is a disease in which abnormal collections of chronic inflammatory cells (granulomas) form as nodules in multiple organs.[1] The cause of sarcoidosis is unknown. Granulomas (of the non-caseating type) most often appear in the lungs or the lymph nodes, but virtually any organ can be affected. Normally the onset is gradual. Sarcoidosis may be asymptomatic or chronic. It commonly improves or clears up spontaneously. More than 2/3 of people with lung sarcoidosis have no symptoms after 9 years. About 50% have relapses. About 10% develop serious disability. Lung scarring or infection may lead to respiratory failure and death. . . ."Not my problem.I have been sedentary for too long.I need to move.
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Zahid
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Parting Glance: Colleagues and Friends Remember Tim Hetherington
“Parting Glance: Colleagues and Friends Remember Tim Hetherington - http://nyti.ms/e0r59T”
"You get the pictures. I'll make the war." W. R. Hearst
The events that photograph are only a small fraction of war.
These are telling pictures.Their cost is high.
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@18:51, 01/20/12
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Michael Gomez
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Manning Marable, African-American Studies Scholar, Has Died at 60
“Rest In Power Manning Marable http://nyti.ms/fJCHtH”Malcolm X has a biography.
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nody_2888199@yahoo.com
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U.S. Subpoenas Twitter Over WikiLeaks Supporters
“U.S. Subpoenas Twitter Over WikiLeaks Supporters - http://nyti.ms/ie4kFj”The dead past. Learn from it.
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kosmar
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Lennon's Return
Bed is a good place. I like it.
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inherit.the.win@gmail.com
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U.S. Subpoenas Twitter Over WikiLeaks Supporters
“U.S. Subpoenas Twitter Over WikiLeaks Supporters - http://nyti.ms/ie4kFj”That is an X parrot.
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Janet Camp
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Sanders Rails Against Tax Bill -- For Hours and Hours
6:48 p.m. | Updated Senator Bernard Sanders, independent of Vermont, took to the floor of the Senate at 10:24 this morning to denounce the tax cut deal struck between the White House and congressional Republicans — and he’s still going.
It was a bad deal. It is a bad deal. It will expire.
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Bob
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Does IMF Stand for Impressive Macroeconomic Flexibility?
So the IMF is holding a meeting on rethinking macroeconomic policy (I was invited but couldn’t make the timing work.) And the Fund’s chief economist has already made it clear that he’s open to some serious revision of the prevailing paradigm.
The currency controls are not in place.Governments will attempt to halt international transfersjust before they devalue.That has not happened yet.
http://www.guardian.co.uk/business/2012/jan/20/greece-verge-breakthrough-debt-deal
"- guardian.co.uk,
- Article history
Greece's finance minister, Evangelos Venizelos, talks to reporters on Friday. Photograph: Louisa Gouliamaki/AFP/Getty ImagesGreece is on the verge of a breakthrough in talks with its creditors that could wipe out up to 70% of its debts and alleviate the crisis in the eurozone. An outline deal, hurriedly endorsed by Brussels, came after a frantic three days of negotiations that at one time appeared to be heading for deadlock. It appeared that Greece had secured a deal to pay an interest rate of 3.1%, rising to 4.75%, on new 30-year bonds created from its outstanding €360bn (£300bn) debt burden. The effect would be for creditors to accept writedowns of up to 70% on many of their loans. Sources close to the Greek government said it was still possible that major lenders could walk away if there was a failure to get agreement on some of the fine detail, but Athens was confident that further talks over the weekend would bring a comprehensive deal. Before the news, trading on world stock markets was subdued, indicating the importance attached to a Greek deal as investors waited for the outcome before committing funds. The FTSE 100 finished the day down 12 points at 5728.55, closing before speculation surfaced that a Greek deal was imminent. The French CAC and the German Dax were also down 7 and 11 points respectively. The Dow Jones followed a more positive path closing up 96.5 points at 12720.48. Greece has become the focus of tension in the eurozone for the third time in as many years after first announcing it was in trouble in the spring of 2010. It was bailed out along with Ireland and Portugal, then in May last year it became clear that the €110bn Athens had received would be insufficient to finance its growing debts and that a second bailout was necessary. German resistance to giving any more financial support without a sacrifice by creditors of at least 50% of their loans has held up attempts by Brussels to co-ordinate a second bailout. Greece's finance minister, Evangelos Venizelos, has spent the last two weeks locked in discussions with a team representing the banks, insurers and hedge funds that hold Greek debt. It is understood a framework deal is in place outlining the basic structure of a bond swap that Venizelos wants to present at the eurogroup meeting of finance ministers in Brussels on Monday. He needs a deal in place, and approval for a second bailout plan, before a €14.5bn loan refinancing in March. "The atmosphere of the talks is good, they are continuing today and we hope they will be concluded very soon," a government spokesman said. "This is very important for the sustainability of the national debt and our ability to handle the debt." European Union ministers will be meeting in Brussels to reach agreement on a new pact enforcing stricter budget controls in the eurozone that could allow the single currency area's highest court to fine countries that fail to adopt key rules. The European Central Bank wrecked an earlier draft of the agreement after warning that the enforcement powers it proposed were weak and would fail to keep errant countries in line. Under the guidance of Germany's chancellor, Angela Merkel, Brussels has drafted a tighter pact that would allow the courts to punish a country that refuses to implement a balanced budget rule in its national law with a penalty of up to 0.1% of GDP. Every EU country except Britain is expected to sign off on the pact when leaders meet at a summit on 30 January. The debt talks in Greece were expected to continue into Friday evening to thrash out the fine print of the deal. Even if a decisive agreement were to be reached, the proposals will have to be put to the technocrats and they would be likely to change it again. But the prospect of a deal seemed to encourage investors to move away from safe havens in favour of riskier assets for the first time in several months. US bond prices slipped and German bonds followed suit, both on hopes for a deal and on more upbeat news from the US housing market. Kevin Flanagan, chief fixed-income strategist at Morgan Stanley Smith Barney, said the drop in demand for US bonds, and therefore decrease in the price, "seems due to a combination of developments beginning with yesterday's US jobless claims figures (which showed a sharp drop in the newly jobless) and reports that the Greek negotiations with private sector investors may yield results after all." Benchmark 10-year bond yields rose to 2.01% from 1.97% late on Thursday. The rise in the yield, which follows a decline in the price, were in line with a decline in German bunds, another safe-haven asset. "Europe is calmer. Their auctions have gone OK, and the euro has responded," said David Ader, head government bond strategist at CRT Capital Group. But he added that the "myopic focus" on rumours about Greece underscored the market's general lack of confidence. Earlier, France's president Nicolas Sarkozy, warned that Europe remained at risk and urged Greece's political leaders not to delay important decisions to stabilise their debt-ridden economy. "The eurozone remains in danger. The whole of Greece's political class must understand that it cannot put off decisions needed to resolve the country's crisis," he told a meeting with ambassadors." http://ftalphaville.ft.com/blog/The EBA 9% rule and the Eurozone crisis
Back in October 2011, James Ferguson, banking analyst at Arbuthnot Securities, warned that the EBA’s tough new capital rules could be about to make the eurozone crisis a whole lot worse because the absence of fresh capital meant banks would have no other choice but to contract their assets.Greek lessons for Portugal
It appears that the “voluntary” Greek bond swap might finally come to an end. Time then to spare a thought for the derivative that drove the need to draft the damn thing so gently in the first place. Ladies and gentlemen, FT Alphaville gives you the incredible shrinking market for credit default swap contracts written on Greece!
(Courtesy of Thomson Reuters CreditViews)
This chart shows how the volume of CDS contracts on Greece has dramatically dropped off over the last year. The net notional outstanding was a mere $3.2bn as of last Friday. Participants may be backing out to take profits or losses. Or, they may not have the stomach for extreme uncertainty sports. Fair enough really. The contracts have been trading at distressed levels for a while now anyway:
The above means that buying $10m of protection on Greece today will set you back $6.7m on day one, a number fairly consistent with the losses that bondholders are expected to incur on the restructuring itself.
As the contracts haven’t experienced a credit event — due to the bond swap being “voluntary” — much philosophical debate about CDS has ensued, concerning whether they are a good hedge, etc. From an FT editorial on Monday:
It is a false concern that triggering CDS may set off market contagion. The market is too small – and perverting the course of the swaps’ rules actually carries the bigger risk, as insurance on every other country’s debt would lose all credibility. The likely motive to push for a “voluntary” writedown is a desire to punish “speculators”. Eurozone leaders should instead focus on the real dangers of PSI. This mostly concerns banks: Greek ones and the eurozone’s central bank.
On the topic of peripheral debt and the ECB, do spare a thought about what all of this means for Portugal. FT Alphaville has already discussed why S&P’s downgrade was taken rather badly by Portuguese bonds. As far as the country’s CDS are concerned, there is also a significant focus on what goes on all the way over in Greece, as IFR’s Divyang Shah points out:The widening of the [10-year CDS] bid/offer spreads confirms the seriousness of the move that we are seeing on both cash and CDS for Portugal as markets fear restructuring/default risks and the prospect of following down the messy path set by Greece.
Furthermore:Even if Greece manages to avoid a March default the markets will still have to grapple with the thorny issue of an increasing risk that Portugal is still walking down the same road as Greece in needing a debt restructuring. A Greek default will only see this risk being brought forward.
He also points out that Portugal getting further help from the IMF and the ECB via the central bank’s bond-buying programme isn’t necessarily a positive since it effectively subordinates existing bond-holders to claims by the two institutions. The ECB’s Greek bonds will not be swapped, which basically means that haircuts to private holders need to be deeper in order to put Greece anywhere in the general vicinity of a sustainable debt path. Portuguese bondbuyers beware. In terms of CDS contracts outstanding though, Portugal has already been experiencing something similar to Greece for quite awhile, as the spreads of the contracts have deteriorated:
Compare and contrast to the rising popularity of CDS on France and Germany:
A couple of years ago, if you’d said, “when Greece gets a cold, Portugal sneezes,” would anyone have had a clue what you were on about? Funny twist of fate.
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corinnakester
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In Tide Dry Cleaners, a Laundry Room Staple Expands
“Interesting marketing case study about the extension of the Tide brand to dry cleaning services http://nyti.ms/fEFpos”I want results.
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Neediest Cases
I went top sleep trying to think.
We owe these people. Money will not pay the debt.
Generous and unconditional support is all we can do. -
SilverMythago
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Manning Marable, African-American Studies Scholar, Has Died at 60
“Rest In Power Manning Marable http://nyti.ms/fJCHtH”
Work is.
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ccortez
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The Overconfidence Problem in Forecasting
“Required Reading: The Overconfidence Problem in Forecasting - http://nyti.ms/aqYvU7”You are not in the forecasting business.Emergency preparedness is a bit different."Two lessons emerge from these papers. First, we shouldn’t expect that the competition to become a top manager will weed out overconfidence. In fact, the competition may tend to select overconfident people. One route to the corner office is to combine overconfidence with luck, which can be hard to distinguish from skill. C.E.O.’s who make it to the top this way will often stumble when their luck runs out.
The second lesson comes from Mark Twain: “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”"
I know I am guessing.
I find it surprising how powerful denial can be.
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Snow, about three inches so far.
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