Loyalty without truth
is a trail to tyranny.
|
a middle-aged George Washington
|
|
Saturday, 5 January 2008 at 3h 4m 18s | A summary of subprime mortgage SIVs and CDOs | In case you haven't been paying attention, or if you don't really
understand
economics,
this is the
best quick summary of the big picture over the subprime mortgages.
banks made loans to homeowners who did not have to prove their ability to pay, then quickly sold
the loans to other companies. By the time it emerged that a lot of homeowners could not pay, these
loans had been pooled with other loans and chopped into strange new paper assets that were sold to
unsuspecting buyers around the globe. The subsequent reckoning has forced major banks to write off
vast sums of money.
“Here you had all these people who were supposed to be sophisticated investors, and it turns out
they were buying billions of dollars worth of debt where they didn’t even understand what they
owned,” said Dean Baker, co-director of the liberal Center for Economic and Policy Research.
[SOURCE: Peter S Goodman | New York
Times | 30 December 2007 ]
A "SIV" is the acronym for Structured Investment Vehicle. CDOs are Collateralized Debt
Obligations.
Let me explain. Collateral is something of value that backs the loan. Here's an example of what
collateral means in the real world. When you take out a 5 year loan on a car (something they
call "financing") the value of the car is the collateral of the loan. This means that if you balk
on the loan after, say, 14 months, the collateral value of the car plus the payments over the 14
months is the economic accountanting that takes place.
You buy a Toyota that is $20,000 wholesale, but sold for to you $22,000. Toyota "finances" a loan,
which means the finance company buys the $20,000 wholesale and keeps the title until the loan is
paid. If you make $350 payments for 14 months you have paid $4900. At 10% interest, about half or
less would be collected as interest on the loan, but this really depends on the finance charges the
company takes after the car is repossessed, since the blue book value is still $20,000 after 14
months. Now after adding the $4900 to the $20,000, the finance company has assets of $24,900 less
the $20,000
wholesale price, or $4900 profits over 14 months. Say the finance company sells the car back to
the Toyota dealer for $17000. This yields them a total of $21,900 ... which is net gain of
$1900 more than the original $20000 wholesale price: a 9.5% gain over 14 months, or 8.1% per year.
Housing and Real Estate work the same way, except that housing generally appreciates over time,
unlike
automobiles, which depreciate (decrease) in value over a relatively brief span of time. A 20 year
old car is generally
worthless and unusable, unless it is an antique; but a 20 year old house is usually 10 times more
money in value. Plus, if that house is an apartment building or 20 story office tower, the
property receives a regular supply of rental income.
However, the value of houses & properties are tied to supply, location, and the
average income of those who inhabit the cities, towns, and suburbs where the houses are located.
People have to be able to buy the houses, or they will continue to rent apartments. The monthly
payments necessary to finance housing purchases cannot be too much larger than the average
necessary rental costs, or very few persons will be able to afford the monthly payments. Most
lenders
and real estate brokers will say no more than a third of one's income.
And don't forget property taxes and interest payments.
Housing and real estate in general are not always commodities that attract investors, because
houses don't create their own value like a factory or communications corporation does. The value
of a piece of property is more directly related to the number of purchasers. In the case of
business real estate, it is a function of the ability of businesses to earn revenue over and above
their costs plus the cost of leasing the property. The value of the property, the ability
to "generate" revenue is contingent upon local economic conditions and location.
Which brings me to the other acronym, the Structured Investment Vehicle, or SIV. This is what the
investment gurus call bundling the various financial agreements and mortgage payments into an
agglomeration of say 2,000. This is the "vehicle" thru which real estate values became part of the
securities market. A "security" is a piece of paper that confers a percentage
payment. "Securitizing" means you obtain funds based upon the inherent value of the "security"
such as a stock, or a corporate receivable.
Bonds are loans to public institutions. The value of a bond is the amount of repaid funds after a
period of time. A value of a bond is based upon how much will be repaid after a period of time.
The United States, or Canada, or Germany, are safely assumed to always make the quarterly interest
payments for 10 years, so the value of bonds don't change much over time. A bond rate of 4.5%
means you purchase the bond for 95.5% (100 minus 4.5%) of the value knowing you are 99.9999%
guaranteed to get your 4.5% return per year. A large demand for bonds is indicative of investors
who are leery of the alternatives and want a "safer" investment. This however reduces the value
because more people wanting a limited quantity causes the price to go up.
When banks and investment firms are holding collateral and securities that drop in value, the
equity and assets on their balance sheets reduce their ratios of cash to liabilities. In order to
maintain the necessary ratios to stay solvent, banks have to hold on to their cash. The Fed can
liquify the system, but the banks are still "borrowing" from the Fed. This is why the
Fed interest rate decisions are a very big deal. Lowering the Fed rate costs the banks less money
when they borrow from the Fed. Mind you they don't actually "pay" this money. What happens is they
buy Treasuries equivalent to the interest on the Fed loans. The money from the Fed are backed by
the Federal bonds that are sold.
As you can see, all this is pretty complicated, inter-related stuff. It's taken me 20 plus years
to figure this much out, and I'm
still not quite able to grasp the entirety of the macroscopically inter-related global details such
as
international monetary flows and international stock markets. But I'm working on it. It's a life-
long learning
process. I'll keep you posted.
| Friday, 4 January 2008 at 18h 45m 39s | J Edgar Hoover and Habeus Corpus |
The New York Times reported that a newly declassified document shows that J. Edgar Hoover, longtime director of the FBI, had a
plan to suspend habeas corpus and imprison some 12,000 Americans he suspected of disloyalty.
According to the declassified material, Hoover sent his plan to the White House on July 7, 1950. This was 12 days after the
Korean War began. Hoover's plan called for putting suspect Americans in military prisons.
Hoover urged President Harry S. Truman to proclaim the mass arrests necessary to "protect the country against treason,
espionage and sabotage." The FBI would "apprehend all individuals potentially dangerous" to national security. The arrests would
be carried out under "a master warrant attached to a list of names" provided by the bureau. The names were part of an index
Hoover had been compiling for years. "The index now contains approximately 12,000 individuals, of which approximately 97
percent are citizens of the United States," he wrote. "In order to make effective these apprehensions, the proclamation suspends
the writ of habeas corpus."
Truman did declare a national emergency, but he had the great good sense to reject Hoover's advice for the United States to
adopt one of the worst of communist characteristics -- to create an American gulag for thousands of people unfortunate enough
to find their names on Hoover's lists.
[SOURCE: | Capital Hill Blue | 3 January 2008 ]
Thank god for Harry Truman.
I was talking to a childhood friend this Xmas, and he was talking about how he thinks the government is preparing for an
"incident" in which they intend to arrest a lot of people. He said that there are 2 books of names: the people arrested before the
incident, and the people arrested after the incident. This is how the Nazi's took control between 1930 and 1939. Keep in mind
that Hitler was technically elected.
Now I'm not as conspiratorially minded as my friend, but when you know the history of the past, J. Edgar Hoover in particular,
you know that these deranged paranoid types exist -- even now. I've blogged about a lot of these trolls and ghouls in human
form many times in the past. These iron-skin lizards live in the sheltered worlds of law offices, lobby firms, and think tanks
bankrolled by a small number of irrational mean-spirited extremely wealthy people. They provide the money for the sadists and
anti-democratic actions of the hirelings.
Two names you should look up : Norman Podhoretz (stess the "hor") and John Negropontes ("black layings"). The careers of both these men embody the
paranoid sadist streak that permeates the minds of a small number of humankind throughout the length of history. From
Caligula and Nero, to the Dark Czars of Russia, the dungeons of the Inquisition, and up to now, the possibility of individuals to
break the social norms and yield to naked power is ever present. Only the strength of a people to resist dictates the extent in
which they are permitted to thrive.
| Friday, 4 January 2008 at 3h 7m 16s | The Winter storm hits | It is stormy as hell today. The entire city is littered
with
pieces and
parts of
trees from the winds gusting close to 50 mph at
times. The lights were out at a lot of major intersects and the ticket riders wound up directing
traffic in their raincoats. I had to go to 3 gas stations to find one that still had power.
The rain comes and goes in cycles between barely a drizzle and then a pelter of rain. The
electricity is out in my neck of the woods,
and right now I'm parked outside of Cafe Abir linking to their wi-fi network hoping the meter maid
doesn't show up.
| Friday, 4 January 2008 at 16h 30m 39s | The games played involve real people | Today Robert Pear at the New York Times writes about the Administration's unwillingness to subsidize the health care costs of
working families with federal Medicaid funds, by insisting that states cannot fund families who are more than 250% of the poverty
line.
The child health program complements Medicaid. Income limits vary from state to state and tend to cluster from 133 percent to
185 percent of the poverty level for Medicaid, with states allowed to go 50 percentage points higher for the child health
program....Under the new policy, states must meet certain conditions if they want to cover children with family incomes above
250 percent of the poverty level. For example, a child who had private coverage in the past must be uninsured for at least one
year before being enrolled in a state child health program.
Now why is this, you might ask. Here's the administration's reason: "Administration officials say government health programs
start to “crowd out” private insurance when they cover families with incomes from 250 percent to 300 percent of the poverty level
— about $51,600 to $62,000 for a family of four." This came out in an 17 August letter sent to all of the state Health Care
Departments.
“The Aug. 17 letter is a CHIP policy, not a Medicaid policy,” said Mike Fogarty, chief executive of the Oklahoma Health Care
Authority. “But it’s being applied in a much broader way. We are seeing many more roadblocks.”
In addition, federal officials challenged Louisiana to explain why it did not want to enforce the one-year waiting period for
children who had lost private health insurance because of a parent’s death or the failure of a business where a parent was
employed. In such cases, the state replied, the loss of coverage is involuntary, and the waiting period would “penalize children
and families for circumstances beyond their control.”
[SOURCE: Robert Pear | New York Times | 4 January
2007 ]
So the Administration is once again formulating and directing policy by rigidly interpreting the laws and using the power of the
purse to enforce it's interpretations that are friendly to the behemoth of the insurance industry. "Crowding out" private insurance
means not enabling private insurers to decide how much health-care they will pay for and at what price. Kids with asthma and
other medical issues will cost a lot of money, and insurance companies don't want to pay that money. They want to filter their
customers into different health-care criteria, and charge different prices, while not necessarily providing quality health-care,
because private health insurance is first and foremost about making a huge profit. All else is secondary.
Now Republican wing-nuts would have you believe that competition will eschew the inefficient, bad health insurance companies.
But insurance is not a grocery store. Insurance companies have to have a large amount of customers in order to be viable. Small
companies cannot compete, and so what you have is a small number of very large companies who are actually competing for the
business, and what they all do is "rationalize" the health-care payments they make in addition to deciding who to insure and what
to insure.
The point is to make health care affordable and available for all people. The current system is inefficient because the health
insurance market is innately inefficient absent government intrusion or regulation. Without Medicaid, Medicare, and the S-CHIP
program, a lot of people who not have health insurance or receive health care at all. Hospital and doctor visits get avoided until
the emergency health-care situation. The costs of the uninsured drive up the costs to those who can afford to pay for insurance,
either with higher premiums or expensive hosptal costs (like, $800 a day beds and various fees). We are paying for this inefficient
system of private health insurance.
This is what the Republicans and their Democratic enablers don't want to "crowd out."
| Friday, 4 January 2008 at 3h 28m 6s | Oil For What Scandal |
| Thursday, 3 January 2008 at 4h 12m 44s | What fighting terrorism really means | You have to read the entire article, because there are more examples. But the
first one
given, is
amply sufficient.
[Icelander Erla Ósk Arnardóttir Lilliendahl] flew to New York City with her girlfriends, first
class, from her native Iceland, to partake of "the Christmas spirit." She was drinking white wine
en route and, as she put it, "look[ing] forward to go shopping, eat good food, and enjoy life." On
an earlier vacation trip, back in 1995, she had overstayed her visa by three weeks, a modest enough
infraction, and had even returned the following year without incident.
This time -- with the President's Global War on Terror in full swing -- she was pulled aside at
passport control at JFK Airport, questioned about those extra three weeks 12 years ago, and soon
found herself, as she put it, "handcuffed and chained, denied the chance to sleep… without food and
drink and… confined to a place without anyone knowing my whereabouts, imprisoned." It was "the
greatest humiliation to which I have ever been subjected."
By her account, she was photographed, fingerprinted, asked rude questions -- "by men anxious to
demonstrate their power. Small kings with megalomania" -- confined to a tiny room for hours, then
chained, marched through the airport, and driven to a jail in New Jersey where, for another nine
hours, she found herself "in a small, dirty cell." On being prepared for the return trip to JFK and
deportation, approximately 24 hours after first debarking, she was, despite her pleas, despite her
tears, again handcuffed and put in leg chains, all, as she put it, "because I had taken a longer
vacation than allowed under the law."
[SOURCE: Tom
Engelhardt | tomdispatch.com | 2 January 2008]
All of this happened on 12 December 2007 - 3 weeks ago. Here is a translated version of her web
account.
Lost
During the last twenty-four hours I have probably experienced the greatest humiliation to which I
have ever been subjected. During these last twenty-four hours I have been handcuffed and chained,
denied the chance to sleep, been without food and drink and been confined to a place without anyone
knowing my whereabouts, imprisoned. Now I am beginning to try to understand all this, rest and
review the events which began as innocently as possible.
Last Sunday I and a few other girls began our trip to New York. We were going to shop and enjoy the
Christmas spirit. We made ourselves comfortable on first class, drank white wine and looked forward
to go shopping, eat good food and enjoy life. When we landed at JFK airport the traditional
clearance process began. We were screened and went on to passport control. As I waited for them to
finish examining my passport I heard an official say that there was something which needed to be
looked at more closely and I was directed to the work station of Homeland Security. There I was
told that according to their records I had overstayed my visa by 3 weeks in 1995 and. For this
reason I would not be admitted to the country and would be sent home on the next flight. I looked
at the official in disbelief and told him that I had in fact visited New York after the trip in
1995 without encountering any difficulties. A detailed interrogation session ensued. I was
photographed and fingerprinted. I was asked questions which I felt had nothing to do with the issue
at hand. I was forbidden to contact anyone to advise of my predicament and although I was invited
at the outset to contact the Icelandic consul or embassy, that invitation was later withdrawn. I
don't know why. I was then made to wait while they sought further information, and sat on a chair
before the authority for 5 hours. I saw the officials in this section handle other cases and it was
clear that these were men anxious to demonstrate their power. Small kings with megalomania. I was
careful to remain completely cooperative, for I did not yet believe that they planned to deport me
because of my "crime". When 5 hours had passed and I had been awake for 24 hours, I was told that
they were waiting for officials who would take me to a kind of waiting room. There I would be given
a bed to rest in, some food and I would be searched. What they thought they might find I cannot
possibly imagine. Finally guards appeared who transported me to the new place. I saw the bed as if
in a mirage, for I was absolutely exhausted. What turned out was something else. I was taken to
another office exactly like the one where I had been before and once again a long wait ensued. In
all, it turned out to be 5 hours. At this office all my things were taken from me. I succeeded in
sending a single sms to worried relatives and friends when I was granted a bathroom break. After
that the cell phone was taken from me. After I had been sitting for 5 hours I was told that they
were now waiting for guards who would take me to a place where I could rest and eat. Then I was
placed in a cubicle which looked like an operating room. Attached to the walls were 4 steel plates,
probably intended to serve as bed and a toilet. I was exhausted, tired and hungry. I didn't
understand the officials’ conduct, for they were treating me like a very dangerous criminal. Soon
thereafter I was removed from the cubicle and two armed guards placed me up against a wall. A chain
was fastened around my waist and I was handcuffed to the chain. Then my legs were placed in chains.
I asked for permission to make a telephone call but they refused. So secured, I was taken from the
airport terminal in full sight of everybody. I have seldom felt so bad, so humiliated and all
because I had taken a longer vacation than allowed under the law.
They would not tell me where they were taking me. The trip took close to one hour and although I
couldn’t see clearly outside the vehicle I knew that we had crossed over into New Jersey. We ended
up in front of a jail. I could hardly believe that this was happening. Was I really about to be
jailed? I was led inside in the chains and there yet another interrogation session ensued. I was
fingerprinted once again and photographed. I was made to undergo a medical examnination, I was
searched and then I was placed in a jail cell. I was asked absurd questions such as: When did you
have your last period? What do you believe in? Have you ever tried to commit suicide?
I was completely exhausted, tired and cold. Fourteen hours after I had landed I had something to
eat and drink for the first time. I was given porridge and bread. But it did not help much. I was
afraid and the attitude of all who handled me was abysmal to say the least. They did not speak to
me as much as snap at me. Once again I asked to make a telephone call and this time the answer was
positive. I was relieved but the relief was short-lived. For the telephone was set up for collect
calls only and it was not possible to make overseas calls. The jail guard held my cell phone in his
hand. I explained to him that I could not make a call from the jail telephone and asked to be
allowed to make one call from my own phone. That was out of the question. I spent the next 9 hours
in a small, dirty cell. The only thing in there was a narrow steel board which extended out from
the wall, a sink and toilet. I wish I never experience again in my life the feeling of confinement
and helplessness which I experienced there.
I was hugely relieved when, at last, I was told that I was to be taken to the airport, that is to
say until I was again handcuffed and chained. Then I could take no more and broke down and cried. I
begged them at least to leave out the leg chains but my request was ignored. When we arrived at the
airport, another jail guard took pity on me and removed the leg chains. Even so I was led through a
full airport terminal handcuffed and escorted by armed men. I felt terrible. On seeing this, people
must think that there goes a very dangerous criminal. In this condition I was led up into the
Flugleiđir waiting room, and was kept handcuffed until I entered the embarkation corridor. I was
completely run down by all this in both body and spirit. Fortunately I could count on good people
and both Einar (the captain) and the crew did all which they could to try to assist me. My friend
Auđur was in close contact with my sister and the consul and embassy had been contacted. However,
all had received misleading information and all had been told that I had been detained at the
airport terminal, not that I had been put in jail. Now the Foreign Ministry is looking into the
matter and I hope to receive some explanation why I was treated this way.
[SOURCE: Comment
306 | erla1001.blog.is | 12 December 2008
And there is this next little bit too (its a long article). You have to go to the source to get
the links which source all of the assertions in the first paragraph. There are nine links.
Think Guantanamo is bad, do ya?
Take, for example, a December 1st Washington Post piece in which reporter Craig Whitlock revealed
one more small part of the CIA's global network of secret imprisonment. We already knew, among
other things, that the CIA had set up and run its own secret prisons in Eastern Europe and probably
in Thailand; that it had a network of secret sites in Afghanistan like "the Salt Pit" near Kabul;
that it may have used the "British" island of Diego Garcia in the Indian Ocean, as well as American
ships, naval and possibly commercial, to hold prisoners beyond the purview of any authority or even
the visits of the International Red Cross; that it ran an air fleet of leased executive jets
(including some from Jeppesen Dataplan, a subsidiary of Boeing, which made it back into the news in
December because of a lawsuit launched by the ACLU); that these were used to transport terror
suspects it snatched up off city streets or battlefields anywhere on the planet to its own "black
sites" or which it "rendered" in "extraordinary" manner to the jails and torture chambers of Syria,
Egypt, Uzbekistan, and other lands whose agents had no qualms about torturing and abusing
prisoners.
Whitlock, however, added a new piece to the CIA's incarceration puzzle: an "imposing building" on
the outskirts of Amman, Jordan. This turns out to be the headquarters of the General Intelligence
Department, Jordan's powerful spy and security agency (and the CIA's closest Arab ally in the
Middle East). Known as a place where torture is freely applied, it has been a way-station for "CIA
prisoners captured in other countries." The first terror suspects kidnapped by Agency operatives
were, it seems, flown to Jordan and housed in that building before Guantanamo was up and running or
the Agency had been able to set up its own secret prisons elsewhere. There, the prisoners were
hidden, even from the International Red Cross
[SOURCE: Tom
Engelhardt | tomdispatch.com | 2 January 2008]
| Thursday, 3 January 2008 at 3h 39m 26s | Bhutto was shot |
Meanwhile, the caretaker government is furiously backtracking on its earlier claims that Benazir
Bhutto died of a concussion. The retraction comes after videotape surfaced that shows her being
shot. The Pakistani public has been enraged by the appearance of a cover-up in official
pronouncements on the cause of her death.
[SOURCE: | Hindustan
Times | 2 January 2008 ]
And According to professor Juan Cole
The USG Open Source Center sent out the following note, which points out that in scouring jihadi
web sites, the analysts have found none where al-Qaeda has taken credit for assassinating Benazir
Bhutto. You think of the announcement by al-Qaeda posted the morning of 7/7/05 when the London
Underground was bombed. Yet they are not claiming this one.
" As of 1830 GMT on 31 December, OSC has not observed any official statements from Al-Qa'ida
claiming
responsibility for the assassination of Benazir Bhutto on any of the websites that normally
disseminate authenticated statements from the group. OSC will continue to monitor these websites
for any such claims. "
[SOURCE: Juan Cole | juancole.com | 2
January 2008]
| Wednesday, 2 January 2008 at 1h 24m 45s | Milan's new tax on automobiles travel into downtown | In Milan, the city government has a new "anti-pollution" law beginning with the new
year.
The law classifies groups of automobiles
and assesses a ticket for some of the groups to have access to the center of town. The idea is to
give incentives to the use of public
transportation and also provide funds so that the available public transportation facilities can be
improved.
Certain kinds of vehicles will be exempted: public transportion vehicles, electric cars, and
vehicles that transport the handicapped.
Furthermore,
The daily tax varies from 2 to 10 euros. The yearly fee is 50 to 250 euros. The tickets are
available from kiosks, tobacco shops,
transportation information centers, and also the internet. {You affix the ticket stub to your
car.] Surveillance cameras are placed at
43 different points of access to the center of town. Fines range from 74 to 285 euros.
Translated from the French by me.
[SOURCE: Rome Correspondent | Le Monde | 2 January 2008 ]
| Wednesday, 2 January 2008 at 18h 18m 8s | What economic gifts will 2008 bring | Floyd Norris puts the economic dilemma of 2008 as follows:
In 2008, the biggest issue for Wall Street and the banks will be assessing the damage. Can the securitization market recover, and
continue to provide financing for everything from credit cards to corporate loans? Or will its failure in the area of subprime loans
spread, leaving it discredited and other parts of the economy desperate for cash?
On the answer to that question may hinge the answer to whether the latest financial crisis will pass with little impact on the real
economy, or whether it will pull down all the parts of the economy that enabled most investors to have a good year while their
brokers were suffering.
[SOURCE: Floyd Norris | New York Times | 2 January
2007 ]
| Sunday, 30 December 2007 at 1h 28m 53s | Navy JAG Andrew Williams Letter to Editor | Here's why Navy JAG Andrew Williams resigned in
protest,in his
own
words.
The final straw for me was listening to General Hartmann, the highest-ranking military lawyer in
charge of the military
commissions, testify that he refused to say that waterboarding captured U.S. soldiers by Iranian
operatives would be torture.
His testimony had just sold all the soldiers and sailors at risk of capture and subsequent torture
down the river. Indeed, he would
not rule out waterboarding as torture when done by the United States and indeed felt evidence
obtained by such methods could
be used in future trials.
Thank you, General Hartmann, for finally admitting the United States is now part of a long
tradition of torturers going back to the
Inquisition.
In the middle ages, the Inquisition called waterboarding “toca” and used it with great success. In
colonial times, it was used by
the Dutch East India Company during the Amboyna Massacre of 1623.
Waterboarding was used by the Nazi Gestapo and the feared Japanese Kempeitai. In World War II, our
grandfathers had the
wisdom to convict Japanese Officer Yukio Asano of waterboarding and other torture practices in
1947, giving him 15 years hard
labor.
Waterboarding was practiced by the Khmer Rouge at the infamous Tuol Sleng prison. Most recently,
the U.S. Army court martialed
a soldier for the practice in 1968 during the Vietnam conflict.
General Hartmann, following orders was not an excuse for anyone put on trial in Nuremberg, and
it will not be an excuse for
you or your superiors, either.
Despite the CIA and the administration attempting to cover up the practice by destroying
interrogation tapes, in direct violation
of a court order, and congressional requests, the truth about torture, illegal spying on Americans
and secret renditions is coming
out.
[SOURCE: Think Progress | 29 December
2007]
[SOURCE: Andrew
Williams | Letter to
Editor The Peninsula Gateway : Gig Harbor, WA |
26 December 2007]
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