Friday, February 27, 2009

Over/under on Labor Day 2009

Sheila Blair, FDIC chair, thinks the FDIC will only pay out $22 billion in 2009 to cover failed banks. But what if one of those banks on the FDIC's troubled banks list is Citi? Bank of America? JPMorganChase?

Nouriel Roubini estimates 1400 banks will fail in this crisis. It doesn't sound like the FDIC is getting into position.

Brush up on your Eastern Europe geography, because in a WWI redux, that's the region that will go up in spectacular flames. Probably no later than this summer.

The Romanians, Bulgarians, Hungarians, Serbs, Latvians, Lithuanians, Estonians did a crazy thing during the housing boom: they took out mortgages denominated in foreign currency. As long as everything stayed exactly the same - no currency dislocations, no asset crashes - then everything would be fine. Weirdly, things did NOT stay exactly the same. Worse, everything flipped upside down at the same time. Eastern Europe currencies fell off a cliff AND their housing market crashed.

Swiss, Austrian, and Italian banks dominated the mortgage market in these countries. Austria and Italy, as members of Eurozone, don't have a lender-of-last-resort like say, the U.S. or U.K. Whoops. Can the Eurozone move fast enough when those banks start collapsing?

Friday, February 20, 2009

Out of the mouths of babes

It's takes a Yankee to sum things up.

"It does," he [Johnny Damon] replied. "I'm not sure if the banks we owe mortgages would understand our money's frozen, start putting penalties on stuff. The whole financial world is all messed up right now. Hopefully they will go on a case-by-case basis. I'm not sure the mortgage is going to be paid this month. But hopefully it's only a couple of days."

Alex Jones Issues High Alert

Citing the Daily Times Herald (Carroll, Iowa):

Guardsman to conduct urban training at Arcadia in April

From the article:
The primary phase will be done Saturday, April 4, when convoys will be deployed from Carroll to Arcadia. Pictures of the arms dealer will be shown in Arcadia, and soldiers will go door to door asking if residents have seen the suspect.

Soldiers will knock only at households that have agreed to participate in the drill, Kots noted.
[Ed. note: Alex Jones will be in Carroll/Arcadia for these drills. From his experience with other urban training drills, households are NOT asked if they want to participate.]

"Once credible intelligence has been gathered," said Kots, "portions of the town will be road-blocked and more in-depth searches of homes and vehicles will be conducted in accordance with the residents' wishes.
[Emphasis mine. Road blocks and in-depth searches. How does Arcadia IA help the military prep for AfPak, Iran, etc? The answer is: IT DOESN'T.]

"One of the techniques we use in today's political environment is cordon and knock," Kots explained. "We ask for the head of the household, get permission to search, then have them open doors and cupboards. The homeowner maintains control. We peer over their shoulder, and the soldier uses the homeowner's body language and position to protect him."
[Ed. note: Who's the HIM in that sentence? The soldier?]

During this phase of the operation, troops will interact with residents and media while implementing crowd-control measures and possibly treating and evacuating injured persons.
[From previous experience they anticipate injuries?]

The unit will use a Blackhawk helicopter for overhead command and control, and to simulate medevacs.
[The infamous black helicopters.]

The drill will culminate in the apprehension of the suspected arms dealer.
[Everyone loves a happy ending.]

Tuesday, February 17, 2009

What I actually said in Springfield

Below is the full, unedited version of Mark Brown's February 17, 2009 column in the Chicago Sun-Times, in which I was serendipitiously present.

BY MARK BROWN Sun-Times Columnist

Sen. Roland Burris says the transcript of his Illinois House impeachment committee testimony proves he is not a lying little sneak.
[Ed. note: I was present due to a mix-up in subpoenas.]

It doesn't. But judge for yourself. Here's the excerpt Burris says exonerates him:

Rep. Jim Durkin: "Did you talk to any members of the governor's staff or anyone closely related to the governor, including family members or any lobbyists connected with him, including, let me throw out some names -- John Harris, Rob Blagojevich, Doug Scofield, Bob Greenleaf, Lon Monk, John Wyma? Did you talk to anybody . . . associated with the governor about your desire to seek the appointment prior to the governor's arrest?"

Burris lawyer Timothy Wright: "Give us a moment." (Wright and Burris confer.)
[Ed. note: At this juncture I replied: I only know those guys from the Sun-Times. Except for Doug Scofield - who IS that guy?]

Burris: "I talked to some friends about my desire to be appointed, yes."
[Ed. note: Note the shock on my face. I inadvertently blurt: Hey, that's not what you said in the hallway!]

Durkin: "I guess the point is I was trying to ask: Did you speak to anybody who was on the governor's staff prior to the governor's arrest or anybody, any of those individuals or anybody who is closely related to the governor?"

Burris: "I recall having a meeting with Lon Monk about my partner and I trying to get continued business, and I did bring it up -- it must have been in September or maybe it was in July of '08 that, you know, you're close to the governor, let him know that I am certainly interested in the seat."
[Ed. note: When it was my turn to answer, I said "How is that everyone spells my name the same as the senior Senator from Illinois, until I really need them to mistake my name for his? For crying out loud!]

From that exchange, Burris now says, we were to deduce that when he referred to "friends" and said "yes," he was confirming having been in contact with everyone named by Durkin except Greenleaf. He blames Durkin for then taking the questioning in another direction.
[Ed. note: If only they had printed a photograph of my in complete disbelief at Burris' lying. Well, another golden opportunity lost.]

OK, that might be enough to save the senator from a perjury charge, even though he had previously submitted an affidavit claiming "there was not any contact" between him and Blagojevich's representatives concerning the Senate seat.

But here's what proves he is a lying little sneak.

While Durkin might not have asked Burris to clarify his reference to "friends," his fellow Republican, Rep. Jill Tracy of Quincy, did return to the subject.

Just watch Burris dance.
[Ed. note: And he's not just whistling Dixie here. If the cameras had panned underneath the table, they would have seen a soft shoe shuffle not seen in a long time.]

Tracy: "You said that you had visited friends perhaps in September of '08 or July of '08 concerning a desire to perhaps be appointed as a senator if our president-elect was elected. And could you give me the names of those friends?"

Burris: "I don't think I said in July. I said they were friends that I contacted after the election, but I was talking to people, I mean I don't know who you want as my friends that I consider as persons. For example, when I handled a press conference to express my interest in the seat, was the press conference -- I did hold a press conference, and some of my friends were there, for instance."
[Ed. note: Wait, what? Who you want as-my-friends-that-I-consider-as-persons? Do I have to answer that question? I DO? Well, I suppose I consider Max and Flurry as friends but not persons. What's that, Representative Tracy? Yes, Max and Flurry are dogs. ]
Tracy was temporarily sidetracked, then came back to the point.

Tracy: "But I think I earlier heard you today testify that in September '08 or perhaps as early as July '08, you had visited with some friends about your desire to seek the seat."
[Ed. note: I interjected here: Friends, but not persons.]
Burris: "No, I think I testified that that's when I began to express an interest in it. As I saw that --"

Tracy: "And I just was wondering who those friends were."

Burris: "One of them was my law partner."
[Ed. note: I reiterate here "But not a person."]
Rep. Barbara Flynn Currie, the committee chairman: "Is that when you talked about your interest with Lon Monk? I think that --"

Tracy: "Was it Lon Monk, was that the extent of it was Lon Monk?

Burris: "That came up in our conversation when we were talking about, you know, if he has some excess clients in the lobbying business, you know, as we try to see whether or not he had conflicts somewhere with some type of a client because of his previous relationship with government. That's what we were talking about then.

"And it just came up, and in fact I said, 'Now, Lon, I don't know what's going to happen, but I think I'm qualified to be appointed to the Senate seat.' And Lon said, 'Well, Roland, I think you are, too.' And that was the extent of it."
[Ed. note: For the love of god, answer the question. And by the way, we all know the answer so you better come clean.]
Tracy: "So you don't recall that there was anybody else besides Lon Monk that you expressed an interest to at that point?"

Burris: "No, I can't recall. Because people were coming to me saying, Roland, you should pursue that appointment, you're qualified, and this was --"
[Ed. note: OK, so you are NOT going to come clean.]
Tracy: "Is there anybody that comes to mind in that light that you can --"
[Ed. note: That is both a friend AND a person?]
Surely, here was one last chance for Burris to clear the air and mention his contacts with Harris, Wyma or the governor's brother. But who did he name?

Rich Barber, a friend of his from New Jersey.

Case closed.

And let's all give Mark Brown a round of applause. And now a round for the Chicago Sun-Times. Thank you, and good night.

*Postscript: Chicago's 10:00PM news is reporting that Burris has changed his story AGAIN. I wish I was making this up. Check the 2/18/09 Sun-Times for more details.

Monday, February 16, 2009

This is NOT going to make the State Dept happy

Chavez wins bid to scrap term limits.

Some guesses from unnamed analysts:
But analysts also suggested that the comfortable victory will also embolden the government to confront serious economic challenges caused by a collapse in oil revenues.
And unnamed economists at Barclays:
Economists at Barclays suggest the government will soon implement a financial transaction tax, increase the value added tax rate and cut expensive subsidies on domestic petrol prices, which are some of the cheapest in the world.
'Nuff said.

Sunday, February 15, 2009

Some damn thing in the Balkans

Ambrose Evans-Pritchard has a great horror story in today's Int'l Herald Tribune.

(Some) highlights from the article:
The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.
[Editor note: Hmmm.]
Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP.
In Poland, 60% of mortgages are in Swiss francs. The zloty has just halved against the franc.
Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.
Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico's car output fell 51pc in January, and Brazil lost 650,000 jobs in one month).
Britain and Switzerland are up to their necks in Asia.
. . . there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.
IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan – and Turkey next – and is fast exhausting its own $200bn (€155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights.
[Editor's note: What's this about Special Drawing Rights?]
Latvia's central bank governor has declared his economy "clinically dead" after it shrank 10.5pc in the fourth quarter.
Germany contracted at an annual rate of 8.4pc in the fourth quarter.
[Editor's note: I think we're well past arguments of Keynesian vs Austrian economics. Try, how long do you boil the water before it's safe for drinking? And what if I don't have a pot to boil it in?]

Friday, February 13, 2009

Do not judge me

[Romans 14:13] Let us not therefore judge one another any more: but judge this rather, that no man put a stumblingblock or an occasion to fall in his brother’s way OR COMMIT A HEINOUS TYPO.

Thursday, February 12, 2009

We see your Guernica and raise you Dresden

While the US continues to wage two wars and threatens two more countries with hostilities, I thought it would a timely reminder to bring to your attention the 64th Anniversary of Dresden Fire Bombing. (February 13/14, 1945)

You may know of it from Kurt Vonnegut's "Slaughterhouse Five." Kurt Vonnegut in interviews:
On Shrove Tuesday, February 13, 1945, a flood of refugees fleeing the Red Army 60 miles away had swollen the city's population to well over a million. Each new refugee brought fearful accounts of Soviet atrocities. Little did those refugees retreating from the Red terror imagine that they were about to die in a horror worse than anything Stalin could devise.
Howard Zinn, the noted historian, participated on a Dresden-lite bombing in the south of France. The awfulness of what he participated in led to his unflagging pursuit of America's hidden history.

There is no agreement on the number of victims. The CBC in October 2008 reported:
"A special commission in Germany says the Allied firebombing of Dresden in 1945 killed no more than 25,000 people — far fewer than scholars' previous estimates running as high as 135,000."
[Editor's note: Just 25,000 people.]

[Historian Tami Davis] Biddle makes the case that one of the Allied objectives for the Dresden raids was to create an obstacle, through the use of refugees, to hinder the German Wehrmacht’s attempts to reinforce the Eastern Front against the approaching Soviet offensive. She also notes that, unlike what one might have expected to happen at the beginning of the war, no debate occurred amongst Allied war leaders about the use of civilian refugees for this purpose. Biddle attributes this lack of debate to “hardened attitudes” among the war leaders at this stage of a long and exhausting war, as well as their anxiety about the conflict’s future direction in the immediate aftermath of the Ardennes offensive. Donald Bloxham contends that the bombing of Dresden was, in fact, a war crime: “

This is the underlying theme to remember: the United States has systematically targeted and killed large numbers of civilians to achieve strategic ends throughout its history, and continues to this day.

Thursday, February 05, 2009

Hey you mobsters, I'm the good guy here

From Markopolos' testimony to Congress, Wednesday 4 February 2009.

Race to the bottom

The San Jose Mercury News is reporting the following developments in California:

Several counties are considering some form of tax revolt—either filing lawsuits or delaying tax payments to the state—because the governor has proposed withholding payments to them for as long as seven months in a move to preserve cash.

Local governments already are missing out because the state has imposed a 30-day payment delay to counties.

Colusa County decided to impose a 30-day delay on sending any taxes and fees it collects to the state.

... the state could in turn withhold sales tax revenue from the counties because the state needs to ensure it has enough cash throughout the year to pay its debt.

Meanwhile, back in Illinois-
A tanking economy and "smoke-and-mirrors" fiscal approach by former Gov. Rod Blagojevich is expected to trigger an $8.95 billion budget shortfall come July 1, state Comptroller Dan Hynes is warning.

The federal economic-stimulus package could pump $3 billion into the state's coffers, but that still would leave the state facing a $6 billion gap, according to [Comptroller] Hynes.

The Southern (Southern Illinois newspaper) reports:
Patton said the national average reimbursement for Medicaid is around 30 days, but Illinois was 130 days behind at one point. However, a recent short-term borrowing plan has allowed Medicaid to catch up to about 80 to 90 days.

While Illinois won't be improving things anytime soon, California will be getting so much worse so much faster that we'll look great in comparison.

And one last thing - California now has the worst credit rating of all 50 states. They were tied with Louisiana for worst, but the latest downgrade left them all alone at the bottom.