Mr. Bloggington

i made a funny

2010-07-14T18:09:00.003-04:00

Banker lacked a certain something

Sir, In a meeting recently with a particularly innumerate banker (a history major with no sense of irony) with whom we were discussing risk management, our team were tempted to describe our prospective client as “one derivative short of a financial crisis”. I wonder if your readers have any other double-edged insults that they may care to share?

John Whiteman
Director at Board: Investment Strategy,
The Zeta Fund

Why yes, yes we do.

A history major responds
Sir, Though John Whiteman’s swipe at innumerate history majors struck a little too close to home for me, I’d assure him that I’m merely one tranche short of a collateralised debt obligation.
Todd Fitzgerald
Harrisonburg, Virginia

So many rich people are laughing themselves to death hopefully right now. "Hahaha! Where is Jeeves? He simply must read this."

Also, did you know the Zetas are a renegade Mexican special forces outfit that decided selling/doing drugs was way more fun than not doing that? It's true. Why does John Whiteman work for them?

God Save Europe (actually don't)

2010-06-02T15:45:00.005-04:00

Faced with a teetering economy, a possible sovereign subprime debt crisis, a breakup up of the currency union, and the hellish prospect of working into their late 50s, Europe's citizens demanded an epic meeting of minds, a concerted action to assuage them of their plight, that they may pull themselves up by their own bootstraps, even if those bootstraps are made by illegal Chinese immigrants in Italy.

That effort was made this week as Euroweeners and their "footballs" voted for the winner of the Eurovision song contest. It's like American Idol but with fewer toffs and more socialism. Anyway, this annoying fucking thing from Germany will save Europe from debt deflation:

I'm no music critic but this is basically the soundtrack to the Holocaust. If the devil take the hindmost then all the other continents have nothing to worry about. Even Antarctica, because whatever sounds penguins make blowing each other can't possibly be as bad. Excuse me while I diversify my foreign currency holdings.

A Mr. Bloggington Achievement Award, however, goes to Azerbaijan, who used their Eurovision entry as a ploy to take back Nagorno-Karabakh while Armenia was busy checking out this girl's ass:

EXTREME GOLF CLAP.

this explains everything

2010-05-08T07:34:00.012-04:00

Have you ever been merrily driving along listening to the Jonas Brothers or whatever when some asshole cuts you off, and you're suddenly overwhelmed by the desire to make a shelter out of that person's skin? Well now we know why:

The draft sequence of the Neanderthal genome, obtained from DNA fragments extracted from 40,000-year-old bones, shows that ancestors of modern Eurasians interbred to some extent with the Neanderthals they encountered as they moved out of Africa between 50,000 and 80,000 years ago.

The discovery, published in the journal Science , contradicts the view of most palaeontologists that there was no interbreeding between Neanderthals and modern humans.

Right, grandpa¹⁰. You only "talked" and went out on "one date". Way to slum it.

But hey, good news for Africans finally:

To their surprise, the researchers found that everyone of Eurasian origin – including people from East Asian and New Guinea where Neanderthals never lived – carried a similar amount of Neanderthal DNA, while sub-Saharan Africans had none.

Yea yea, AIDS, poverty, ecological disaster, "government", sure. Well you know what? At least we didn't FUCK NEANDERTHALS.

All this, by the way, on the day the S&P drops 8% in 5 minutes because some dingus forgot his dialing wand and typed a "b" for "billion" instead of an "m", which is significantly less, according to math. But they are very close on the keyboard almost.

[below]: Citigroup trading desk reacts to the share price collapse of Squirrel Pelts, Plc. Thursday. (photo: Bloomberg)

marketing challenges

2010-05-06T14:13:00.002-04:00

ISDA, the business association tasked with defending the usefulness of useless synthetic collateralized debt obligations that destroyed the solar system, thinks the time is ripe for a whole new kind of derivative: sharia-compliant ones.

Haha, everyone hates derivatives enough already without the word "Muslim" attached. Good luck with that. But for those who have longed to make leveraged bets on how many times some trilobite on Saudi TV says "death to Israel", your wait will soon be over.

This Week in Poorly Thought-Out Currency Unions

2010-05-05T19:44:00.006-04:00

Germany finally decided to bomb Greece with money to save the euro. But it will cost them:

On top of the wage freeze, public sector workers will lose their “13th and 14th month” salaries, paid at Christmas and Easter, and see further cuts in allowances.
Andreas Loverdos, social affairs minister, told the Financial Times that pensioners would also lose seasonal bonuses as part of an overhaul of the underfunded state pension system. The average retirement age would be raised from 53 at present to 67, he said.

So Greek public sector workers no longer get paid for "Smarch" and "Cocktober", and they have to work past 53. Quelle horreur! But in Greek.

You know what'll solve this? Setting banks on fire, obviously.

Also, someone slipped Brad, the photoshop guy at The Economist, the brown acid. (KEEP DOING THIS.)

everyone kill yourselves

2010-03-04T06:55:00.006-05:00

My hometown of nearly 30 months, Harrisonburg, Virginia, until now famous only for that dog food smell on Thursdays, was yesterday struck by a 50-megaton spray-tanned nuclear solar flare from space, nearly neutralizing the dog food smell.

James Madison University, the local learning college, hosted Snooki, a human female famous for doing things. She was invited by JMU's Program Board as part of their Distinguished Lecture series. Snooki gave a wide-ranging presentation on topics such as derivatives regulation and Middle East peace for nearly seven minutes, a friend's brother tells me, in a talk titled "At Least Hell Has Free Tanning".

Event organizers were pleased with the turnout, arguing that "bringing a speaker like this is a good way to attract students to events." Sticking with this logic, the Program Board is already preparing for next month's event, Vodka and Cupcakes Night featuring Two Dogs Fucking.

Also, she's not even hot.

best four consecutive words ever

2010-02-28T07:20:00.007-05:00

Eh, this guy, Judd Gregg, the moderate fiscal-conservative bipartisan-curious Republican hero of New Hampshire who was nearly Obama's Secretary of Trains. He simply does not care for "facts".

Mr Gregg also disputed non-partisan economic studies that showed last year's $787bn (€585bn, £520bn) stimulus cushioned the impact of the recession. "The facts are wrong," he said. "I can understand how a Keynesian would make that argument. I find them absurd on their face."

HAHAHA. Gold medal. Suck it, South Korea.

Even devoted Friedmanist follower of Milton Friedman Milton Friedman wouldn't make this argument. He preferred monetary policy to ward off recession, but when monetary policy was exhausted agreed that government spending and tax cuts could be effective, but that tax cuts were better because governments have cooties. Fine, but still.

Gregg then goes on to argue that George Bush's tax cuts "were actually paying for themselves" as Edward Luce develops several aneurysms trying to explain how 1) they actually didn't, and 2) Gregg's logic would at least lend weight to the idea that government spending could in fact blunt a recession. Watch the hardcore action! Or don't, because Edward Luce sounds like a British Harvey Fierstein, only gayer.

What else. Oh right, Judd Gregg then thanks our Chinese overlords for threatening to dump US debt as a fine public service for drawing awareness to our mounting long-term budget problems which the tax cuts he voted for had absolutely nothing to do with you fucking communist.

Haha, Judd Gregg hates the biggest fact of all: America.

Extra credit:

If Mitch McConnell takes a dump in his pants on C-Span 2, does it make a sound? 500 words, double-spaced, on my desk Monday.

UN to tax America's precious moo-cow farts

2010-02-22T02:06:00.008-05:00

First they took our guns, then they took our Medicares, FOR CHRIST'S SAKE WHAT DO WE EVEN HAVE LEFT?!

Livestock should be taxed to reduce the contribution made by their flatulence to greenhouse gas emissions, the United Nations said yesterday in a report that will give anti-livestock campaigners fresh ammunition.
The novel suggestion by the UN's Food and Agriculture Organisation to use taxation comes as campaigners focus on the impact on climate change of emissions of methane from cattle, sheep and pigs.

This is exactly the kind of thing Charlton Heston warned us about. Wake up, America!
I think I hear taps. Wait, no. Definitely not taps.

trading fail

2010-02-18T16:22:00.003-05:00

No dialing wand?:

J-Com in new 'fat finger' trade case
J-Com, the Japanese re-cruitment company at the centre of a "fat finger" trade in 2005 , has been caught up in another case of market inefficiency after a trader mistakenly bought up a chunk of its shares instead of those of a similarly named but unrelated company. The trader is thought to have mistaken J-Com for Jupiter Telecommunications, a cable television group widely known as JCom and which on Monday was the subject of a tender offer by Sumitomo Corp announced after markets closed.
To make matters worse, the stock price of both Jupiter Telecommunications, Japan's largest cable television operator, and J-Com were at similar levels before the market opened for trading yesterday.
[...]
It is not the first time that the recruitment company has been subjected to ill-fated events in the market. J-Com stock was the focus of a botched trade when it listed in December 2005 when Mizuho Securities, the Japanese brokerage, accidentally tried to sell 610,000 shares in J-Com for Y1 each.
Mizuho had been trying to sell one share for Y610,000. The error was compounded by a glitch in the TSE's computer system that blocked attempts to cancel the trade.

Important Financial Regulation Nooz

2010-02-11T19:28:00.009-05:00

Oh god damnit. Barack Obama's bank regulation thing. First Obamers rolled out a plan to tax big ole banks to recoup losses on TARP bail-out money. This is around $100bn and would be paid back over 10 years and would be easier on banks with large deposit bases. Fine. Except that:

1) TARP money did not go to just banks, even though they're the only ones who are being asked to pay the new tax.

2) Most banks that took TARP money have already paid the government back at a LARGE PROFIT TO THE GOVERNMENT. Did you know this?

And 3) some shit I can't remember.

Anyway, banks called bullshit on this and its the first time in awhile (history) that they've had a point. Still, it made them cry, and this is funny.

THEN, a few days later, oh man, Obamington rolled the big mother financial regulation thing no one saw coming. This is the Volcker Rule, after Paul Volcker, the 9ft-tall former Fed chairman who wears a blinking red light on his head so as not to be struck by low flying aircraft. The Volcker rule seeks to ban banks from proprietary trading, i.e. trading on their own account. Gambling with customer's money would be fine as long as the customers want to. Gambling with banks' own capital is not. The new rules would also impose limits on banks' size.

Egh. The good thing that can be said about this is that its big and disruptive. Something to shake banks out of their complacency. A modified Glass-Steagall, sort of. Whatever. BUT, if we're looking for actual solutions to actual problems revealed by the actual financial crisis that actually just happened, then I have no fucking idea what any of this is for. Let's review...

At the root of the financial crisis was basically a guess. A guess that people would not default on their mortgage payments in as big numbers as they turned out doing. For most other markets there is a huge statistical history where you can extrapolate all sorts of nerdly things to give you some sort of reasonable idea about where things will go or wont. As is made clear in this book here, banks simply had no idea what default rates for subprime mortgages would look like because there was no such history. So there it is. The guess.

From this guess a massive edifice of complex mortgage-backed securities was built. Banks securitized mortgages and sold them. Other banks bought and repackaged them into even more complex mortgage-backed securities and sold them again. Credit ratings agencies gave them AAA ratings, which means their likelihood of default was the same as the most stable of governments. How did they know this? They didn't.

At the same time trillions of dollars of credit insurance were written between banks on these same securities, and why not, since it was very cheap to do so, and the insurer was more than happy to, since the likelihood of default on AAA assets was by definition very low if not impossible. And since banks thought this effectively immunized them from any risk this only reinforced the process further.

Finally to lubricate this trade a fragile "shadow" banking system arose, with super short-term just-in-time financing and off-balance sheet vehicles with no capital requirements. And the minimal capital cushions banks were required to have under Basel II international banking regulations turned out to be wholly inadequate because those rules used, haha yes, ratings agencies to risk-weight certain assets, the shittiest of which were rated AAA.

Yea well, the guess was wrong. Even people who saw the housing bubble a mile away were shocked by the impact on the financial system. Losses once thought impossible happened daily. The financial system froze. America elected its first black Muslim communist president.

So do you see where the Volker rule fits into all of this? No you don't because IT FUCKING DOESN'T.

I just don't get it, man. Banning banks from proprietary trading, trying to maintain a core of safe banks that can't fail while pushing the risky stuff out into the ether seems to create more problems than it solves, and I'm not convinced it solves any. Goldman Sachs for example can trash its new banking charter to avoid the proposed regulations, but does anyone think this would stop Goldman from getting bailed out if necessary? So what's the point? This would needlessly tie down regulators who would be left bickering over what is proprietary trading and what isn't. That would be fine if that contributed to the financial crisis but Jesus fuck it didn't? Moreover there's no real evidence that size per se had anything to do with the likelihood of failure.

So I have no idea what's going on. At best the new proposals are irrelevant. This is like the financial regulation version of the response to 9/11. Yea, bin Laden attacked us WOO LET'S INVADE IRAQ. But at least we had an idea why George Bush wanted to invade Iraq (freedom). This Volcker rule is just baffling. I really want to believe that this had nothing to do with a certain naked Republican teabagging Ted Kennedy's headstone, but I'm having trouble finishing this sentence.

Fortunately much of the real work to strengthen the financial system is being done through the Basel Committee.

And I am getting way ahead of myself.

The Volcker rule still has to go through Congress where Ben Nelson will make it a tax cut for fetuses somehow.

update: I almost forgot. The Volcker rule also bans banks from investing in hedge funds and private equity, because golly we all know how many hedge funds and private equity companies had to be bailed out: 0.

Senator Oldpants

2010-01-25T20:17:00.005-05:00

I signed up to John McCain's mailing list simply to make fun signs like this:

Hilarious, right? I know.

But was it worth having to read things like this?

Our national debt has reached an all-time high of $12.4 trillion dollars as a result of the astonishing expansion of big government under President Obama. And now, Congressional Democrats want to raise our national debt ceiling by an additional $1.9 trillion. This is unconscionable.

If Democrats are successful in raising the debt ceiling, our country will have a budget deficit of nearly $14.3 trillion! It's outrageous and frightening to think of passing on such a staggering amount of debt to our children and grandchildren.

Leaving aside whose fault this all is, and leaving aside that not raising the debt ceiling would require immediate and arbitrary spending cuts (or a fucking default, Jeebus help us)---leaving aside all that---is it too much to ask that someone who's been Senatoring since the Pleistocene know the fucking difference between the budget deficit and the national debt?

Yes.

FT front page Executive Summary

2010-01-19T20:06:00.007-05:00

Still a week behind hooray! God damnit, why did I start doing this again?

ESPN is set to launch history's first 3D tele-mo-tron station. And you thought seeing Derek Jeter scratch his nuts in HD was the pinnacle of human progress? Well, you, sir, are a fucking idiot.

Google is opening a store, on the internet somehow (?), to sell its new Google phone thing that no one is buying.

Everyone thought Warren Buffett was going to intervene in the Cadbury bunny saga but it turns out he didn't because this story is a week old.

The Bank for International Settlements invited top private bankers for a top-secret entirely public meeting that Ron Paul and Lyndon LaRouche think is completely nothing to worry about. Actually the BIS yelled at them for their risky business dealies.

Senator Chris Dodd and his hair are sick of Senatoring and will retire this year so as not to lose embarrassingly to a Republican. Democrats will now get a chance to run someone with approval ratings in the double digits and will likely win, because the hedge fund capital of America is also solidly communist somehow. Since Dodd is leading financial regulatory reform efforts in the Senate, everyone is now wondering whether he'll roll over to banking lobbyists with their free handjobs, or "stick to his principles", which is the same thing.

Goldman Sachs is parting with its Japanese mistress of 24 years:

The relationship was cemented by an agreement that allowed Goldman to tap SMFG’s vast balance sheet to help its corporate clients execute trades and do deals.

This is how it always starts. One minute she's letting you tap her "vast balance sheet", now its all arbitration proceedings and paternity suits.

Two dingleberries in the British Labor party---oh, I'm sorry, "Labour" party---thought it would be a good idea to challenge Gordon Brown's leadership just as he actually started gaining on the Conservative's sexy David Cameron in the polls. Poor Alistair Darling was left to twitch his massive eyebrows in confusion.

Ghanian authorities are probing, in the butt, allegations that an oil company with links to a former president helped a Texas-based company secure blocks in a newly discovered offshore oil field at unreasonably sexy terms.

President Obama said "the buck stops with me" over that whole weenerbomber thing. This is a welcome improvement over George W. Bush's "the buck stops here. Well, over there, actually. No, not there. Back a little. No, left.....no......just keep going. Almos--HEY LOOK A PONY!"

Former McKinsey director Anil Kumar, who may or may not frequent White Castle, pleaded guilty to funneling information to his fat Sri Lankan friend in that insider trading thing everyone's already forgotten about.

America added to its massive army of killer mutant Unemploids.

JP Morgan completed the assimilation of Bear Stearns, a famous bank-type thing that collapsed while its boss played cards (this is true). Gone forever is Bear Stearns' memorable corporate logo, the, uh, typed words "BEAR STEARNS". *Tear*

The Financial Times sent a questionnaire to leading banks about how they will deal with UK banker bonus tax. Paying even more ridiculously large bonuses and telling shareholders to suck it was a popular response. Except for Goldman and JP Morgan, who just threw the survey in the trash like normal people.

A Swiss federal court ruled that Swiss authorities broke Swiss bank secrecy laws when Swiss authorities gave up secret Swiss banking information to the United States, from Switzerland. Also they ski and make cheese there.

And in Ukraine, the IMF postponed Christmas so their indigenous munchkins were forced to put off the traditional "stand in line like idiots" until January 7th.

FT Front Page Executive Summary: Pound of (Camel?) Flesh Edition

2010-01-14T18:10:00.004-05:00

Dubai unveiled the world's tallest building, in Dubai of all places, and threw in some fireworks since everyone already knew it was there, what with it being a large building. It was renamed the Burj Khalifa after the president of Abu Dhabi, which had to bail their dumb asses out. There are, hmm, some vacancies.

Some of the world's most important-sounding investment funds are set to cut holdings of US and UK bonds. Say it ain't so, Pimco. 10-year Treasuries creep towards the 4% mark of death, which is uh still really low.

Haha, former Time CEO Jerry Levin is VERY SORRY for the AOL merger that crippled shareholders and urged other CEOs to apologize for the dumb things they did ten years later.

Optimism prevails in the thing-making industry.

And some guy from New Jersey says the US public pension system faces a $2 trillion shortfall, according to math, if you take into account today's lower interest rates and some actuarial shenanigans. Bitchin'.

FT Front Page Executive Summaries

2010-01-14T17:28:00.004-05:00

Haha, Ben Bernanke, the new "I didn't do it" boy. Pretty much everyone with any responsibility for the financial crisis this year has at least pretended to be contrite. But he gaveth a speech at the American Economic Association that blamed poor financial regulation rather than low interest rates. And he's probably correct, according to blogs.

December was the first month since ever that the US suffered zero combat fatalities in Iraq. Knock on wood times a million.

Iranian opposition leader Mir-Hossein Moussavi is all like "you know what, go ahead and kill me, you fucks."

Kraft is just so intent on violating the Cadbury bunny.

A TERROR SUMMIT was called by western governments over what to do about Yemen. How bout not bombing the shit out of it? Let's try that once, just to say we did. Separately the US and UK embassies closed for a few hours after unspecified terror threats that may or may not have involved underpants.

Walmart summarily executed the low-price smiley face queer. He wasn't a "team player".

Lobsters 1, Canada O.

And Pope Nazius the Whateverth engaged in a little youthful indiscretion during his New Year's address. Unlike most of us who were able to experiment with controlled substances in our youth (Jergins), Pope experimented with German artillery pieces.

FT Front Page Executive Summary: Can I Avoid a Borat Joke Edition

2010-01-10T23:28:00.007-05:00

If your bank gets bailed out, and you still feel the need for an entertainment budget, then just seriously go ahead and die.

The US International Trade Commission imposed dooties on imports of Chinese steel pipes. Oh fuck BORING.

Kazakhstan is probably the world's biggest uranium miner now, and they might have been trying to sell some to Iran, unless they're not and weren't.

Okay, let's say you're a Muslim, you're from Nigeria, your dad's already warned the US embassy that your skullcap is on a little tight, you're known to have had sexy internet chats with a nutcase Yemeni cleric already known to have had sexy chats with another recent terrorist murderer douche, and intelligence agencies have already caught wind of a possible terrorist attack involving some Nigerian Muslim with connections to Yemen. How 'bout we don't let you on the plane? Take a cab. Or drive one. Dots. Connected.

Relatedly, some European airports will use full body scanners ("Dutch ovens") to defend planes against anymore Hanes bombs. And they come with Dance Dance Revolution. Have you ever tried to dance with pentaerythritol in your anus? Not easy.

FT front page Executive Summary

2010-01-10T22:29:00.004-05:00

Ugh, so behind. Anyway... ::drum roll:: ::fanfare:: ::armpit fart:: ...NEWS!

Iran's government wants to know how anyone in Iran could possibly hate its repressive secretive stupid illegitimate government of retarded incompetent rednecks? Oh right, because of Britain, flobviously. Still sore about Mossadeq.

China also tried to settle historic scores with the UK by executing a British mental for drug trafficking, because of the Opium Wars, why not. Some complained the trafficker, Akmal Shaikh, was a few bricks short of a stash, given that he, oh let's see, TRAVELED TO CHINA TO BECOME A POP SINGER VIA TAJIKISTAN, as we so often do. But China was all like "lick my dumplings, bitches" and shot him.

President of America Barack "Re-Run" Obama pointed his righteous finger at intelligence agencies who failed to point theirs at the appropriate underpants. They promised to "go commando".

Russia is considering capital controls to halt the rise of the rouble which is funny because last year they were draining reserves like mad to defend it. Markets are retarded, the end.

And Russian autoworkers brace for the inevitable bearing-of-the-moobs Vladimir Putin is famous for.

uhh..

2010-01-05T13:59:00.002-05:00

I thought I knew a lot about Yemen. But this suggests I could stand a little more research. Especially with you two. And bring the guns.

FT front page roundup: Economics Fail

2010-01-05T11:52:00.007-05:00

Chinese premier Wen Jiabao is all like, "why these peeps be all protectionist and shit when we only subsidizin' our exporters by massive currency intervention? Why you hatin'?"

Obama will check his terrorist watch list, and check it twice.

Also, this watch list is actually called the Terrorist Identity Datamart Environment (TIDE), another sad case in the annals of Struggling To Arrange Awkward Things Into A Cool-Sounding Acronym (STAATIACSA).

A consortium of South Korean companies won a contract to build nookyaler plants in the United Arab Emirates. Nothing bad can come of this.

IMPORTANT STATISTICAL FINDINGS: Countries with large "shadow" (semi-to-not-at-all-legal) economies tend to be cushioned from recession better than others, except in the many cases that they are not, because countries exhibiting pervasive honesty tend to be cushioned from recession better than others. Thank you, interns chained to your desks in the basement of Deutsche Bank.

And lo, pity the poor Iranian police, trying to have a peaceful college-student-whomp-slash- dirtbike-rally (?) only to be pummeled with concrete.

FT front page roundup: Underpants of Terror Edition

2010-01-05T10:59:00.004-05:00

Some toolbag from Nigeria tried to blow up a Christmas plane but merely succeeded in esploding his weener. So only THAT will be nailing virgins in paradise. His body gets to stay on Earth and get raped in a Supermax for awhile.

President of America Barack Obama warned the terrifying terrorists that Americans will not be terrified by their terrible terrifying terrorpants of terror.

Republicans and Joe Lieberman (Republicans) think we should invade Yemen. Not double-checking our paperwork or improving airport security, no, this is for pussies. Invading the country with more guns than people is the reasonable thing to do.

In other news...
Terrorists in Pakistan think Shi'a Muslims are not nearly Muslimy enough and cannot stand seeing them live.

The Fed is extending its favorite new monetary policy tool--the ability to pay interest on reserves (also, that's what she said)--to offer banks term deposits as it prepares its exit strategy from quantitative easing.

Haha, this is genuinely funny on its own so read it. It's about boardgames in Argentina. For reals.

Also available is Bureaucracy, which exploits locals’ disenchantment with the country’s notoriously cumbersome civil service. Argentina ranked 118th out of 183 nations in the World Bank’s latest Doing Business survey, which benchmarks obstacles to commerce.

The game is designed to elicit groans of recognition to anyone who has ever spent hours grappling with regulatory issues in public offices in Argentina.

The game, made by toymaker Habano, cheerfully invites players “to waste time and lose their patience” as they move across the board with a lengthening list of documents to procure and departments to visit in their quest to complete a simple piece of paperwork.

It is a game “where everyone loses”, crows the box.

FT front page roundup: Christmas Edition? why not.

2010-01-01T07:16:00.005-05:00

Italian authorities uncovered several dead hookers and €80bn in undeclared assets in a tax amnesty but will lose it all what with the government being staffed by Italians.

Haha, the Senate deathcare bill will impose a 10% tax on tanning salons, as John Boehner and his 15-year-old niece cry orange tears.

Let's see, investment banks this (last) year saw a large increase in revenues from service fees from debt and equity issuance, but this was offset by a decline in revenues from merger and acquisition activity. A million points if you can find a joke here.

Glencore, a Swiss commodity trader, is set for an IPO, who cares.

In Bethlehem, Israel is showing the Christmas spirit (AND WHY WOULDN'T IT?) by restoring the original nativity scene with the 30ft concrete barriers that kept baby Jesus from riding his donkey cart on Roman-only roads, for historical accuracy.

And in another Christmas miracle, Sinead O'Connor tackled the Pope or something.

Hard to tell here, but it doesn't look like he signaled fair-catch, and all the flags were late.

God's work

2009-12-31T04:32:00.006-05:00

Haha, just, why. The Financial Times names Goldman Sachs CEO Lloyd "G-Sach" Blankfein its Human Person of the Year. Fortunately for them everyone who hates this (i.e. everyone) is too poor to subscribe to the Financial Times.

Which reminds me, something is wrong with this Goldman Sachs ad. Let's see...

Oh right.

Fixed it!

Haha, it was a joke!

For the record, Goldman-bashing has always annoyed me a little, to the extent that I care, which is not at all, but jesus, this is why God invented the copy-and-paste tool.

FT front page roundup: Change Edition

2009-12-30T16:02:00.005-05:00

Hahaha, Lehman Brothers, you'll recall, the bank that collapsed and died and ignited the horrible sequence of events that led drunk illiterate rednecks to willingly vote en masse for a black Mexican Arab Kenyan named Hussein for President of Earth? IT'S STILL PAYING OUT BONUSES.

China's banks are being ordered to boost capita l after going on their own government-led subprime lending spree of joy recently.

Silvio Berlusconi's approval ratings ticked up a bit after he was hit in the face by a church, as we've previously discussed. Unpopular leaders everywhere (i.e. everyone except Putin) consider staging such attacks.

Grand Ayatollah Hossein Ali Montazeri died in Iran. He was once in line to succeed Ayatollah Ruhollah Khomenei but fell out after saying it probably wasn't very nice to kill literally everyone in the last government, which made him a "dissident". Also he went to Phish concerts. Iranian opposition protesters will now get their mourn on, plus tear gas.

FT front page roundup

2009-12-30T15:18:00.004-05:00

Business leaders were very upset over the lack of clarity in the Copenhagen climate change dealie that they suddenly care about. This actually is a big deal since it will soon pay to make coal-powered cars if the carbon price drops any further. Al Gore must be spinning in his grave.

The "elected" "president" of "Afghanistan", Hamid Karzai, Earth's foremost garden gnome of corruption, appointed his corrupt new cabinet that everyone hates.

Airbus and Boeing, which compete solely to transport Happy Meals to the soldiers in whatever country the US invaded that week, got all pissy over some WTO report. The fact is they both complain about the huge subsidies the other gets while studiously ignoring the huge subsidies that they get, because, you know, fairness?

Let's see, the socioredistributizationalist healthcare bill cleared some more hurdles somehow. But Ben Nelson does not want me to get an abortion. It's my body, Ben!

And oh hey, right, if you WEREN'T DRIVING IDIOTS AROUND IN A BLIZZARD FOR 15 HOURS STRAIGHT then you may not have noticed it snowed a lot last weekend. I did not have such problems.

FT front page roundup

2009-12-30T14:52:00.004-05:00

Climate negotiations in Copenhagen ended with a watered-down "deal" that everyone agreed was not a deal at all and what the fuck are you talking about?

Rich country negotiations stagnated after Friedrich Reinfeldt of Sweden noticed Angela Merkel's manhands, and the acrimony reached a head when Hugo Chavez and Evo Morales led developing countries in a surprisingly catchy "yo, fuck the po-po-polar bears". And who cares about yanqui gringo bears anyway.

John Mack of Morgan Stanley decided not to take a year-end bonus since his bank will likely make a loss. REVOLUTIONARY.

And Google's cutting-edge 21st-century genius nerd plan of scanning books that no one reads so as to be easily sued by their destitute authors is going swimmingly, like polar bears.

FT front page roundup: As I Struggle to Catch Up Edition

2009-12-30T14:21:00.004-05:00

Deutsche Bank plans to share the pain of a new UK banker's bonus tax in much the same way BDSM parlor attendees share it, i.e. on the buttocks by some German guy (Josef Ackermann).

Beard enthusiast Ben Bernanke will almost certainly get a second term at the Fed over Republican's impotent bitching.

Activist ("communist") investors are taking advantage of a CRAZY recent SEC ruling that allows a company's owners to have a say in the succession of CEOs. Insane, right?

And Silvio Berlusconi was set to make his acting debut in Phantom of the Opera II, which is just him nailing 18-year-olds to organ music for three hours.

ACTUALLY he was released from the hospital after a mental threw a tiny cathedral at his face, doing severe damage to his plastic surgery, also teeth.

FT frontpage roundup: THE RETURN OF THE FT FRONT PAGE ROUNDUP

2009-12-20T21:16:00.006-05:00

I'm stuck in the snowpocalypse, so why not. Some motherfucking headlines!

Failbank Citigroup was all set to free itself from Tim Geithner's deadly reacharound like every other bank but still somehow managed to fuck that up. Someone at Citi thought it might be funny to lowball the government in it's planned share offering so instead it will now be kicked in them (the balls).

Important news in financial innovation. Insurance companies will soon offer protection to companies who stand to suffer reputational damage when their spokespeeps, oh I don't know, get caught straight-up nailing pornstars and fire hydrants and trees and shit.

Some insider trading thing, who cares.

In order to soothe investor concerns about all this inflation that there isn't any of, the Federal Reserve announced an end in February to some of its special liquidity programs, like its Bernanke FunBucks swap lines with foreign central banks. Little awkward breaking up right before Valentine's day. Still, THRILLING.

And Danish police dressed as Legos broke up David Bowie's rendition of Cats for reasons that should be obvious.

to my "fans". (hi mom!)

2009-08-28T16:37:00.003-04:00

Have you been checking this blog daily, attempting to fill the void in your soul, only to be let down time and again, for months? Of course you have...

BUT! Now I am writing again (occasionally) over here at this VERY SERIOUS NEWS SITE. There are no bylines, like my hero, The Economist, so just go ahead and assume that everything you laugh at was written by me, the end.

life goals

2009-05-12T18:39:00.003-04:00

On May 12th, 2009, the Financial Times, the renowned global newspaper that regularly publishes letters from people who write books or run countries, allowed me to wantonly shout obscenities at old people.

This is quite a milestone for me, one of few in my 28-year career as a carbon dioxide manufacturer. It ranks right up there with, I don't know, wiping my own ass for the first time, or making out with hottest girl at a rival high school when I was 16. Until I was dumped for someone with a personality. GOOD FOR HER. ::sob::

Anyway, gay avenger and chairman of the House financial services committee Barney Frank gave an interview with the FT the other week, making characteristically smart-ass remarks about efforts to recapitalize ailing banks:

Mr Frank said there were other ways for [Treasury Secretary Tim] Geithner to boost bank capital if next week’s stress tests revealed a big shortfall – for example by imposing a “haircut” on bondholders by forcing debt-for-equity swaps, a step the administration has been unwilling so far to take.
“Risk is inherent in the nature of being a bondholder,” said Mr Frank. “[As for] subordinated debt: Why the hell is it called subordinated?” However, he added: “To the extent that imposing haircuts would cause a daisy chain effect you have to be worried about it.”

Fine.

But then along came nice professor Paul Antal, who read Frank's question literally, wrote about it, and for some reason the FT published it.

In your interview with Barney Frank (April 25) you record his spontaneous remark: “[As for] subordinated debt: ‘Why the hell is it called subordinated?’” Is anyone else troubled by the fact that the chairman of the House financial services committee does not know why some debt collection is subordinated to others? Even a retired humanities professor in Boulder, Colorado, knows that.

Ok, now professor Antal is almost certainly a wonderful human being. I imagine him in his study, writing checks to various anti-poverty campaigns while his cat, Mr. Whiskers, licks himself in front of the wood stove. In another capacity, I'm sure I would exchange pleasantries with professor Antal, as I pet Mr. Whiskers.

But no. You, sir, insulted Barney Frank, and that there's my bitch.

So, in a caffeine-induced rage, I wrote the following, with the express purpose of swearing and being a dick:

Sir, Paul Antal (Letters, May 7) wonders why Barney Frank, chairman of the House financial services committee, doesn't seem to understand the capital structure with his question: “Why the hell is it called subordinated debt?” The question of course is clearly rhetorical, and the context implies that Mr Frank thinks subordinated debt holders should line up for their “haircuts” before senior holders, otherwise why the hell bother with the classification “subordinated”? Even a 27-year-old security guard knows that.

So there, beating up a nice old man, with words. Why does the FT print this filth? I'm beginning to lose all respect for them.

re: idiots

2009-03-25T10:52:00.009-04:00

Welp, I'm famous.

The letter is in response to an op-ed by Gary Becker and Kevin Murphy, who wasted several column inches whining about literally everything being done or proposed so far to counter the recession, and that we should merely be comforted that capitalism is STILL BETTER THAN STALIN. This is the kind of rigor you'd expect from the University of Chicago, founders of the 'Ass, Insert Thumb' school of countercyclical economic policy.

The tulip thing is a reference to the mania that took hold in Holland in the ~~15th~~ 17th (ha, whoops) century, when the price of tulips resembled that of houses in the US in the 2000s, stocks in the late 90s, and on back, before deodorant. It's a clever way of saying that the weight of centuries of human activity lands squarely in the "Becker and Murphy are dumb" school of thought.

Oh yea, Becker and Murphy still somehow managed to win the Nobel prize in economics and the John Bates Clark medal, respectively. Way to go.

Separately, I'm very disappointed with the FT editors for mangling the intent of my original letter which appears below:

What, if anything, are Gary fuck Becker and Kevin Murphy fuck advocating in response to the global recession and financial crisis balls? I read and re-read their op-ed for a specific proposal cock but they seemed more or less satisfied with their attitude of: "if its broke, don't fix it." Their weener concerns about overbearing or unrelated government intervention seem fucking valid enough, I suppose, but if they really believe that "[g]iven the losses, actors in these markets have a strong incentive to correct their mistakes the next time", well then I have some motherfucking tulips for sale, word.

FT Week in Reviewington: This Week in News

2009-03-23T13:38:00.020-04:00

Yay, I missed my own self-imposed deadline since I got to spend two hours on the phone with my bank's credit card fraud department last night, hooray! So here's the abridged version of what I was going to write.

Everyone flipped a shit last week over bonuses to be paid at AIG Financial Products, the division of the company that killed all your money, and innocence. Congress managed to make this travesty seem reasonable by comparison and proposed a putative 90% tax on bonuses at all companies receiving government assistance. Some nerds argued that the tax might violate that thing, what's it called, the Constitution.

Banker douches predictably got all pissy over this "witch hunt", but in fairness to witches, they never actually came close to destroying the world economy, or, you know, existed.

Treasury secretary Tim Geithner took some serious heat over the AIG bonuses, since its the first event of the financial crisis Congress can actually understand. Separately, Mr. Geithner is still pretty much the only person working at Treasury because Obama's vetting process continues to find that everyone has done something moderately distasteful in their life, which is unacceptable.

Current AIG boss Edward Liddy, who is actually working for a nominal salary of $1, is accosted by the aging hippies of Code Pink who demanded he return it, even though he needs something to snort his dwindling coke stash.

John Gapper worries that the reason AIG gave for handing out the bonuses, that they needed to keep the writers of credit default swaps on payroll in order to unwind those trades, might be accurate. Those contracts alone are complicated enough, and the collateralized debt obligations they insure even more so. This is exactly like some bad comic book where only the super villain can disarm his doomsday device, so we all have to give him our monies. We'll call him "Derivatron".

Gillian Tett explains that the logic behind securitization, the bundling of mortgages, car loans and whatever else into securities and selling them to investors most capable of bearing the risk, worked more or less as planned. The idea was to disperse risk and indeed all of it was, directly to AIG.

The Federal Reserve ramped up its quantitative easing strategy, only don't call it that or Ben Bernanke will kick you in the nuts. It's basically monetary policy on steroids, and Imodium AD. The Fed plans to buy $300bn in US treasuries and another $700 some-odd billion on mortgage-backed securities to, among other things, push rates down to assist in refinancing underwater mortgages. This is the first time the Fed has explicitly monetized US debt but follows similar moves by the Banks of England and Japan. The dollar fell sharply on the news. It is thought the Fed is attempting to buy time until Tim Geithner's toxic asset program and the revamped TALF can be implemented.

Pope to Africa: Drop Dead. The pontiff, fresh from re- then uncanonizing a holocaust denier, continues his charm offensive by telling Africans that condoms not only wont cure AIDS, duh, but will make the problem worse. Okay, Mr. Pope, its bad enough Africans have to deal with contradictory messages coming from their governments, traditional "healers", and poor-hugging NGOs without the Ambassador to Jesus coming along and sowing more confusion amongst all the crop failures. (Also the Pope wasn't counting on the soon-to-be-released Trojan Kevlar!) Even as a non-religious heathen I'm reluctant to just come out and say "hey, fuck you, Pope", so pardon me while I have a hot love-making session for one, just to spite you.

This Week in Graphs:
Corporate earnings are in for 2008, and they're pretty great, uh, if you flip them upside down, like they were on your boss's desk, when he was firing you...

Mohammad Khatami withdrew from the presidential race in Iran after two other reformists planned to run, threatening to dilute the vote against Mahmoud Amadi-Nejad.

Asif Ali Zardari of Pakistan agreed to reinstate the judge at the center of the political crisis and will ask courts to reconsider the banning of opposition leader Nawaz Sharif from politics. Thank fucking god.

Epic scumbag Avigdor Lieberman of Yisrael Beitenu, likely to be king-maker in any Likud-led coalition in Israel, is set to become foreign minister. So Israel's new public face to the world will have openly called for ethnic cleansing of Palestinians and actually lives in a Jewish settlement. Diplomacy!

Separately, the Israeli army wantonly killed civilians in the Gaza war according to allegations made by the incorrigible anti-Semites in, uh, the Israeli army.

The entity managing China's foreign exchange reserves, SAFE, lost roughly a bajillion dollars investing in equities right before they became a substitute for toilet paper.

Finally, the army in Madagascar overthrew president Marc Ravalomanana and installed...

...hey, Ralph Macchio, I guess. Alright.

FT Week in Reviewington: Recession Defeated

2009-03-15T07:10:00.029-04:00

Everyone put down your food stamps and fucking pay attention! The recession is overrrr! We fucking did it, yeaaah! Done. Pwned. Pull the money, if you have any, out from under the mattress and halt construction on your race-war bunkers...

The S&P 500, if you'll ignore for the moment the 4-month nosediveish trend shown above, and the entire year before it, was up 10% on the week with most other major indices topping 5% or so. The rally began Monday when Citigroup reported that it had made something called a "profit" in the first two months of the quarter. I had to look up what this was in the dictionary but apparently they are good and make up for the billions in government aid and no-cost financing from one of the Fed's many "temporary" liquidity programs. JP Morgan and Bank of America made similar claims, thought no word on the actual size of these alleged "profits". Retail sales in the US also held up at non-cataclysmic levels. So as I understand it, "not terrible" is the new awesome.

Some pants-jizzers were certain the news marked the bottom of the market:

One investor confident that equities have seen the worst is Anthony Bolton, president of investments at Fidelity International.

In a video interview with the FT this week, Mr. Bolton called a bottom in stocks and the start of a new bull market. Mr. Bolton made the same call late last year, before a renewed sell-off.

Haha, journalism. In all seriosity, the rally was a pleasant distraction from the continuing collapse of industrial output everywhere.

Moving along, there's still a fucking financial crisis. Eighteen months on and the only financial institutions that can access capital markets, if at all, are the ones huddled in a tent-village outside Sheila Bair's house. Possibly because banks still have huge amounts of unpriceable shit on their books. Possibly.

If anyone needed a single metric to determine just how bad the things really are, well here you go. The non-profit Sesame Workshop was forced to lay off 20% of its workforce. Meanwhile the entire Sesame Street gang has been forced to scrape by in Oscar's trash condo after a bitter labor dispute. Except Snuffleupagus, who doesn't fit. Fuck you, Snuffleupagus. The rest work in various semi-legal fields, struggling to pay off Oscar's mortgage, which is saddled with negative equity since he refinanced at the top of the market and built a cardboard add-on. TYPICAL SUBPRIME LOSERS.

The G-20 summit convened in the UK, so everyone get your caffeine pills ready, and probably those things that hold your eyelids open for extended periods, you know, pornography. Topping the agenda will be fiscal efforts to fight the recessions, establishing a framework for actually regulating global financial markets on a global level, and boosting IMF funding to keep eastern Europe from falling of a cliff.

Tim Geithner prefers phone chats with UK finance minister
Alistair Darling so as to avoid looking him in the eyebrows.

The US initially called for a tripling of IMF contributions, which is amazing considering two years ago people openly discussed closing it down since it had nothing to do. But now everyone is broke so its saved, hooray. A deal on the IMF is likely to be the only significant outcome of the summit, since the US-UK front to throw money at the recession met stiff resistance from masochistic tightwads in Germany:

“We have reached our limits,” said Axel Weber, president of Germany’s Bundesbank, in Frankfurt yesterday. “The expectation that we could neutralise this synchronised recession through short-term fiscal policy measures is false. We should not even try. There will be costs.”

Axel Weber is totally gay for recessions.

In light of US spending plans, Chinese premier Wen Jiabao finally, and hilariously, did what everyone in China had long fantasized about and yanked the choke-collar of post-imperialism. America will pee on the rug again anyway. Ruff.

Ken Lewis of Bank of America is more or less openly flouting an actual for-real investigation into bonuses paid by the failboat U.S.S. Merrill Lynch before BofA acquired it. BofA, a recipient of billions in government aid, reasons that protecting the privacy of greedy douchebags at Merrill, whose company nearly destroyed them, mind you, is more important than cooperating with the NY attorney-general. Why anyone would possibly take a stand on principle over this, now, is beyond me. Never underestimate the power of the handicapped.

The perp-walk we've all been waiting for: Bernard Madoff plead guilty to securities fraud and was marched directly to jail. He took all the blame and declined a plea bargain to rat out his employees, who prosecutors surmise must have known and helped in the fraud, what with the compiling of elaborate financial statements complete with pie-charts of deceit. Further cases are likely at some point. Madoff, who had been under Park Avenue-arrest, will hopefully get to shit in front of strangers forever.

Thirty years later, Jack Welch, father of the "shareholder value" movement, much maligned for breeding destructively procyclical short-termism in corporate boardrooms, derided those who ever listened to his "dumbest idea in the world." Uh, thanks, Jack.

Mike Mackenzie attempts to puncture the twisted cult of the Dow Jones Industrial Average.

Unlike most equity benchmarks, the price of a company matters greatly for the Dow, as it is weighted according to a company’s share price and not, like most indices, according to total market capitalisation. That means a stock with a low price has much less influence on the Dow’s overall performance.

Perma-bear Stephen Roach of Morgan Stanley, who has called three of the last one recessions, is worried that the paths chosen to counter the global meltdown so far are merely exacerbating the same underlying imbalances that led to this mess in the first place. Deficit countries have been the most jubilant about spending their way out while surplus countries seem reluctant. The noises coming out of the G20 summit unfortunately seem to confirm these attitudes haven't shifted.

Gillian Tett spoke with ~~Dolf~~ Bo Lundgren, the Swede who headed the efforts to clean up their banking system after the financial crisis of the early 90s:

[T]he grim truth is that, if the financial system keeps melting down, then eventually even the unfathomably large cost of a blanket guarantee might look more palatable than other options. And even before that, there is another crucial point: “What we learnt in Sweden is that you cannot solve financial crises by taking a piecemeal approach,” laments Mr Lundgren, who confesses to feeling deeply worried that “there are still [so many] piecemeal approaches being used”.

Hey, we've ignored you for so long, Sweden. Why stop now? Schnergen.

Pakistan, the basket-case enclosed in a hand-basket, post-marked to hell, just upgraded to overnight shipping. The opposition PML-N is staging protests against prime minister Asif Ali Zardari, after the Supreme Court barred its longtime leader Nawaz Sharif (the 'N' is for 'Nawaz') from holding public office, in a move that is widely seen as politically motivated. Sharif and Zardari had earlier united to secure the ousting of the military government of Pervez Musharraf but soon fell out over the failure to reinstate a senior judge dismissed by Musharraff, who it is thought may pursue corruption charges against Zardari. Pakistan already faces terrorist attacks, two insurgencies, an army only partially answerable to the government, and a desperate need of IMF funds, but will now have the more reasonable segments of the population rioting in the streets.

Hamid Karzai, president of Afghanistan, decided to annoy everyone and call a snap election for April, which would have been interesting considering the ballots for the planned August election haven't even been printed yet. He later changed his tune after the electoral commission politely informed him he was out of his fucking mind. Karzai is constitutionally required to step down in May but the logistical and security nightmare of holding countrywide elections means there will be an interim period no one is certain how to fill.

Switzerland fires the opening salvo in the War of Competitive Devaluation, intervening to depress the franc in a move henceforth known as quantitative cheesing (patent pending). Hopefully everyone will give the Swiss a pass on this since the franc, like the yen and indeed the US dollar have been the subject of flights to safety, driving up the currency and tightening monetary policy unnecessarily given domestic economic conditions.

And finally, a few days ago I pointed out that Agent of Incontinence John McCain supported the temporary nationalization of banks that proved insolvent. I stupidly assumed the person who repeatedly confused "fiscal" and "financial" in the presidential debates knew what that meant. He and Richard Shelby, ranking Republican on the Senate banking committee, respectively called on Barack Obama to "let the banks fail" and "close them down", so as to avoid giving them more sweet, sweet tax monies. This, of course, is completely different from nationalization, which would require huge initial outlays of public funds and would almost certainly have to honor bank debt in order to avoid the multiple Lehman Brothers-like catastrophes of simply "closing them down." I'd be interested in hearing Mr. McCain's explanation of all this if I didn't already know the answer, which is "earmarks".

corporate restructuring

2009-03-13T16:07:00.003-04:00

Since its been difficult to keep up with the demands of internet blogging, what with all the sitting around in my underwear and typing and whatnot, I've decided to try aiming for a weekly reviewington instead, mercifully limiting my ~~mom~~ readers to one Bernard Madoff joke per week.

FT front page roundup: Billionaires with Douchebags Edition

2009-03-10T20:44:00.007-04:00

North Korea's temper tantrums have gotten worrying. The military hotline between the two Koreas was cut, this coming after the North said it would no longer respect maritime boundaries and threatened Southern commercial aircraft entering its airspace. The tizzy is likely to be a prelude to a missile test of the newer ~~Kinedowang~~ Taepodong IIs, which are capable of hitting Sarah Palin's house, which she can see countries from. There was even some speculation that the US would attempt to shoot down any missile launch, which recalls an episode from my childhood, throwing toys of my crib and then shaping up once my mom started shooting them down with surface-to-air missiles.

Also, one of Kim Jong-il's sons was "elected" to something this week, marking him as Kim's likely sucessor. It wasn't the one who likes Eric Clapton, unfortunately.

Pharmaceutical giant Merck is acquiring rival Schering-Plough, so hopefully they'll make us the hippie wonder drugs that make war and depression seem dull.

Japanese stocks tanked as the current account swung heavily into deficit in January, highlighting the swan dive in exports and the strength of the yen. The yen has since fallen back as investors finally forgot why they ever considered Japan a safe haven.

China introduced a security crackdown in Tibet on the eve of the 50th anniversary of the failed uprising in Lhasa, which last year sparked anti-Chinese riots. Communist party leaders continue to struggle with the mother of all public relations dilemmas, how to slander a nice old man who everybody likes.

And Helg Sgarbi, some douchebag who suckered wealthy women out of millions, including the billionaire heiress of BMW, confessed and will be going to Swiss federal pound-me-in-the-ass prison. Apparently he pretended to be a secret agent, just like sexy Bill Paxton in True Lies. This totally works, apparently. Anyway, I'd heard about this story a year ago so I suspected he must have been a dashing super stud. Yea, well...

I am doing something wrong.

In the Navy

2009-03-10T20:25:00.002-04:00

This is so perfect. No explanation. No nothing.

White House protests to Beijing over naval incidents

The White House urged Beijing to follow international law yesterday after a series of incidents in which the Chinese navy allegedly harassed US naval vessels in the South China sea.

[...]

According to the Pentagon, five Chinese vessels surrounded the Impeccable on March 8, telling the ship to leave the area. After two ships came within 50 feet, the Impeccable sprayed its fire hoses at the Chinese vessel. The Chinese ship continued to approach, as its sailors stripped to their underwear.

FT front page roundup: Stupidly Misleading Headline Edition

2009-03-10T02:56:00.004-04:00

I woke up yesterday ~~morning~~ afternoon and wandered outside to find my FT, waiting patiently as always below the dent in my front door. Plastered above the fold was this headline:

Summers backs state action

Holy dog shit, Summers backs nationalization? Or is this some thinly-veiled metaphor for his renowned sex parties, also to be nationalized somehow? Do tell!

Oh, hey, yea. Nothing about the banks at all. You fucking cockteases. A more accurate headline would have been "Summers backs things Summers is doing already". To think I actually stood there reading this while the 20-something hottie across the street cleaned out her car. Creepily staring at her would have been a much better use of those two minutes.

Anyway. The Asian Development Bank reckons the total fall in asset prices across the world for 2008 was around $50 trillion, give or take several trillion. Fortunately, I know the remedy for multi-trillion dollar wealth destruction...

Kittens. With poor motor skills.

Take that, Asian Development Bank.

Bank of America is canceling a program to recruit foreign MBA graduates of US schools due to conditions laid out in the TARP. Where will foreigners learn to make poor acquisitions and run their financial conglomerates into the ground like their hero, America?

In an interview, human dildo Hank Greenberg, fast replacing John Thain as the object of my impotent rage, berated the government for fumbling the bailout of his beloved AIG, which still exists only because of the government bailout.

He specifically blasted the AIG's purchase of collateralized debt obligations from counterparties at face value to avoid triggering payouts on credit default swaps written on those CDOs as a bad deal for the company. This, of course, is true, but guess who led AIG's charge into credit derivatives? Yes, Hank Greenberg, and his huge, wrinkly balls. He is literally the only person who is not allowed to complain about this.

And some potato-hugging douche-nozzles from an IRA splinter group killed two British soldiers outside their base in Northern Ireland, wounding two others and the two pizza delivery guys they were talking to. Patriots.

FT Week in Reviewington: Chinese Play Joke Edition

2009-03-06T07:13:00.008-05:00

On Wednesday markets were pleased to find there was still in fact such a direction as "up", staging a broad rally. The optimism was driven by leaks from a senior Chinese official that prime minister Wen Jiabao was set to announce new stimulus measures at the Communist party's annual National People's Congress, where thousands of delegates gather to vote on who can stay awake the longest.

But then on Thursday, Mr. Wen went and peed in everyone's coke. Haha, it's funny, because its racist.

He offered no new stimulus measures and crucially failed to provide details for the already vague plans the party announced earlier, sending markets down horribly again. Capitalism is so punk'd.

Anyway, revel in the irony as the remnants of our financial system pathetically subject themselves to the whims of a communist dictatorship, widely suspected of making up economic figures.

Shares in GE fell over fears over the stability of its finance arm and worries that it may lose its AAA credit rating. If you're keeping score, GE, like everything else, is too big to fail.

The Mexican soap opera that is Ukrainian politics continues. Facing collapsing output, a souring deal with the IMF, and two leaders who hate each other slightly more than everyone hates them, literally the only positive development in the last month has been a resolution of the gas payment issues with Russia, so at least people aren't freezing to death anymore. (Or not.)

Well, security forces raided state-owned Naftogaz, in order to preemptively contradict anyone who'd have argued Ukraine had enough problems. Ukraine already has by far the highest credit default swap spreads in Europe indicating a universal lack of confidence. The raid itself is apparently an extension of the power struggle between president Viktor Yuschenko and prime minister Yulia Tymoshenko, which it was thought could not possibly get any more ridiculous. But then state security forces raid a state-owned company in the middle of an economic meltdown, literally days after the pair publicly agreed to stop feuding.

At least the SUB guys look cool.

Ford continues to entertain the fantasy that it wont end up asking for a government bailout with a debt-for-equity swap. Cash bonfire GM on the other hand is coming to terms with the inevitable, since everyone continues to not buy cars.

The firm in charge of the liquidation of Lehman Brothers is questioning a $3.3bn discrepancy in the accounts of Barclays, the UK bank which bought Lehman's North American operations. Alvarez & Marshal figure that Barclay's set aside far more than they actually paid out in compensation to former Lehman employees and may have booked the remainder as profit. Barclays responded with a calm, considered letter:

“Alvarez & Marsal’s position is completely without merit, baseless and a serious misunderstanding of the facts."

Methinks the lady doth protest too much.

Pantsuit of Freedom Hillary Clinton broke from Bush era protocol and invited her best friends in Iran to a regional discussion on "Afghanistan's future", which is perhaps the most optimistic statement in history. So long as we're guessing, this will include a slow, steady erosion of the Durand Line, as the Pashtun regions of Pakistan and Afghanistan unite as 'Clusterfuckistan', lots and lots of opium, a protracted death-spiral of medieval violence, and finally a reunion concert on VH1.

John Gapper seems to agree with my whole Hank-Greenberg-is-a-dildo thesis.

America's army of unemploids grows, with a third-straight month of 600,000+ jobless claims. Jesus fucking Christ.

Retarded petro-clown Hugo Chavez of Venezuela nationalized a Cargill rice mill, which violated strict laws ordering every business to sell everything at a loss, for the poors, who have been blessed with 30% inflation forever. Chavez has already nationalized broad sectors of the economy in pursuit of his 21st century socialism thing, and is mulling more takeovers.

Rice production has been the focus of government intervention so far this week. But Mr Chávez has said the government is looking at other sectors, including plants producing maize flour, cooking oil and toilet paper.

Oh please, please, please nationalize the toilet paper industry, so I can do a master's thesis on Caracas' black market for TP, for bungholes. I'm desperate to find out whether consumers prefer the ass-chafing solidarity of Simon Bolivar's revolutionary construction paper, or the imperialist comfort of scented Charmin ultra bunny soft.

A currency trader aboard the failboat Merrill Lynch is being investigated for possibly losing $400 million in undisclosed trades. Way to go, dickhead.

Superdouche Bernard Madoff, who took all the monies, is nearing a plea bargain with prosecutors.

And Mattel opened its ginormous Barbie store in Shanghai. Some early hits: soup-kitchen Barbie, unemployed financial analyst Barbie, and riot-police Ken.

I'm not touching you, I'm not touching....

2009-03-05T08:34:00.004-05:00

Years before my birth, God placed Clive Crook on this planet solely with me in mind, that may I grow up to have someone to annoy the shit out of me by the time I became literate and potty-trained.

That time has come.

Budget reveals the liberal Obama

Barack Obama’s first budget is a revelation. The US president’s plans will not come to pass in the form he suggests. Congress writes the laws and will make a hash of it. Still, this first full statement of intentions speaks volumes, and leaves me in a paradoxical position. On one hand, I admire much of what the budget says. On the other, I feel I owe Republicans an apology.

He's liberal? Do go on.

As you recall, in the debate over the fiscal stimulus, Republicans accused the president of presenting a measure they could not support, disguising this with an empty show of co-operation. Bipartisanship, they said, is more than inviting your opponents round for coffee and a chat. I did not buy it: I accused them, in effect, of brainless rejectionism and a refusal to compromise, and congratulated the president for trying to come to terms with the other side.

Brainless. Yes. Continue.

This budget says the Republicans had Mr Obama right all along. The draft contains no trace of compromise. It makes no gesture, however small, however costless to its larger agenda, of a bipartisan approach to the great questions it addresses. It is a liberal’s dream of a new New Deal.

Um, is Crook willing to grant that the reason Obama's new proposals are less than compromising is because his efforts at bipartisanship went nowhere, precisely because of the "brainless rejectionism" he points out? Let's recall that the stimulus bill was originally designed to include a large percentage of non-stimulative tax cuts specifically to sate Republicans, and that the final version was needlessly weighed down with more, yet still it gained minimal support.

But from what I gather, Crook is upset that even after Republicans threw a temper tantrum over the stimulus, in which their primary objections to the bill made literally no sense, Obama didn't go out of his way to court them again, as if he's learned nothing from the experience. Pardon me for thinking that the actual lesson here was for Republicans, that by blowing off a genuine attempt to gather their input, its hardly shocking the courtesy isn't extended the next time around.

Crook then argues regarding Obama's liberal new New Dealie, with which he more or less agrees, is setting a bad precedent because for now he's only asking the wealthiest 5% to pay for it:

When Mr Obama turns to financing this historic initiative, however, he moves left. His budget pencils in roughly $80bn a year in new revenues from a carbon cap-and-trade system – another welcome innovation, by the way, in my view. Does he use those revenues to pay for the new healthcare reserve, or to close the deficit in outlying years? No, he uses them to make permanent the tax credits in the fiscal stimulus: rebates and subsidies tilted to the working poor. To pay for healthcare reform, the plan curbs Medicare payments to private providers and, unexpectedly, reduces the value of income-tax deductions claimed by the better off.

So as well as reversing the Bush tax cuts for households making more than $250,000 a year, as promised during the campaign, the budget comes up with another way to extract tax from high earners. All but 5 per cent of households will pay “not a dime” for the panoply of public investments in the blueprint.

Take this budget at face value, and when Mr Obama talks about “a new era of responsibility” he does not mean: “We are all in this together.” He means: “The rich are responsible for this mess and it is payback time.” Leftist Democrats are thrilled, and rightly so. The budget has three themes: healthcare reform, public investment and unflinching redistribution. This is indeed a new social contract: we get, they pay. Liberals never had it so good.

Yes, everyone's taxes will have to go up eventually, fair enough. But how does the above square with what he just said? How does Obama call for higher taxes for everyone, and, at the same time, court Republicans who will no doubt lunge at the chance to support universal healthcare, universal tax hikes, and they're favorite, a cap-and-trade emissions program. What fucking planet are you on, dude? Two months into the presidency, I'm going to have to give Obama a pass for not striding out to the podium in his Mao suit vowing to RAISE EVERYONE'S TAXES FOREVER.

Lastly, Crook lays bare his pathological hatred of hippies, which I share, but nevertheless clouds his judgment, much like a cloud of patchouli and unwashed hair smell.

Tactically speaking, Mr Obama may have overdone it. If I were advising him, I would say that the elation of his party’s progressive wing is a red flag. It mocks the president’s claim to be a consensus-builder, and tells the centre to watch out. Keep the left unhappy, would be my counsel.

Hm, yes, brilliant. Piss off the people who vote for you. Suck off the people who will never vote for you. Build consensus where there will never be any. Clive Crook is Machiavelli's retarded third cousin.

stimuluten!

2009-03-05T08:28:00.001-05:00

Hippies in Germany are upset that some of their stimulus money is going to the Bundeswher to buy guns and other cool shit. I think they're forgetting Keynes' axiom, that in such dire economic circumstances the government might as well pay people to blow holes in the ground, and then pay others to fill them in, with the bodies of their enemies. Pretty straightforward, I thought.

FT front page roundup

2009-03-04T07:23:00.004-05:00

Sorry, I've been slacking lately. It turns out finding the humor in epic human tragedy every day weighs on the soul. Anyway, news...

Stocks fell on Monday to their lowest level since 1996, when people still listened to Ace of Base.

David Moffett, who took over housing giant Freddie Mac only six months ago, discovered that life is demanding, without understanding, so he quit.

Ken Lewis, head of Bank of America, which has received a total of $45 billion in government assitance, told FT interviewers that it was a mistake to request the last $20 billion he asked for and that he shoud have asked for "only $10bn." Ken Lewis cannot hear himself talk.

fAilIG became the biggest loser in corporate history by posting a $62 billion quarterly loss, largely due to the deteriorating situation in commercial mortgage-backed securities, which have until now held up better than residential. And the damage apparently is not over, as their books revealed a further $12 billion exposure in credit default swaps written on collaterallized debt obligations, the toxic assets that are at the heart of the financial crisis.

Even more interesting is news of a 'bad bank' set up by the Fed to clear AIG's balance sheet of toxic CDOs after the company was first nationalized. Cleverly named ‘Maiden Lane III‘, after Ben Bernanke’s favorite pornstar, the case illustrates the challenges facing the Fed and Treasury as they attempt to clear banks' balance sheets.

In November, the Federal Reserve Bank of New York set up a limited liability company called Maiden Lane III – backed by $5bn from AIG and borrowings of up to $30bn from the Fed – to resolve the situation. The idea was that Maiden Lane III would buy CDOs from AIG’s counterparties and then tear up the credit insurance issued by AIG.

[...]

In the days after the creation of Maiden Lane III, AIG and the Fed approached about 20 counterparties with an offer to buy CDOs. By the end of the year, Maiden Lane III had paid nearly $30bn for CDOs with a face value of $62bn, AIG said.

AIG paid $32.5bn to terminate the credit insurance on the CDOs, recognising a 2008 loss of $21bn.

Counterparties received 100 cents on the dollar for the CDOs, but the prices paid by Maiden Lane III suggested that the CDOs were worth 47 cents on the dollar, said a person familiar with the matter.

Any sales of CDOs at a certain percentage below face value can trigger payouts on credit default swaps, leading to cascades of awfulness. But avoiding default triggers means paying disgustingly more than they’re actually worth. How to solve this? Fuck knows. Hooray for finance!

More hilariously, Hank Greenberg, former head of AIG, is suing the company for material misrepresentation after he bought shares at "inflated" prices. Greenberg, more than anyone, is responsible for AIG's foray into complex structured finance and credit derivatives that are the reason it failed. He was ousted in 2005 but remained the single largest shareholder, harboring fantasies of regaining leadership. For him to pretend to be the hoodwinked investor, in a company that he micromanaged for four decades, is simply beyond words. Hank Greenberg is a human dildo and these court decisions will prove definitively whether or not there is a God.

Barack Obama and Gordon Brown met to discuss the economic crisis before retiring to the Lincoln bedroom to cement the US and UK's "special relationship".

Nutcases in Pakistan shot up the Sri Lankan cricket team with rockets and machine guns, wounding several and killing six police officers.

German chancellor Angela Merkel and French president Nicolas Sarkozy decided to patch up their mutual hostility by invading Liechtenstein together.

And planet-huggers are complaining that the various stimulus bills being implemented around the world are too carbon-heavy, ignoring the fact that people’s concern for the environment is positively correlated with their net worth.

FT Weekend roundup

2009-03-02T09:36:00.004-05:00

The US government completed its third bailout deal with Citigroup, becoming its single largest shareholder. This semi-nationalization, henceforth known as Tim Geithner's Semi, leaves the US with a 36% stake in the company and substantial leverage over its management. Analysts wonder whether this slow-motion time-wasting death by money can be a model for future clusterfucks.

Last month's awful terrible US GDP figures turned out to be too optimistic. Fourth quarter GDP for 2008 declined at an annual pace of 6.2%. The revision was largely due to huge fall in inventories, which would normally be good if there were signs of a pickup in demand, but there aren't, so it isn't. It's basically a series of tubes.

Financial scandals just got hotter. Laura Pendergest-Holt, chief investment officer of Sir Allen Stanford's Ponzi division, is escorted to court by an equally sexified US marshal. I'd misappropriate their assets! Ms. Pendergestt-Holt faces charges of obstruction of justice in the investigation of her boss. It's safe to assume her intransigence will be overcome in a manner most fitting that of your typical Cinemax coming-of-age lesbian prison-sex drama.

Finally, GE is cutting its dividend payments for the first time since 1938. Private equity firm Blackstone is also suspending dividend payments for the quarter. And only because dividends lack comedic value.

Ben and Tim's bogus journey

2009-03-01T07:15:00.005-05:00

Large US banks are essentially paralyzed by the toxic assets on their books, particularly collateralized debt obligations, the complex securities that managed to turn shitty mortgages into AAA-rated milk-chocolaty goodness.

But when investors began to realize that the chocolate was, in fact, shit, they no longer wanted to chow down. This led to the collapse of off-balance sheet vehicles banks were using to unload these things and landed them right square on their plates. Any solution to the financial crisis requires getting them off. Hence today’s dilemma.

The Treasury's plan for them is to center on finding private buyers, which is an indication that, after all this time, they still think the problem is a lack of liquidity. True, ascertaining what value, if any, they have has been near impossible given the credit crunch, but Gillian Tett reports on some recent efforts. They are, let's say, less than comforting:

In recent weeks, bankers at places such as JPMorgan Chase and Wachovia have been quietly sifting data trying to ascertain what has happened to those swathes of troubled CDO of [asset-backed securities].

The conclusions are stunning. From late 2005 to the middle of 2007, about $450bn of CDO of ABS were issued, of which about one third were created from risky mortgage-backed bonds (known as mezzanine CDO of ABS) and much of the rest from safer tranches (high grade CDO of ABS).

Out of that pile, about $305bn of the CDOs are now in a formal state of default, with the CDOs underwritten by Merrill Lynch accounting for the biggest pile of defaulted assets, followed by UBS and Citi.

The real shocker, though, is what has happened after those defaults. JPMorgan estimates that $102bn of CDOs has already been liquidated. The average recovery rate for super-senior tranches of debt – or the stuff that was supposed to be so ultra safe that it always carried a triple A tag – has been 32 per cent for the high grade CDOs. With mezzanine CDOs, though, recovery rates on those triple A assets have been a mere 5 per cent.

The covered years are admittedly at the height of the lending frenzy so losses are unlikely to be that great for earlier periods. Still, we can be generous and assume recovery rates on AAA tranches of 50% and still be stuck with a massive hole in banks' balance sheets.

Moreover, as Tett points out, these assets were rarely traded to begin with, so merely finding new buyers will do nothing to improve the underlying performance of these securities. But that is exactly what folliclely-challenged Ben Bernanke and Treasury douche Tim Geithner are proposing as a solution--trying to lure in buyers with subsidized government finance and hope they're worth more than they are.

As I pointed out earlier, Ben and Tim have been arguing that banks are solvent and that there is no need for nationalization, while at the same time they acknowledge that no one has a fucking clue how much the CDOs are actually worth, which means they have no idea if banks are solvent or not, and all the while they nurse at America’s Tit of Freedom.

Well, we now have our first glimpse of their real potential losses, which puts the inadequacy of the Treasury's plan into stark relief. But even supposing banks' actual losses are realized and they fail their stress tests, the Treasury has allotted a 6 month window in which they can try to raise capital and close the gap in their finances.

Given the state of the global economy, it's frankly unforgivable to let the uncertainty continue for that long. The government is so heavily exposed as it is that it might as well just take all of the banks' losses and get on with it, so long as it's actually communicating a definitive, if stupid, strategy.

But no, more dicking around. Heinous.

FT front page roundup

2009-02-28T14:10:00.005-05:00

Known illegal immigrant Barack Obama explained that zillions of dollars in new spending will increase the budget deficit somehow.

The Office of Management and Budget released a ten-year budget outlook that stripped out George Bush's cherished accounting gimmicks so we can truly enjoy how poor we are. Obama plans on letting Bush's tax cuts expire by 2011 and then adding new taxes on the rich to pay for the poors' healthcares, like some suave black Robin, from the Hood. This bothers Republicans who insist on shaping the issue with homoerotic innuendo, as always.

In a sign of partisan battles to come, Mitch McConnell, Republican leader in the Senate, where Mr Obama needs at least 60 out of 100 votes to push through bills, said: “While the American people are tightening their belts, Washington seems to be taking its belt off.”

Hot!

Mr. Obama additionally plans on taxing the "carried interest" of private equity managers as income, because it is, and introducing a cap-and-trade system for carbon emissions, so Al Gore doesn't have to continue absorbing them all.

Royal Bank of Scotland, now officially the biggest loser in British history, is getting a further sexy capital injection from the government, for losing.

Controlled cash-burn and former motorcarriage maker General Motors prays for divine intervention from the Sword of Deloitte.

And UBS has appointed Oswald Grubel, former boss of arch-nemesis Credit Suisse, as chief executive, in a stunning move about which several people are likely to care.

FT front page roundup: Rage-Inducing Sub-Heading Edition

2009-02-26T16:47:00.005-05:00

Normally I am filled with joy to be awakened by the latest edition of the FT pelting my front door at 6am, by an obviously disgruntled delivery man who can't understand why anyone except the local learning college could possibly want this gay-looking elitist homo paper. I'm sure my roommates, now also lying awake, have wondered the same thing. But I know that whether I have to "work" or not, I will be spending a few hours of my day wasting time in the most intelligent way possible.

So as I cheerfully stumbled out of bed, at 2pm, imagine as my joy turned to rage having to read this...

Treasury bank plan pushes shares up

...but with the subheadings:

Institutions to have six months to raise capital

Investors relieved that stress test not too hard

You goddamn motherfuckers.

First of all, guess what we'll be writing about in six months. Second, raising capital from who? Oh, wait, I remember. And thirdly, a stress test that provokes relief from bankers is not a stress test. Vikram Pandit and Ken Lewis, on treadmills, for 6 days, while Tim Geithner and Ben Bernanke take turns shooting paintballs at their genitals. That is a stress test.

So, yea. Both the Fed and Treasury have been making a point of killing any idea of nationalization in the last few days. The new plan leaves open the possibility of taking larger government stakes in banks at the end of six months, but, as many esteemed economists have already pointed out, that is six months away, which would mark two full years into the financial crisis. With the same problem. That we started with.

Everyone restock your Japanese zombie bank survival kits, what with the brain-eating and all, since hanging around Washington they're probably not going to find any.

Moving on, the government's new restructuring plan for AIG is considering forgiving a $60 billion---oh, for fuck's sake! The plan foresees beaking the company into three or four teensy failures instead of one huge one.

Luxury goods maker Saks [insert testicle joke here] Fifth Avenue has ended its aggresive discounting drive after too many commoners began wandering into their stores.

Ayatollah Barack Hussein Obama outlined a ten-year $630 billion healthcare fund to improve upon our current system.

And a Turkish passenger jet crashed in Holland, killing most of the crew but saving everyone else.

FT front page roundup

2009-02-25T17:54:00.004-05:00

My new laptop manual advises me not to place the device on my lap. What mindfuckers. My warm balls and I will do whatever we want now, thanks. To the news!

Beard enthusiast Ben Bernanke told Congress that banks wont be nationalized and everything will be fine as long as they keep getting free money forever.

Welfare queen Citigroup is lining up it's third bailout arrangement with the Treasury, which will likely take a 40% stake in the company, and is becoming impossible to make fun of.

Barack Obama managed to deliver an unofficial State of My Package address in between signing autographs for children in Congress. We look forward to upcoming steroid revelations.

Bobby Jindal, the Republican's Great Brown Hope, gave the unofficial response which was politely described as "insane" and a "disaster", but only by people who saw it. Sarah Palin will be thanking all of Jindal's multi-limbed foreign demon gods for his performance. At least someone finally took a stand against volcano monitoring and magical fairy trains.

(Ok, seriously, I can't get over the fact that mag-lev trains and monitoring deadly volcanoes are the best examples of government waste Republicans could come up with, one of which being in direct conflict with the whole "pro-life" agenda. Hilarity.)

Google's free online G-mail service, which I use, suffered a two-hour long system crash, preventing me from seeing my new dating site matches and, far more importantly, preventing them from seeing me.

And Merrill Lynch, the failboat now being towed into port by Bank of America, under-reported its 2008 losses by $500 million. Ha, whoops!

faith-based initiatives

2009-02-25T16:11:00.004-05:00

I was glad to see Paul Krugman was also baffled by plans to possibly convert preferred shares in ailing banks into regular equity capital, as if it was some big deal, successfully making me feel less stupid for a half hour. Compared with equity, interest-bearing preferred shares give banks an incentive to rush to pay back the government when we'd much rather have them lending, potentially numbing the effect of aid, maybe.

It’s true that preferred stock has some debt-like qualities — there are required dividend payments, etc.. But does anyone think that the reason banks are crippled is that they are tied down by their obligations to preferred stockholders, as opposed to having too much plain vanilla debt?

The biggest problem of course remains on the asset side, where Treasury officials are still working through the details of a plan to encourage private investment in the toxic assets, a week after Tim Geithner's supposed 'big bang' financial rescue. I'm sure he's a bright enough guy but I'm struggling to understand how everyone is supposed to keep swallowing news like this...

One reason US authorities are reluctant to pull the plug on any big banks is that they hope their toxic asset purchase plan could show that losses on traded assets may not be as large as they feared.

...when at the same time they're arguing this...

Second, the authorities said all the big US banks were solvent. “The major US banking institutions have capital in excess of the amount required to be considered well capitalised.”

The authorities are emphasising that the stress test is intended to determine how much additional capital each bank might need if the economy turns out to be even worse than expected.

If you merely hope these assets are actually worth more than they appear, you can't simultaneously argue that these banks are solvent with any certainty.

More revealingly, the stress tests for US banks that began yesterday it turns out project a worst-case scenario of US unemployment at 10.3%. This is high, but not outlandish, and higher is certainly not out of the question since employment has lagged even in recent periods of growth compared with earlier, and especially since we're facing a genuinely global recession. In previous recessions there was a motor running somewhere, but that is not the case now. Everything is contracting. The numbers from Asia are particularly frightening. Given this outlook, assuming a baseline worse-case of 10.3% seems insane.

Even more amazing are the stress test assumptions for house price falls. Krugman again:

They consider a fall of housing prices, as measured by the Case-Shiller 10-city index, of 27 percent from 4th-quarter 2008 levels to be as bad as it could get. But the CS-10 were around 30 percent overvalued relative to rents or overall consumer prices in 2008 Q4 — so their worst case is for housing prices to fall to historical norms, with no overshooting.

This is effectively saying house prices are more or less done falling and will not overshoot on the way down. For a supposed "stress test" this absolutely beggars belief.

A few days ago I was willing to bet the Treasury and Fed were merely buying time until the stress tests could reveal that the weakest banks were fucked and that drastic action was warranted. But the aggregate here seems to indicate a continuation of the same:

hoping investors will buy toxic assets...
that are hopefully worth more than everyone thinks they are...
so banks are hopefully not insolvent...
so hopefully we wont have to keep giving them money...
which is what we will continue to do in the interim.

In other words, the same damn thing we've been doing for 18 months. The only real effort seems to come from avoiding nationalization at all costs. The rest is a faith-based initiative.

Praying is for churches, dickheads.

(Tuesday's) FT front page roundup: Behind the News-Cycle Edition

2009-02-25T11:12:00.010-05:00

Stocks fell to their lowest level since 1997 over fears Barack Obama's Canadian Central Planning Commission was about to take over the banks and sell them to the terrorists. Citigroup meanwhile was in negotiations over a third bailout and will be the star on next week's episode of "Intervention".

fAilIG, already 80% owned by Barack Obama, is also lining up for its third bailout. Baseline expectations for insurance companies generally assume their own survival, but AIG shifts paradigms.

Street urchins in Mumbai expected to gather to cheer their friend Asharuddin Ismail, child star of Slumdog Millionaire, at the Ocsars, but were soon far more interested in cheering teh boobies.

Rupert Murdoch will be taking direct control of the Fox network after failing to secure a new contract will his former minion, Peter Chernin. Expect more hot blond lip-liner sluts reading your news.

And the central banks of the Czech Republic, Poland, Hungary, and Romania pledged to defend their currencies from the Ottomans, or something. Central and eastern European currencies rallied on the news, and over the growing likelihood of financial support from the European Union and IMF.

The forint's position is perhaps the worst. Hungary for years ran a massive current account deficit, and foreign currency mortgages became particularly popular. These were generally denominated in Swiss francs and, aside from making zero economic sense, masked the risk of a painful spike in cost should the home currency fall, which it did. Borrowers were intially attracted to the low interest rates but the government did virtually nothing to warn of the downside, which it is now clear few people understood. Companies in Asia were decimated by the same mechanism in the 1997 crisis, so it is particularly awful to see household balance sheets destroyed in the same fashion.

"the 'N' word"

2009-02-24T07:17:00.008-05:00

Francesco Guerrera, whose utterly tasteless joke above I wish I'd thought of, joins the cavalcade of nerds arguing that nationalization of insolvent banks is not only advisable, but inevitable. Recent days have seen support for this notion from unlikely quarters. "Enough is enough" seems to be the unifying theme...

Barack Obama, US president, will have to draw on his vast oratorical skills to avoid using the N-word but make no mistake: the authorities are going in.

[...]

When commentators warn that a failure by the latest US rescue plan would lead to a “Japanisation” of the financial sector, they are missing the point. It is too late to worry about banks turning into “zombies” – they already are. Crushed under a pile of toxic assets, paralysed by wafer-thin capital cushions and deserted by fearful investors, once-mighty institutions such as Citi and BofA are barely able to perform basic functions such as lending and underwriting.

In his book, Frederic Mishkin described the financial system as the "brain" of the economy. This analogy proved a little too accurate as the collective craniums of finance proceeded to embark on an orgy of hormone-driven excess the human brain is famous for.

The analogy has since broken down, as the brain lies in a persistent vegetative state, much like myself, with the Federal Reserve in the role of life-support system. The financial system cannot even perform the most basic circulatory function, much like a bad analogy. Ben Bernanke is an intravenous drip.

The ultimate cause of the crisis, the toxic securities whose underlying revenue streams have collapsed as people fall behind or default on mortgages, remain on banks' balance sheets. Pricing them has proved impossible but suffice it to say they are substantially below face value. As the real economy deteriorates, separate classes of asset-backed securities linked to car and student loans face the same fate. Banks cannot solve the problem themselves without realizing huge, suicidal losses. The government cant simply keep handing over taxpayer funds forever.

Hence the call for nationalization.

Many of the criticisms of nationalization have smacked of ideology. However, two stand out. The widely-touted Swedish model of bank clean-up, and indeed the takeovers of small failed US banks, ignores the presence of cross-border linkages of huge multinational banks like Citigroup and BofA. The nationalization of Sweden's banks saw nothing remotely comparable in terms of scale and international exposure, since their problems were more or less isolated at home or in the immediate region.

Secondly, and related, is simply the possibility of vast unintended consequences. We already have the Lehman Brothers example, who's failure triggered defaults on credit derivatives which led to the nationalization of AIG within days. Where nationalization ideally attempts to halt the banking crisis in its tracks, the government nevertheless risks igniting a chain of events whereby takeovers merely lead to speculation over who is next, undermining the logic of nationalization in the first place and dragging the government deeper into a financial management job it was already reluctant to do. Such "black swan" scenarios cannot be ruled out.

Tim Geithner's upcoming "stress tests" for US banks are rumored to provide the pretext for nationalization, since they will no doubt tell us what is already known about banks' solvency. Any step toward nationalization then must take these items into consideration.

Though at this point, facing the exact same problems 18 months later, it still seems a risk worth taking.

A tale of two douches

2009-02-24T07:07:00.009-05:00

Douchebag Texas bazillionaire Allen Sanford’s fraud was uncovered by the super sleuthery of a Venezuelan financial analyst. This hero bravely sacrificed an entire half-hour of his time using the sophisticated financial detective software known as "the internet", and somehow managed to access Sanford's secret library of accounting data, in something called "public financial statements". Hilarity.

"Stanford Financial was almost like a phantom company," says John Olson, a prominent Houston businessman who is managing partner of Houston Energy Partners, a hedge fund. "You never saw anyone from Stanford at any of the meetings or conferences. It was like they weren’t even there."

Indeed. Just like your money.

Bonus hilarity: Investigators have yet find a single instance of superfraud Bernard Madoff actually purchasing a security on behalf of an investor in the last 13 years. By contrast, it would take several hours to detect similar behavior from, oh, I don't know, the Domino's delivery guy.

FT front page roundup

2009-02-24T06:55:00.004-05:00

European Union leaders gathered in Berlin to discuss the financial crisis and how they don't like it. Initial progress was made as the UK declined to block discussion over financial regulatory reform, and Germany agreed to take steps to bailout its loser neighbors should it become necessary, which it will.

The group photo session however was ruined when it became clear Nicolas Sarkozy had tracked dog shit everywhere.

Dubai, city of make-believe and poster-child of real estate and financial excess, received a bailout loan from the United Arab Emirates' mothership in Abu Dhabi to cover its not-so-make-believe debt. Unemployed camels will have many shiny buildings to look at.

The government of Switzerland and its banktards have their panties in a wad over attempts by the US justice department to make US citizens, like, pay their taxes. Switzerland ranks among the few countries whose national point of pride is, in fact, a crime.

Hope-fondler Barack Obama promised to work constructively with retards in Congress in order to halve the budget deficit to only several trillion dollars. Ultranerd Peter Orszag, head of the Office of Management and Budget, indicated the administration would begin honestly reporting how broke it is, thereby destroying George Bush's legacy.

FT Weekend front page roundup: Saab Story Edition

2009-02-22T18:59:00.005-05:00

Markets were shaken by speculation over the fate of welfare queens Citigroup and Bank of America. Honorary white person Barack Obama reiterated that he "wasn't" going to "nationalize", uh, "them", wink, just like he's "not" a "Muslim".

Pantsuit of Freedom Hillary Clinton paid homage to her masters in China. Human rights groups were disappointed she didn't condemn the government while simultaneously begging it for money.

The free-market nutcases in Sweden refused to bailout GM-owned Saab, which was forced to file for bankruptcy protection. Meatballs! Yea, I've got nothing.

Douchebag Texas bazillionaire Allen Stanford's ritzy lifestyle was laid out in court documents, so we can all marvel at how the other half percent live.

And Israel's Mexican president Shimon Peres tapped Binyamin Netanyahu of Likud to form a coalition government and not Kadima's Tzipi Livni, who won the most votes. Netanyahu then turned around and called for a national unity government with Kadima and Labor, instead of Avigdor Lieberman's Yisrael Beitenu, which was widely expected, by experts like me.

Netanyahu was picked because it was thought he was most likely to secure a majority in the Knesset, given the surge of support for right-wing parties. By opting for a unity government, he's completely sidestepped the logic for him to be picked in the first place, and it would be very hard to Livni to swallow being a junior partner to Likud since she won more votes. Labor, for its part, doesn't even seem to want to join any government, since it needs time to contemplate its own ass, which was handed to it.

In short, everyone fucking hates ~~Joe~~ Avigdor Lieberman.

FT front page roundup: Partially Unsure Destruction Edition

2009-02-20T07:17:00.005-05:00

According to an IAEA report, Iran's nuclear holocaust deniers have reached "breakout capacity" for producing a nuclear weapon within months, if they feel like it or whatever. This is said to cross Israel's "red line" for unacceptable behavior, as opposed to its "green line", which it has no problem crossing. Finally, the specter of terminal nuclear war in the Middle East to distract us from the tedious drudgery of worldwide financial collapse.

The US is suing UBS for allegedly helping 52,000 American heroes hide their money from Tim Geithner's Soviet tax monster. UBS just settled in a separate case with the US for $780m and turned over the information of 250 clients. According to math, we can expect them to settle this for $162 billion.

Mountie-hugger Barack Obama fled to Canada and had the temerity to point out that it was the only country ever not to have to bail out any of its banks, eh? Traitor.

Idiot investors in idiot banks finally decided to start pulling all their money out after it became clear Obama and his Canadian Central Planning Commission were about to go all 5-year-plan on their ass.

And below, two Chechen brothers and a third man charged with assisting in the murder of Russian journalist Anna Politkovskaya were acquitted. A third brother, thought to be the trigger man, is still at large, leaving them one short of a Monkees reunion.

paradigm shifts

2009-02-19T07:49:00.004-05:00

Some Republican Senate leaders have managed to excise bits of the crayons in their brains and are prepared to back temporary nationalization of insolvent banks. Agent of Incontinence John McCain and Lindsey Graham, America's gay uncle, both agreed that such an approach may be necessary in the current environment, and by "may", they meant just fucking do it already. Human Salvador Dali painting Alan Greenspan also just came out in support of this approach.

This proves definitively that unreasonable people can disagree over literally everything except giving banks free money forever.

This comes on the heels of reports in the Washington Post that the reason Treasury elf Tim Geithner's financial rescue plan lacked details was because he made it up that morning on the toilet. Virtually everyone and their gay uncle are now backing nationalization. So yea, we're waiting, Timmy.

FT front page roundup

2009-02-19T07:10:00.003-05:00

Oppressed black man Barack Obama whipped out another package, in public, so you'll all get to stay in your crystal meth labs, hooray.

Meanwhile, Fed chair and beard enthusiast Ben Bernanke lived out his childhood dream and adopted a de facto inflation target of 2%, for America. The idea is to anchor inflation expectations at that level so the Fed can print money for everyone, with the assumption that it will take it all away again before we become Zimbabwe. Frederic Mishkin totally jizzed his pants.

UBS settled with the US justice department for $780m after helping American heroes avoid their communist taxes. UBS has also shamefully agreed to turn over the names of these patriots.

Mentally-stable Republican Bob Zoellick called for greater European Union assistance for central and eastern European economies, whom have redefined the nature of a bank run, in which banks literally fuck off and leave. Bob Zoellick is Steve Buscemi's evil identical half-brother.

And finally GM...alternator, something...bleh, dont care.

FT front page roundup: Central Wanking Edition

2009-02-18T07:08:00.012-05:00

Zombie libertarian Alan Greenspan, former head of the Federal Reserve, called for the temporary nationalization of insolvent banks, thereby completing his year-long flame-out death spiral of logic, seen below.

Greenspan, the Keith Richards of central banking, was famous for the "Greenspan put", which somehow was already named after him. This is the idea that monetary policy should focus on cleaning up the mess after an asset-price bubble rather than taking preventive action. During the last decade this meant loose monetary policy all the fucking time. In his book, George Cooper called this "preemptive asymmetric monetary policy". You can simply call it for what it is: Fucktardery. The justification for a refusal to target asset prices when setting interest rates was that it was super hard to tell what a bubble looked like. If only information like this was widely available years in advance. The closest Greenspan ever came to admitting there was a housing bubble during his tenure was to allude to some "froth" in certain local markets. Central banking is hard.

Although the Greenspan put seemed to work okay in 1987, 1990something, and again in 2001, it bred a complacency in financial markets that contributed to the euphoria before the current crash, since Grandpa Alan and Uncle Ben would always be there to make everything okay. When Greenspan finally did begin raising rates, for example, he did so in an utterly predictable fashion, by 25 basis points, every damn time. He never gave markets the gut check they needed. Obviously, no one now thinks that waiting to clean up the mess after an asset bubble is preferable to an attempt at prevention. The pain of that mistake has become all too clear in hindsight.

Which brings me to my advice for current Fed chair Ben Bernanke. ~~Whenever~~ If the economy recovers, you need to make it clear that markets aren't your buddy. When markets are expecting steady, predictable policy, you should come out for your press conference and simply gnaw on the microphone for a few minutes. Or just not wear pants and get really, really defensive if someone points it out. I can think of no better incentive for banks to improve their own internal risk management since they'll think you've lost your fucking mind. Call it the madman theory of central banking.

Update: Wow. Greenspan has company.

--

In lighter news, US treasuries spiked as investors fled screaming from central and eastern Europe, which is on the brink of financial meltdown, since they've insisted on reenacting the Asian financial crisis of 1997. Current account deficits, foreign currency debt, capital flight, currency routs, retarded central banks--they've got it all. More unique, and disturbing, is the fact that so many eastern European banks are foreign-owned, mainly from western Europe. Whether these banks are pulling back now simply due to risk aversion or "financial protectionism", the fact is they are and it really sucks. The IMF is hiring.

Jeff Immelt of GE decided to wave his huge bonus which he'll probably collect next year.

Douchebag Texas bazillionaire Allen Stanford is the new Bernard Madoff.

And Chrysler and GM are begging for another $21 billion in loans from the Fed, even after plans to restructure were announced.

FT front page roundup: Learning Japanese Edition

2009-02-17T14:19:00.002-05:00

General Motors is set to propose a radical restructuring initiative in order to secure more of your money. The United Auto Workers however are balking over being paid in Smarties. Fucking unions. Barack Obama meanwhile has decided not to appoint a "car czar" and will instead just make Tim Geithner President of Cars and Banks.

Pantsuit of Freedom Hillary Clinton arrived in Japan on her first foreign visit as secretary of state. Her delegation was briefly delayed on the tarmac as translators struggled over the phrase for, "Where's the black one?"

We're never leaving Iraq, if only to boost employment figures. Hippies were right about something finally.

Microsoft CEO Steve Ballmer is attempting to seize the moment while the head of his competition dies to plug his new smartphones.

And Japan suffered a 3.3% quarterly drop in GDP, holy fucking shit. Quarterly. The annualized drop is 12.7%, which again, holy fucking shit. Japan has been hit simultaneously with plummeting demand for its exports and an unwinding of the "carry trade" which has sent the yen skyrocketing against the currencies of its trading partners.

Investors had been taking advantage of Japan's super low interest rates by borrowing in yen to buy higher-yielding whatevers. Free money while it lasted, but as in all things finance, its fucking great until it isn't. Rate moves in places like New Zealand and Australia as well as general risk aversion in response to the financial crisis set this trade backwards, pushing up the yen, thereby making more carry trades unprofitable, pushing up the yen more, and so on. So while much of Asia is blessed with the same already sclerotic export environment, Japan gets to enjoy the herpes simplex 10 of currency appreciation.

In the face of the new GDP figures, some in Japan's ruling LDP are calling for a beefed up economic stimulus, proposing ¥30trn ($17) in addition to the meager amount agreed to last year. More exciting still is the possibility that the crisis will be the death knell of the LDP, which has ruled post-war Japan for nearly its entirety, save for a few months in the early 90s. The LDP, already riven by factionalism, is seeing much of it aired in the open, which is unusual. This gives the opposition DPJ a chance to win the elections later this year, despite being run by Ichiro Ozawa, who by all accounts is a huge toolbag.

But either way, Japan is fucked. The only possible way out of this besides a miraculous improvement in exports is an increase in consumption but that actually fell last quarter, too.

Asked for domestic triggers for a return to growth, one Tokyo economist just laughs. “There’s nothing at all,” he says.

More worrying still is that the Japanese social safety net is still geared around its employers since near-permanent jobs had been the norm for decades. But a large slice of the workforce is now on temporary contracts and they have little recourse to unemployment benefits, depending instead on the liberal distribution of hobo beans by civic-minded charities.

Incidentally, the Japanese word for a recessiony depression-type thing, apparently, is fukyo. Fuck, yo, indeed.

...Also yes, I know the Japanese finance minister was drunk at a press conference at the G7 meetings but I'm fucking not showing it because everyone else already has. But here, watch this instead. It contains a compelling metaphor for the task facing Japan's new finance minister, and the dozens surely to come in the next year.

Oh yea, and Al Gore, who has been trying to raise planetary awareness by looking like one, is all up in my FT.

FT Weekend front page roundup

2009-02-14T20:08:00.012-05:00

The eurozone entered its worst economic downturn in 50 years, which is amazing because the euro has only been around for ten, which means the euro is worse than Hitler.

Fed chairman Ben Bernanke was spotted heading to Rome for the G7 meeting in a baby-blue polo shirt of doom.

Chris Dodd, chairman of the ~~Khmer Rouge~~ Senate banking committee, added an amendment to the stimulus bill that will condemn executives of banks receiving significant state aid to the penury of your average bemonocled 19th century industrial magnate.

Twitter will receive $35m from two venture capital funds who submitted their investment pitch in under 140 characters.

And finally, the Twilight series and its hot teenage vampire sluts are literally the only thing keeping the economy alive.

Picture of the Week:

Magical Treasury elf Tim Geithner stunned markets Tuesday as news of his financial rescue plan was overshadowed by the fact that he was 3 feet tall.

(Thursday's and Friday's) FT front page roundup: Because I'm Lazy Edition

2009-02-13T16:19:00.005-05:00

Congressional leaders nodding approvingly at Barack Obama's swollen package. Everyone pointed and laughed at Tim Geithner's.

Senior Wall Street douches lined up for their mock executions in Congress. Legislators yelled at them for awhile, which it turns out is way easier than learning about banking industry regulation. The douches agreed to help restructure housing debt, which they can't because they securitized it and sold it to some German bank that probably failed.

Israel's new hit reality show, 'Oy, So You Think You Can Be Prime Minister?', continued with its opening season. Foreign Minister Tzipi Livni of Kadima managed a one-seat victory over Binyamin Netanyahu's Likud, and each will try to form a government with human skidmark Avigdor Lieberman and some other party you've never heard of. Isn't it great that the US and Israel each have a Lieberman that ruins everything? Kindred spirits! Anyway, Israel's Mexican president Shimon Peres will judge the outcome with wry wit and a British accent.

Moving on, UK mining giant Rio Tinto sold the ~~family~~ "crown jewels" to China's state-run Chinalco. Chinalco invested $19.5bn, much of it in convertible bonds, in preparation for their eventual conquest of Australia.

Chrysler's transmission fell out.

Republican Judd Gregg withdrew his nomination as commerce secretary when everyone remembered he was a Republican.

A Russian military anti-satellite satellite destroyed a US commercial satellite because it looked at it funny. John McCain immediately declared war.

And spotlight-fucker Nicolas Sarkozy of France proposed new regulations for hedge funds, which are managing to destroy themselves quite nicely without him, thanks.

the ultimate insult

2009-02-13T16:00:00.004-05:00

How the mighty have fallen. Former Treasury Secretary, y Salvador de Mexico, Nicholas Brady offers up more of his Brady Bonds to save impoverished Latin American dictatorship los Estados Unidos from Chinese debtors' prison. I don't even think this is applicable to the US crisis since its not a sovereign debt one, and nevermind the intricacy of restructuring debts across US household, business, and financial sectors, but the fact that he's recommending it at all is simply hilarious. Americans no longer merely shop at the Banana Republic.

Iran, so far away

2009-02-12T00:50:00.008-05:00

Former Iranian reformist president of reform Mohammad Khatami succumbed to the pressure on his turban and will run against Sports Jacket of Terror Mahmoud Amadi-Nejad for the presidency of Iran. Khatami, a non-crazy person, is the Barack Obama of Iran, except that he's a Muslim, which means he's exactly like Barack Obama.

This is good news. The way recent elections in Iran have worked is that all reformist candidates are banned by the Guardian Council before they can even run over whatever stupid technicality they think up, leaving the remaining conservative Australopitheci to duke it out. And then they send out Basij paramilitaries in case you forgot who to vote for. So helpful!

Giving Khatami the business however would be a step too far, even for them. Banning all of Iran's Ralph Naders is one thing, but Khatami has name recognition and is respected there and around the world, unlike Ralph Nader. With high inflation, falling oil exports, and international sanctions, the last thing Iran's leaders want to do is break the frayed sense of national unity that would come by banning a popular political candidate.

Even though much has been said about spats between Ahadi-Nejad and Supreme Leader Ayatollah Ali Khamenei, he would still undoubtedly get the full backing of Iran's establishment. So good luck, Mr. Khatami! And someone get that man an ACORN.

FT financial rescue plan roundup: The Legend of Geithner's Gold

2009-02-11T17:31:00.012-05:00

Tim Geithner, who has enjoyed fucking with our heads for the past two weeks, whipped out his financial rescue package at a press conference yesterday to audible gasps of delight. See, there he is trying to dodge questions by impersonating a flag pole.

The plan had four major points: shoring up banks with new capital and regulations; kick-starting credit markets with new Fed monies, particularly securitization markets; cleaning up banks' toxic assets; and tackling the foreclosure crisis.

With regard to the toxic assets, noticeably absent were plans for both the 'bad bank' and an insurance scheme, which means I wrote all that shit the other day for nothing. Thanks, Tim. Dick. The plan will now focus on a public-private partnership to finance purchases of the shitburgers and a renewed effort to recapitalize banks who end up selling them below their booked value, which means they'll all need to be recapitalized.

The public-private partnership will encourage private investors, "co-investors", to purchase toxic assets by providing them with low cost government financing and probably some kind of insurance program in case of catastrophic loss. The difference is investors get the insurance, not the banks. This sounds similar to the super-SIV that was originally proposed by Hank Paulson, but with actual government money behind it. An alleged benefit of the public-private approach is that it absolves the government from attempting to price the toxic assets and leaves that to private players. That sounds like more of a political benefit than anything, but subsidizing private investors doesn't exactly sound like a political winner either.

The big surprise in the plan is that banks don't seem they'll be getting gobs of free money they expected and additionally will be subjected to new regulation and "stress tests", which helps explain Wall Street's reaction yesterday. The parts of the plan that had leaked earlier seemed much more lenient on banks but those, fortunately, wont come to pass.

It's still very unclear how this will all actually be implemented, let alone whether it will work. One major unanswered question is what happens if a bank fails a stress test, if you want to be generous and say they haven't already failed several. It all still looks like a Herculean effort to avoid nationalization of insolvent banks, remember, but it doesn't specifically close the door to it either. The longer that question goes unanswered the more reluctant banks will be to lend, and if the point of the plan is to restart financial markets, it seems an odd, lazy way to go about it, making banks pee their pants in anticipation. Then there's the issue of whether the plan merely stalls the inevitable, wasting a ton of money in the process.

That said, to the extent investors are actually willing to buy the fucking things, the government will still be exposing itself to the biggest losses and will have to spend billions more refilling the hole left over from the sales. Brad DeLong notes that leaks within the Obama team are making it perfectly clear that this is the "Geithner Plan", so people will know whose house to burn down if it doesn't work.

Martin Wolf has more. He is pessimistic, to say the least.

Why Obama's new Tarp will fail to rescue the banks

The new plan seems to make sense if and only if the principal problem is illiquidity. Offering guarantees and buying some portion of the toxic assets, while limiting new capital injections to less than the $350bn left in the Tarp, cannot deal with the insolvency problem identified by informed observers.

[...]

Why then is the administration making what appears to be a blunder? It may be that it is hoping for the best. But it also seems it has set itself the wrong question. It has not asked what needs to be done to be sure of a solution. It has asked itself, instead, what is the best it can do given three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress. Yet why does a new administration, confronting a huge crisis, not try to change the terms of debate? This timidity is depressing. [...]

If Mr Geithner or Lawrence Summers, head of the national economic council, were advising the US as a foreign country, they would point this out, brutally. [...]

The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once. It is an important, but secondary, question whether the right answer is to create new “good banks”, leaving old bad banks to perish, as my colleague, Willem Buiter, recommends, or new “bad banks”, leaving cleansed old banks to survive. [...]

By asking the wrong question, Mr Obama is taking a huge gamble. He should have resolved to cleanse these Augean banking stables. He needs to rethink, if it is not already too late.

In other front page news...

General Motors in cutting 14% of it's white-collar work force. It is unclear what color unemployed people's collars are.

No one knows which right-wing asshole won Israel's election. Tzipi Livni of the "centrist" Kadima party, if you're willing to make the leap that Ariel Sharon was a centrist, claimed victory. Binyamin Netanyahu of Likud hasn't conceded. Any viable government will depend on Yisrael Beitenu's Avigdor Lieberman, who is by far more right-wing and an asshole than either of them.

And advertisers are overhauling their strategies in order to target America's fastest growing demographic: really fucking poor people.

FT front page roundup

2009-02-10T18:56:00.003-05:00

Senators have finished slobbering over Barack Obama's package. Most agree that its big and somewhat effective.

A United Kingdom report argues that the IMF is reluctant to tell the countries that pay its bills that they suck. Shocking.

Executives at Barclay's and Royal Bank of Scotland are voluntarily limiting bonuses before pitchfork-wielding mobs voluntarily harvest their organs.

And the election in Israel is too close to call. Israelis wait patiently to find out which right-wing asshole will lead them to the promised land, which they already live in.

Humility

2009-02-10T18:10:00.004-05:00

Lloyd Blankfein, CEO of Goldman Sachs, is quite literally intent on surviving the recession. From his op-ed in the FT.

More generally, we should apply basic standards to how we compensate people in our industry. [...] An individual’s performance should be evaluated over time so as to avoid excessive risk-taking. To ensure this, all equity awards need to be subject to future delivery and/or deferred exercise. Senior executive officers should be required to retain most of the equity they receive at least until they retire, while equity delivery schedules should continue to apply after the individual has left the firm.

For policymakers and regulators, it should be clear that self-regulation has its limits. We rationalised and justified the downward pricing of risk on the grounds that it was different. We did so because our self-interest in preserving and expanding our market share, as competitors, sometimes blinds us – especially when exuberance is at its peak. At the very least, fixing a systemwide problem, elevating standards or driving the industry to a collective response requires effective central regulation and the convening power of regulators.

[...] Regulators should consider the regulatory inputs and outputs needed to ensure a regime that is nimble and strong enough to identify and appropriately constrain market excesses, particularly in a sustained period of economic growth. [...] To increase overall transparency and help ensure that book value really means book value, regulators should require that all assets across financial institutions be similarly valued. [...]

[...] Regulators should implement more robust information sharing and harmonised disclosure, coupled with a more systemic, effective reporting regime for institutions and main market participants. Without this, regulators will lack essential tools to help them understand levels of systemic vulnerability in the banking sector and in financial markets more broadly.

In other words, thank you, sir, may I have another!

Wall Street douches take note. This is how you grovel. Such a welcome departure from the whiny, defensive, self-serving, tone-deaf dissonance we've been hearing. Everyone kindly spare Lloyd Blankfein's family in the upcoming unemployment riots.

FT front page roundup: Poor Material Edition

2009-02-09T19:33:00.003-05:00

Barack Obama finally stopped stroking his bipartisanship wand and pointed out that there's like this MASSIVE RECESSION outside waiting to kill you unless you pass my stimulus bill, thanks. Republicans meanwhile continue to argue that the bill has too much stimulus in it.

Efforts by the Fed to keep mortgage rates down have been ineffective, which bodes ill for the coming tsunami of debt issuance by the Treasury. And it probably bodes other things as well. Like your mom.

UBS is trying to poach brokers from US rivals by offering them lots and lots of money. So conventional.

Some asshole set southeastern Australia on fire.

And Steven Spielberg's whatever is doing a thing with Disney, like I fucking care. See. None of this was funny.

Shorter Edward Luce

2009-02-09T19:25:00.006-05:00

For Obama, the road to bipartisanship gets bumpy
Due to prevailing journalistic conventions, I can only subtly allude to the fact that Republicans are both incredibly dim and completely full of shit, as opposed to simply pointing out that Republicans are incredibly dim and completely full of shit.

no one could have predicted...

2009-02-08T10:51:00.002-05:00

Gaza offensive boosted Hamas, poll concludes

Palestinian support for the Islamist Hamas movement has soared in the wake of Israel’s three-week offensive against the Gaza Strip, according to a poll released on Thursday.

As the article points out, the political narrative in Israel is that the Gaza war significantly dented Hamas's military capability, which is likely, and its political support, which is fantasy.

Israeli officials argue that Hamas has been severely weakened by the recent offensive, and say the group lost much of its military capability. Several Israeli leaders have also claimed that the war served to strengthen “moderate” Arab and Palestinian movements, while weakening Iranian-backed Islamist groups such as Hamas and the Lebanese Hizbollah.

The most worrying part of the poll is that support for Hamas has spiked in the West Bank, further undermining moderates in Fatah we're supposedly courting. Way to go, morons.

Department of No Shit

2009-02-08T10:23:00.003-05:00

The hippies at the IMF stumbled away from their bongs for five minutes to report on the global recession. Their shocking conclusions:

Estimates of the so-called “fiscal multipliers” – the eventual effect on gross domestic product of a given tax cut or increase in government spending – showed that infrastructure investment would add between 0.5 per cent and 1.8 per cent to output per 1 per cent of GDP spent by government.

Tax cuts of equivalent size would add 0.3 per cent to 0.6 per cent, it said.

The debate has divided politicians in leading economies, with Republicans in the US Congress saying tax cuts would be a more effective boost to the economy than infrastructure investment favoured by the Democrats.

“Tax cuts are an indirect form of stimulus, so you don’t know what the recipient of the tax cut will do with them,” said a senior IMF official. “The infrastructure investment would be a more direct form.”

Oh yea, also:

The fund repeated its call for governments to be more aggressive in restructuring troubled financial systems and said temporary nationalisation might be justified in some cases.

Bah, socialists.

In a sane world none of this would even be worth pointing out. Still, its useful to keep harping on about this since one party has a Crayola lodged in its brain.

I wonder if Canada would be interested in a trade. Their Conservatives for our Republicans. Oh yea, and Alex Rodriguez.

Deep Thought

2009-02-07T16:23:00.001-05:00

How would Sarah Palin handle this?

Bond Markets Made Fun Tolerable

2009-02-07T16:22:00.008-05:00

Obama's plan to bail out everything is making the bond markets nervous. The yield on 10-year Treasuries had shot up almost a full percentage point since the end of December. This pushes up the cost of borrowing for everyone, but more importantly for the government and Fannie Mae and Freddie Mac, the US housing giants, just when they'll need to borrow most.

The US is already facing a $1 trillion deficit this year, without even factoring in the cost of the stimulus bill, some $800 billion plus, or the coming bank bailout, likely to be somewhere similar, though these will be stretched out over several years. Still, dude, that's a lot of fucking debt.

One actual bright side of the financial crisis has been that people have piled into safe assets like US Treasuries en masse, driving down the immediate cost of borrowing since investors have merely sought a return of capital, rather than a return on it. This, obviously, will not last.

A painful irony is that the measure of success against the financial crisis is investor's willingness to buy something else other than safe government securities. As they shift out of those, which is what we want, remember, they will inevitably push up government borrowing costs just after we've taken on those gargantuan debt levels. Moreover, any unwinding of global imbalances will require China to save less, meaning fewer purchases of US Treasuries, exacerbating government borrowing costs even further.

As I alluded to earlier, Ben Bernanke has an ace up it's sleeve to deal with this epic problem. Actually, he has an infinite number of aces up his everywhere. The Fed can print money and buy US government securities to drive rates back down, which it seems likely to do shortly. What this means long-term for the dollar and inflation prospects I don't even want to think about. Still, all very exciting.

ABN

2009-02-07T15:22:00.006-05:00

Krishna Guha offers a sexy breakdown of the shitty asset insurance scheme being debated by Obama's econonerds. The benefits of such a such a scheme, as opposed to a government-run bad bank, are as follows:

banks will actually have to pay something for it.
the government wont actually have to physically engage in the embarrassing transaction in which it purchases a turd sandwich for more than the value of a turd sandwich...
so the accurate pricing of assets, therefore, becomes somewhat less important.
to the extent shitty assets are insured, it will cap banks' potential losses on them. Theoretically this eliminates the uncertainty of catastrophic losses and will kick-start the financial markets by allowing investors and lenders to do something other than cower in the basement.

The unbenefits of an insurance scheme, however, are that:

there's no reason to believe this scheme will be significantly less costly to the taxpayer since...
the government takes the brunt of the losses as it is, and probably all of any catastrophic loss.
pricing the shitburgers is still important because the government could potentially undercharge for insurance.
also any difference between the book value of the assets and the amount the government agrees to insure will need require more capital to fill the hole, from the government.
the assets will still be on the banks' balance sheets.
shareholders don't get stripped and beaten in public.

This plan really is the Anything But Nationalization (ABN) plan. The biggest problem to me seems that working out insurance schemes individually for all these fucking things will take months, while they remain on bank's balance sheets, which seems the antithesis of a speedy, definitive bank rescue however you structure it. And coupled with a new recapitalization scheme and a smaller bad bank seems to make the plan needlessly complex, where mind-numbing complexity was already an issue. At least with the bad bank, which I also hate, the toxic assets are gone and banks can get on with it. Instead, years from now, they'll still be there.

A year and a half into it and Obama's promised deathblow to the financial crisis is turning into a slow, plodding clusterfuck of bad ideas already proposed and discarded for whatever reason, and that not even smarts will be able to understand anyway.

Temporary nationalization seems to me the easiest, most straightforward approach, not that it doesn't present problems of its own. But pricing the toxic assets wont matter, since the government can hold them to maturity for all anyone cares, or simply wait until a market for them materializes. Shareholders will actually be punished for investing in the things that brought down the planet, which is what's supposed to happen when your company gets bailed out anyway. And finally, ahem, let's recall these banks are already insolvent, for fuck's sake.

It may be indelicate to say so, but many of these banks are, realistically, bust. While policymakers are admirably reluctant to extend the process of nationalisation, more public ownership is both inevitable and potentially helpful. For state control can facilitate more lending. It also removes the acute conflict of interest between taxpayers and shareholders regarding finding a value at which bad assets can be extracted from bank balance sheets without favouring one group at the expense of the other.

The only way the proposed rescue plan makes sense is to avoid the above. So far, as Paul Krugman says, its like socialism without the justice.

(Friday's) FT front page roundup: Because I Fell Asleep Had a Hot Date Edition

2009-02-07T12:49:00.006-05:00

Obama's bank rescue package, which changes by the day, apparently, is likely to focus on another wave of recapitalization by converting government preference shares in banks, which are a debt/equity hybrid, into regular shares, which are more fun. An insurance scheme and a small 'bad bank' are also likely to play a role. The only way these makes sense is that they're anything but nationalization.

Useless Republicans are still whining that their non-stimulative things aren't in the stimulus bill. Cry me a river, losers, that I may build a bridge over it.

Um, the European Central Bank left rates on hold. I cant find the words to convey how dumb this is. So I'll let this guy do it.

Josef Ackermann, head of Deutsche Bank, is excited that Barack Obama's pay limits for executives who take bailout money will encourage them to flee to Europe, where they can lose money for his bank.

And, finally some good news, Rupert Murdoch is way poorer!

FT front page roundup

2009-02-05T19:05:00.004-05:00

Hope-fucker Barack Obama fulfilled his campaign promise to take all the white people's money and convert it to Islam. Was that so hard?

On a more serious note, it looks as if the Hussein administration is leaning toward an insurance-type program to deal with the white people's worthless assets, giving much less weight to the "bad bank" idea, previously touted. Losses on toxic assets will be capped at some level with the government taking the remaining losses. This strikes me as odd since even with the bad bank the government would at least get something for those assets eventually, even if it was pennies on the dollar. With the insurance plan the government only takes the losses. I'm not seeing where it benefits from the upside of a bank recovery, whenever that happens, other than through recapitalization of banks through share purchases--but both plans would have required more of that.

So the government takes the loss and bank shareholders don't get punished at all. That's the best you losers could come up with? Capping executive pay then seems to be the proverbial air-freshener on the turd, which Tim Geithner will commence burgling.

The US Treasury is revving up its debt machine while yields creep up before we've even passed a stimulus bill. The Fed is concerned about what this means for mortgage rates and may intervene to buy long-dated Treasuries directly, which is the monetary policy equivalent of masturbation.

Consumer goods juggernaut Procter & Gamble is trying to sell off its pharmaceuticals division as people turn to harder drugs to cope with the recession.

And some investment outfit in Iceland, the IMF-protectorate, is totally fucked, which no one saw coming.

self-awareness II

2009-02-04T19:48:00.001-05:00

Looting stars

The explanation may be that finance’s most recent golden age created a culture of entitlement so deep that it survives, for a while at least, even when boom turns spectacularly to bust. It is telling that fully 79% of Wall Street workers who responded to a poll by eFinancialCareers.com said they received a bonus for 2008, despite the carnage. Almost half said they were dissatisfied with the amount received.

FT front page roundup

2009-02-04T19:00:00.004-05:00

Non-taxpaying weener Tom Daschle gave up his dream of fixing your healthcare after Barack Obama subtly shoved the erroneous W2 form directly up his ass. President Bush will give him the Medal of Freedom.

This is about right. Allowing Tim Geithner to slide I get. He was intimately involved in the bailouts, and of all the horrible things there are to say about that, the last thing you want right now is your Treasury secretary to be learning on the job. Tom Daschle has no such importance. Someone else I've never heard of can do healthcare.

The European Union has warned that if the United States insists on buying American, then they, like, wont. Duh.

Private equity firm TPG's efforts to sell itself for money broke down when investors insisted on paying for what it was worth, which is nothing.

And China sold more cars than the US this month for the first time ever. Hm, yea well, at least we're not foreigners.

FT front page roundup

2009-02-03T09:51:00.004-05:00

UBS is depressed since all its US competition quit being investment banks and now they have no one to play with anymore.

God punished the UK with snow, in winter, of all seasons, so everyone got to stay home to practice being unemployed. Also the snow disrupted labor unrest in Lincolnshire, which proves he hates communists.

Twenty million migrant laborers have lost their jobs in China and left cities go be poor with their families.

Mattel's profits plummeted as parents opt for those sucky 25 cent gumball machine toys as opposed to actual ones.

And ~~Cyberdyne Systems~~ Google and Nasa are laying the groundwork for the robot rebellion, which will solve climate change by killing everyone.*

*Hm. No link on the website for this story, which led me to believe it was the best made-up pre-firing article ever written. But The Daily Telegraph reported it, too.

Buy Amurican

2009-02-02T18:33:00.005-05:00

People are freaking out over provisions in the stimulus bill that require tax monies to be spent only on things from US companies. Paul Krugman argues that while there is an economic argument for protectionism of this sort under certain conditions, that its still a dumb idea from a purely political-economy perspective. I can't vouch for any of the former argument because it uses math-like things that hurt my brain, but the latter is certainly correct.

To refresh, there is a thing called the World Trade Organization, which we are a member. Personally, I enjoy organizations where Antigua can sue the United States over anything and win. More specifically, we have signed the WTO rules on government procurement which bars most forms of procurement discrimination against other WTO members. This means the US can be sued if it violates them. If violators don't comply the way the WTO enforcement works is to allow the aggrieved to violate trade rules of their own at the expense of the violator. Like an authorized trade war. Exciting.

Secondly, and perhaps more importantly, retaliation is certain to come whether through the WTO or not. Cases already take forever to work their way through the dispute settlement panels and there is much time for fiddling with trade rules in the interim.

So why even bother with this? It only works if everyone else doesn't do it too. And by doing it we've given everyone else a huge incentive to do it. Yea, dumb. But it seems the Senate has actually strengthened the "Buy American" provisions to an extent that clearly violates the WTO rules, which the House bill did not.

Pascal Lamy is certain to get balder.

protest fail

2009-02-02T18:25:00.002-05:00

Protesters unite in anti-Kremlin demonstrations

[A]t one planned demonstration, which had not received permission from the government, the organiser, Eduard Limonov of the outlawed National Bolshevik party, showed up alone to find dozens of riot police waiting for him. Before he could say a word he was dragged to a police van. He was released yesterday.

self-awareness

2009-02-02T14:57:00.006-05:00

Please, just shut up.

The bail-outs of Citigroup and Bank of America could distort the market if the US lenders succumb to political pressure when making lending decisions, a senior executive at JPMorgan Chase has warned.
Jes Staley, head of JPMorgan's asset management and private banking operations, said political interference in the management of those lenders that have turned to the US government for large-scale support was the "biggest risk" facing his bank.
[...]
"If the big banks start to be geared for public policy as opposed to economics we may end up competing against institutions that are being run for non-economic purposes,” Mr Staley said. “That is the biggest risk we see out there.”

If the entire financial industry wasn't on life support from the government because of the collective uneconomic stupidity of finance nerds then yes, fine. But unless Jes Staley's biggest fear in 2007 was that the entire financial system will implode on itself without any government assistance at all, well then we have a teensy problem.

Look, dude. I sympathize with the argument that government banks will be prone to misallocate resources to 'non-economic' uses, whatever that means. But could they really do worse? We're talking about a financial system that channeled vast amounts into a mind-bogglingly unproductive, uneconomic real estate bubble, which unlike a tech bubble, doesn't even leave anything useful in the crater it left when it exploded. Teenagers will have lots of foreclosed houses to hang out and snort PopRocks in or whatever they do. That's about it.

The last decade has given the financial industry the closest thing it will ever have to the innovative, regulation-free, libertarian paradise it's always wanted. And quite simply, the magnitude of self-inflicted wounds in finance are such that if the government is even having to seriously consider making these kinds of decisions, like intervening in the most basic, mundane forms of finance, that it reflects badly on your profession, not theirs, whatever their current, and certainly future, policy mistakes will be. So yea, while the argument remains a valid concern, it still matters who its coming from: some douche whose company survived thanks to the government interference he's now whining about.

Free advice: take your bailout billions and just shut up for a few years. You're impossible to defend, even for people who like capitalism and appreciate finance, like me, believe it or not. But seriously. Shut the fuck up. Thanks.

More: My imaginary girlfriend Aline van Duyn has more on the lack of humilit y in finance, which sheds some light on how something like this can still possibly happen.

For months, I and others have written about the disconnect between the way Wall Street regards itself and the way it is regarded by others. Why should investment bankers get paid more than the president of the United States? It is hard to make the case for such payments when the banks in question have received billions of dollars of taxpayers' money. But few bankers think it is strange that they are so much better off than others, even after the recent traumas.
Wall Street is not used to being accountable to anyone. For years, the financial industry has made more money than nearly any other business in the world.
Banks' shareholders rarely questioned them, even as huge chunks of revenues were spent on compensation. It is hard to pinpoint what being accountable to shareholders actually means.
Even activists such as billionaire Carl Icahn had mixed success. Mr Icahn targeted Time Warner a few years ago, when Dick Parsons was the media group's chairman and chief executive. One point often made by executives was this: investors who did not like Time Warner could take their money elsewhere.
Taxpayers cannot just walk away...

Deep Thought

2009-02-02T14:47:00.001-05:00

Because Al Gore uses electricity, and doesn't capture and sequester his own farts, proves that global warming is a hoax.

FT front page roundup

2009-02-02T11:23:00.004-05:00

The FT is hyping their exclusive interview with Chinese premier Wen Jiabao, who says a bunch of things you could have read in the People's Daily.

Republicans are planning to make Barack Obama's stimulus package sit at the back of the bus, and drink from separate water fountains.

Republicans argue that most of the tax portion of the stimulus will be distributed in the form of $500 (€385, £350) credits to middle-class Americans that are likely either to be saved or used to pay down debt.
Mitch McConnell, Republican leader in the Senate, said that with Democrats as well as Republicans in the Senate concerned at the House of Representatives' version of the bill, changes would have to be made. "We ought to go right at the housing problem and right at tax relief to put money in the hands of consumers who can spend it now," he told CBS.

Look, I wouldn't really care if Republican objections to the stimulus were actually coherent. But they're not. Its just knee-jerk ideological flailing. Suit-wearing penis Mitch McConnell already knows a housing plan is already being drawn up as part of the second tranche of TARP funds. So, ha, fail on point one.

Secondly, McConnell acknowledges above that tax cuts are likely to be saved or used to pay down debt. So the logic goes something like, 1) the stimulus bill is not stimulating enough, because 2) it has lots of tax cuts which we know aren't cost-effective or stimulative, so 3) we should have MORE of those non-stimulative, non-cost-effective things, and oh yea 4) make them permanent. How can you even argue with this? Let's recall we're facing $1 trillion in deficits without even factoring in a stimulus bill, precisely because of huge, permanent tax cuts, that have severely hindered our ability to run counter-cyclical fiscal policy. And they want more. This is their principle objection, for fuck's sake. Gah! [hot flashes]

I suppose its to be expected since former President Bush abolished the Department of Sense-Making in one of his first acts of office.

[/rant]

Lehman Brother's creditors are allowing it commit hara kiri. And to be paid in worthless stock. Sweet, dude.

And India is planning to create a $20 laptop to help its poors. And you thought subsistence farming was least productive drudgery known to man. Wait til they find teh pron.

vetting

2009-02-02T11:00:00.003-05:00

Obama's unprecedented vetting process strikes again. First we find out Bill Richardson is a total Mexican. Then its Tim Geithner, who worked for the IMfuckingF, but can't do numbers, apparently. And now Tom Daschle, who I'd fallen in love with only to let my guard down, does this to me.

Ugh. Pay your goddamn taxes, dickhead.

FT Weekend front page roundup

2009-01-31T19:14:00.010-05:00

Barack Obama and his econonerds are set to announce a "big bang" catch-all financial rescue dealie, which will work itself out over the next 13 billion years.

A diplomatic spat erupted when Turkish prime minister Recep Tayyip Erdogan told Shimon Peres, Israel's former Mexican president, to "talk to the hand" during a debate at Davos, since Erdogan was not allotted enough time to call Peres a turdface. This is the worst disaster in debate moderation since John Adams stabbed William Pitt on Meet the Press in 1778.

Germany is making its banks put all their toxic assets into superfun travel-size scheiße banks.

Morgan Tsvangirai, leader of Zimbabwe's opposition MDC, who actually won the election, will relent and join Epic Cocksucker Robert Mugabe's "national unity" government so everyone doesn't die of cholera.

And its the 30th anniversary of Ayatollah Ruhollah Khomeini's return from exile to Iran. Like everyone with 15 kids, the Ayatollah fathered some worthless hippies.

A tale of two McCains

2009-01-31T04:53:00.003-05:00

John McCain, 2000: "Agents of Intolerance."
John McCain, 2009: Agent of Incontinence.

Nigeria has huge balls

2009-01-30T17:38:00.003-05:00

The Nigerian government is gearing up for a bond issue in the next few months...

...in an environment where no one will finance a shipment of Happy Meal toys from China to the US...

...where the price of oil, its main money-earner, has plummeted...

...and whose president will almost certainly be dead by then...

Who, I say, will resist the naira-denominated awesomeness?

Huge balls. Huge.

FT front page roundup

2009-01-30T12:28:00.003-05:00

Jean-Claude Trichet, head of the European Central Bank, told the elitists at Davos that banks better stop hoarding all the free monies he'd been giving them. He then burned a copy of the Basel II Accord, tipped over the podium, and walked off stage.

Barack Obama publicly castrated Wall Street douches who insisted on bonuses this year.

Bankers reacted to the president's remarks with a mixture of anger and resignation.
"Attacking Wall Street is like fishing out of a barrel at the moment," said one financial executive. "Obama is in the middle of a tough political battle to get the stimulus plan approved. He has to say these things."

Yea, dude. He actually really likes shoveling billions to the people who broke everyone's economy, and nevertheless continue to reward themselves. He just has to pretend he doesn't. Ha, yea. Sorry, fuckers. "The Man" is now black.

Ford "Everything is Fine, Seriously" Motor company is drawing on an ~~emergency~~ "prudent" $10 billion credit line.

Wen Jiabao, speaking in Germany, said China doesn't manipulate its currency, but will manipulate it at a "reasonable and balanced level."

And ~~Illinois governor~~ unemployed man Rod Blagojevich, Hairpile of Freedom, was impeached by the Illinois legislature, much like Rosa Parks.

Americans don't apologize, unless we'll get laid

2009-01-29T16:16:00.010-05:00

Mahmoud Amadi-Nejad, President of Iran and Sports Jacket of Terror, demands that the US apologize for past crimes against his country for there to be a fundamental shift in relations.

Pfff, whatever, dude. It's not like we overthrew your government or anything. Or ~~backed~~ tilted toward some crazed dictator who invaded your country and killed everyone with chemical weapons. Or shot down one of your passenger airliners. Hell no.

Why don't YOU apologize for returning all our hostages alive and having a ridiculous-sounding name, and then we'll get Procter and Gamble to ease up on the sanctions so you can take a Mach-3 to that thing on your face. And if you're really nice, we'll get Oliver North to bring you some missiles again. Whatever you want.

America, fuck yeah.

FT front page roundup: Customer Service Wisely Avoids My Wrath Edition

2009-01-29T10:02:00.008-05:00

The International Monetary Fund and the International Labor Organization, who secretly hate each other, are in agreement that the world economy will rape everyone and their pets this year.

The IMF slashed its global growth forecast by 1.5 percentage points, from the nothing it was forecast to grow anyway. Furthermore, it revised total global credit losses from $1.4 trillion to $2.2 trillion. The ILO is predicting 18-30 million job losses, with a chance of 50m if we're lucky. Fucking buzzkills, dude.

Bank stocks soared when tax delinquent Tim Geithner played down the possibility of nationalization. Instead he's probably going to buy their worthless assets and then compensate the banks for any lost capital as a result of the sale, which means banks haven't bothered to try valuing these things correctly, because they'll end up getting nationalized. This is pretty much what Hank Paulson was going to do a year ago until the smarts said it was a bad idea to overpay for a shit sandwich. But now it isn't, apparently.

Wells Fargo reported a $294m loss because clients defaulted when Bernard Madoff took all their monies.

Bank of America is planning to defer bonuses for its employees this year in response to a sexy probe from the NY attorney general into BofA acquisition Merrill Lynch's Bonus for Losers scheme. In times like these, a story like this...

BofA insiders said that the deferral of payments would be a particular problem for executives who have constructed a lifestyle around the near-certainty that there would be some kind of bonus each February.
They said that this could lead to departures beyond the 3,000 or so job cuts expected in the unit this quarter.
"This is going to cause an uproar," says one BofA executive familiar with the matter. "There will be cash-flow issues for families."

...would normally warrant a well-deserved "boo fucking hoo hoo." But recall that BofA employees are being forced to tuck in because of losses at Merrill, whose employees aren't. And some of those BofA bonuses would have been shitty already because Merrill has weighed so heavily on their share price. Haha, so everyone at BofA hates Merrill, and we can expect office pranks to soon escalate into horrible violence. They will be the Crips and Bloods of finance.

Chinese premier Wen Jiabao castigated ~~the US~~ an anonymous country for pursuing "inappropriate macroeconomic policies" and an "unsustainable model of development characterized by prolonged low savings and high consumption". This is accurate, but funny, because China's prolonged high saving and low consumption has necessarily been the mirror of the US's savings profile. Additionally, he said China had "the confidence, conditions and ability to maintain steady and fast economic growth and continue to contribute to world economic growth", which is true because making up GDP figures in a dictatorship is really easy.

Also, he said it while wearing his headphones upside down. Ha, dingleberry.

IMF chief economist Olivier Blanchard meanwhile is trying to play Dr. Phil to the US/China currency dispute, as if we didn't have enough to deal with already.

post-post-partisanship

2009-01-28T23:12:00.008-05:00

::As my lone commenter points out, Mike at C&L was kind enough to link to me, even with the deluge of f-bombs and god knows what else. Thanks, dude! And welcome all C&Lers! Oh yea, wipe your damn feet!::

Well then, Mr. Obama. Congratulations on getting your stimulus bill over the first hurdle. But I noticed that your new best friends weren't so enthusiastic, and that the number of 'yes' votes from the R's hovered somewhere between one and zero.

Allow me to offer some free, drunken advice. I just got done watching Mongol, which sucked balls, but the story of the rise of Genghis Khan nevertheless has much to say about the perils of excessive bipartisanship. Mr. Khan initially tries to accommodate his rival khans who are always whining about tax cuts and boys kissing while the yurt foreclosure crisis continues unabated. Mr. Khan's attentiveness to their needs merely provokes more ridiculous concerns that bear no resemblance to reality. So he simply slaughters them, invades China or whatever, and everyone still in two pieces or less is much better off for the effort.

Bipartisanship is not without its place, of course, assuming the opposition is composed of responsible, well-meaning adults whose economic vocabulary consists of words other than "tax" and "cuts". Clearly that's not what you're dealing with.

So yea, dude, you tried. You told suit-wearing penis Mitch McConnell that he really didn't look like a wrinkled old penis in a suit. You comforted special-needs child Eric Cantor that his brain function was nothing to be ashamed of, even though it is. You told worthless dildo John Boehner that he's almost as good as those multi-setting three-pronged super dildos, even though he's not, and that its okay to wear a pink tie and cry on C-SPAN, even though it fucking isn't. You gave them their tax cuts. You got them wasted, etc. etc.

And what do you have to show for any of it? What did all this cuddly elephant-hugging, minority-pandering post-partisanship get you, Mr. Obama? Ha, not a single fucking vote.

Here's hoping you've learned a valuable lesson tonight, one you should be thankful to have learned so early on in your presidency.

And now comes the opportunity. Rewrite the bill. Cut out the tax cuts and whatever else you put in to secure votes you didn't get. Write the bill you wanted in the first place, but don't let House Democrats load it up with too many subsidized gay abortions for preschoolers which we know they love. And if Republicans want to stand in the way of it, the Save America From A Recession, Totally (SAFART) bill, then fucking let them. Americans will remember, for once, because they'll post a big note inside the cardboard refrigerator box they'll be living in.

Indeed, allowing them to try and block it will make even bothering to campaign in 2012 completely unnecessary.

FT front page roundup: Case of the Missing Delivery Guy Part VII Edition

2009-01-28T11:00:00.002-05:00

Oh, they're testing me. They're only this far away from a polite phone call, they just don't even know.

FT front page roundup: Delivery Guy Unable to Brave Half-Inch of Snow Blizzard Edition

2009-01-27T20:11:00.003-05:00

FT front page roundup

2009-01-26T19:11:00.002-05:00

It turns out Bank of America may have known about human turd John Thain's awesome Bonus for Losers scheme at Merrill Lynch. Thain then was presumably fired for other turdly reasons.

Also Tom Montag, whose department was responsible for fucking half of Merrill's losses, will be promoted at BofA, because it would cost millions to fire him thanks to previous severance agreements. Remember how we're always telling the Europe to make it easier to hire and fire people? God Bless America.

After the dismembered corpse of John Thain was mailed to their offices, Goldman Sachs decided not to throw a huge party at the Davos World Economic Forum this year. Sorry kids, no body shots of Lloyd Blankfein's hot abs. Instead, all the bankers will play a few rounds of "asshole", which they will win.

Shockingly, car part makers are also looking for a bailout. Its only a matter of time before the bailout industry needs a bailout.

And everyone in India is too poor to go see some movie about how poor they are, which isn't funny.

paradigm shifts

2009-01-25T15:44:00.006-05:00

Desmond Lachman, Resident Person with a Brain at the American Enterprise Institute, in responding to Joe Stiglitz's column about infrastructure spending, repeatedly violates sacred conservative principles--namely not bailing out anything other than a bank, a corporation, or rich people, and then only mentioning tax cuts in order to disparage them. Holy fucking shit.

Sir, Joseph Stiglitz is certainly right in asserting that tax cuts will not help much to stimulate the US economy. [...] However, one has to wonder whether Prof Stiglitz is right in proposing that increased investment in infrastructure, education and technology be given pride of place in President Barack Obama’s fiscal stimulus package.
[...]
By their very nature, even if “shovel ready”, infrastructure expenditures are spread over many quarters. As such, whatever their longer-run benefits to the economy might be, they should not be expected to provide the economy with the more immediate boost that it now desperately needs and that might be expected from increased public spending on unemployment benefits, food stamps and support to the states.

Unemployment benefits and food stamps? Aid to states? This is what hell freezing over looks like, which would be a cost-effective solution to global warming if anyone at AEI believed in that either.

doppelgangers

2009-01-24T13:53:00.005-05:00

While searching for FT articles to rip off and write about, I stumbled upon another blo g which does exactly this, written by a "professor" of "finance" at "Johns Hopkins Carey Business School", which frankly sounds made up.

I can't fucking believe this guy traveled to the future to steal my idea, then traveled back and started it before I did. What a dick! He even stole my picture idea, showing him mocking our sacred government institutions by humorously standing in front of them. Also his blog isn't nearly as funny. Searching it revealed no items with the word "fuck" or "dildotron", for example. Still, now that I have (weak) competition, I'll have to be funnier.

...But if you like your financial news without porn references, and want it solely for the purpose of becoming a well informed citizen-scholar in an advanced democracy, then go read his, Financial Times for Us.

FT Weekend front page roundup

2009-01-24T13:33:00.004-05:00

Prospects for the passage of Barack Obama's huge (stimulus) package improved. Republicans however still had some reservations since their idiotic ideas that wont work aren't being given a fair hearing, despite the $300bn in tax cuts already in the plan. Why is Obama pandering to minorities? Here's worthless dildo John Boehner:

At the end of the day, government can't solve this problem. The American people have to solve it and the way they can solve it is if we allow them to keep more of the money that they earn.

This only works of course if tax cuts aren't saved or used to pay down debt. But you heard him, losers. Stop clinging futilely to your remaining jobs and go fix the financial crisis with your tax monies.

China got all pissy about Tim Geithner's currency manipulation remarks. China said it doesn't and that they've merely enjoyed pissing away money on low-yield foreign exchange reserves for years because its fun. In fairness, the yuan has actually risen 20% against the dollar since the one-off revaluation in 2005. And um, if we're about to embark on a debt-fueled recovery spending binge of awesomeness, its probably not the best time to pick a fight with our largest creditor. Watch bond markets wobble for hilarity.

GE's profits shrank because hardly anyone needs electricity anymore, generally.

McDonald's told the recession to blow itself and is planning to open 240 restaurants and add 12,000 jobs. This is all thanks to its new lineup of McChange burgers, Hope nuggets, and the Suspiciously Fishy Madoff McChicken sandwich.

(Friday's) FT front page roundup: Hey Fuck You I Was Tired Edition

2009-01-24T12:53:00.004-05:00

Haha. BofA chief Ken Lewis fired Merrill Lynch CEO and human turd John Thain in person, possibly because he suggested a $10m bonus for himself despite the awfulness of his company; or possibly because he snuck in bonuses for Merrill executives before BofA could cancel them; or possibly because he spent over $1m renovating his office. An insider explained that during their meeting there was a "mutual agreement" that Thain was a human turd and should die. New York's attorney general is now investigating the bonuses.

"Banker of the Year" and serial market-bottom-caller Ken Lewis, it should be noted, bought Merrill and other stellar institutions like Countrywide for like, 5 pesos, which it turns out was still too much. You get what you pay for, dude.

Tim Geithner hasn't even been confirmed for Treasury Secretary yet and he's already started a trade war with China. Geithner accused China of manipulating its currency, which everyone knows already, but violates the first rule of diplomacy which is to ignore the obvious.

Microsoft gave notice that even consumer staples like internet porn wont save the company from the effects of the downturn.

And Spanish bank Santander was one of the few banks to make out decently from the financial crisis, until the whole Bernard Madoff Ponzi scheme thing. Homoerotic documents from one of Santander's funds describe Madoff's skills as "impeccable", and that he "find[s] great entry and exit points to benefit investors." Class-action lawyers are now looking for vulnerable "entry and exit points" of their own.

brotherly advice

2009-01-24T12:03:00.006-05:00

Dick (Penis) Parsons, the new ~~token black guy~~ chairman of Citigroup, wants you stupid hippies to shut up while the grownups are talking.

Mr Parsons told the Financial Times the new administration should replicate the Resolution Trust Corporation, the government-owned "bad bank" charged with buying assets from failed savings and loans companies in the 1980s and 1990s.
"I lived through the first crisis," said Mr Parsons, who ran Dime Bank, a small lender, between 1991 and 1995. "I remember one of the keys to bottoming out of the crisis was the presence of the RTC . . . We now need something along those lines."
Mr Parsons suggested banks that sold assets to the new entity - also known as an "aggregator bank" - should be required to use some of the proceeds for loans to companies and individuals.
However, he argued that the nationalisation of troubled financial institutions would be misguided. "People who talk about this have no idea how complicated these things are," he said.

Complicated indeed. So complicated, in fact, that Penis Parsons neglects to mention that the Resolution Trust Corporation (RTC) didn't rescue the S&L's. The FSLIC (the FDIC for S&L's) nationalized failed S&L's before liquidating them, wiping out shareholders, publicly bare-bottom spanking their managements, etc. The RTC was left to pick over the remnants so taxpayers could recoup some of the cost of bailing them out.

All this is missing from Penis Parons' fantasy RTC, which will have the government simply buy the shitty assets that make his bank so shitty so he wont have to worry about it anymore. You can just dump your money in the hole there, Mr. Obama, thanks.

Also, "Dime Bank"? Haha, really?

FT front page roundup: Oh Hey, Look What Finally Showed Up Edition

2009-01-22T19:59:00.004-05:00

AIG is selling off its Asian life insurance arm to pay back Hank Paulson before he breaks their legs for fun.

Tim Geithner explained to Congress that he will single-handedly save the economies, but he wont tell them how other than that it will involve money. Cocktease.

Toyota avenged Hiroshima by becoming the world's largest car maker by sales, ousting GM from the top spot which it held for 77 years.

And John Thain is attempting to secure his nomination for Executive Most Likely to be Dismembered by a Mob. Thain is the captain of the fail boat known as Merrill Lynch. It seems he tried to sneak in bonuses for Merrill executives in December instead of January, before it was taken over by Bank of America, when said bonuses would have been laughed at and shit on, since Merrill was known to have huge losses. John Thain is a human turd.

FT front page roundup: The Fucking Delivery Guy Died or Something Edition

2009-01-21T15:10:00.001-05:00

FT front page roundup: Inaugurational Pee Pee Pants Edition

2009-01-20T09:46:00.004-05:00

Legions of libtards flooded into Washington to see the inauguration of Barack Obama, who will almost certainly be America's worst black president ever.

Shares in Royal Bank of Scotland fell nearly 70% in a single day, as the goverment tries to avoid nationalization, which it wont.

Fiat is hammering out a deal to save Chrysler, which will survive thanks to an infusion of the stellar, streamlined corporate management that Italy is known for.

Standard & Poor's downgraded Spain, which now really, really misses its pesetas.

IBM is also facing anti-trust suits in Europe, which is um, yea really, dont care.

8 fucking years

2009-01-20T01:52:00.016-05:00

That silly ole Constitution made George Bush surrender America today. Fortunately Barackaham Oblincoln is riding his soul train to Washington as we speak, where he will hold a promising and statistically insignificant chance of fixing anything noticeably forever, hooray! But my, has it been eight years already? Gee wiz...

---

Here was America in 2000. Remember him? This sprightly young go-getter was at the top of his game. He had a decent job with, uh, some benefits. His pension still existed and government programs to care for him in his old age still had, like, some money left over. His children were going to school to get super smart so they could think up the next big idea in aerospace engineering or internet porn. And he was really popular too! Even some Muslims wanted to be like him! He'd just won the whole Cold War thing against France or whatever and retained only a moderate desire to bomb and rage on brown people half-way across the globe. Ha, you go, America!

But eight years later...

...and look at him now. His bank just foreclosed on his house, or would have if it hadn't just failed and fired everyone, including his wife, who is fucking the guy at the unemployment office. His government is broke and dependent on the charitable givings of Asian dictatorships. His kids are on deployment somewhere fighting Islamoterrorpirates. His whole infantile Freudian desire to needlessly remake foreigners in his own glorious image failed when the foreigners, like, started fighting back. Everyone now hates him and thinks he's a dick because he thinks torture is cool, which it totally is. For shame.

---

I must say that's quite a legacy to rack up in less than a decade, Mr. Bush, one sure to be, uh, remembered, if anything. Anyway, we hope you enjoy retirement, and we're all looking forward to the petulant, self-serving book you'll write in a few years that no one will read.

So from all of us here in America, we bid you, adieu, which is American for go fuck yourself.

FT front page roundup

2009-01-19T21:24:00.004-05:00

The United Kingdom announced the Bailout to End All Bailouts for its banks, which will never need to be bailed out again. Promise.

Change-licker Barack Obama will impose new conditions on bank bailouts, making banks lend the rescue money. As a reward, Obama will buy all of the shitty assets that they got the last time they lent money.

The Commodity Futures Trading Commission is being overwhelmed by the number of Ponzi schemes coming to light as douchebags rush to confess their douchebaggery since everyone else was doing it.

Israel ran out of people and food to bomb so declared a unilateral ceasefire in Gaza. Hamas scumbags haven't and didn't.

And North Korea may be engaging in uranium enrichment in violation of whatever agreement they last signed because they broke the one before it. Suspicions were raised last year when documents submitted by North Korea were found to have traces of enriched uranium on them. Haha! Oh, North Korea, you fail.