Archive for August, 2009

Running Out Of Money Again

Thursday, August 27th, 2009

The FDIC is running out of money, just as it did during the S&L debacle.

The problem? The number of bank failures has risen dramatically, from 3 in 2007 to 25 in 2008 to 87 so far this year. Given the impending collapse in commercial real estate, there could be another 1,000 banks failing in the next 5 years.

The solution? Either borrow from the Treasury or raise the fees charged to the remaining banks for deposit insurance (the FDIC has already done so earlier this year).

Meanwhile, the FDIC has decided to make it easier for private equity investors to acquire failing bank assets, principally by keeping capital requirements low (10%).

Gorilla thinks: “When you’re bailing, there’s nowhere to run, except on banks!”

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This Week’s George T. Platter And Bait

Wednesday, August 26th, 2009

The tidetime folklorist wonders when if ever in the next 5 decades we’ll again start asking why not.

The Platter: For You For You by Wayne Fontana and the Mindbenders (from the first year of a Senatorial lifetime’s quest, as yet unfulfilled)

The Bait: The Chuck Grassley Slim Shaky Worm (a no nothing lure, full of baloney, wrapped in a tissue of lies)

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The Health Care Sham

Wednesday, August 26th, 2009

A very useful article, for once, in the New York Times.

Health care “reform” isn’t reform at all, it’s simply moving the deck chairs around. The fundamental stupidity of employment-based insurance remains, the near monopolies health insurers enjoy in many states remains, and the protectionism of doctors and Big Pharma remains.

Obama ran against this ludicrous state of affairs, but he’s been racing to the bottom of the barrel ever since the election.

This is why Gorilla doesn’t think it matters what plan is passed, none of them are radical enough: “Bringing everyone into Medicare, and allowing the private sector to offer supplemental plans for those who want them, is by far the easiest and cheapest solution, which means it has no chance of happening!”

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Ending With A Clunk

Wednesday, August 26th, 2009

Reality for the auto industry is settling in for the long haul.

Cash for clunkers moved up sales a few months, but the overall picture is dire: a vast oversupply of cars and very few buyers.

When Toyota, which actually makes cars people want to buy, is cutting production by 10%, the odds of GM staying afloat remain dim.

Gorilla thinks: “We could have covered all the uninsured Americans right away, but instead we’ll all be hitching a ride!”

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Farewell, Teddy

Wednesday, August 26th, 2009

A charismatic, effective and flawed politican and human being.

He didn’t live to see health care passed, and what’s passing for health care reform at the moment would have tarnished his legacy.

Gorilla says: “He’ll be missed!”

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More Idiocy From The Idiot’s Idiot

Tuesday, August 25th, 2009

Richard Holbrooke, again.

Seems he thinks the Taliban’s getting way more money from Persian Gulf sources than from the drug trade.

Lots of Middle Eastern guys are coming across the borders with suitcases full of cash.

The Taliban are a low-cost insurgency, says the Ambassador, but they can still blow up things down the block from the drones at the Kandahar air base.

No irony here, still we’re funding both sides of a pointless war once again, whether through drug demand or oil demand, whether through Pentagonal budgets or foreign aid budgets, but our Special Envoy can’t be bothered to connect the dots.

Gorilla thinks: “The Dayton airport never looked so good to a man whose times have passed him by!”

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Talking About Talking

Tuesday, August 25th, 2009

When it comes to Israel and the Palestinians, that’s been about it for 60 plus years in Goingbackwardville.

We now have to deal with an Israeli leader who has never supported the peace process or the two state solution.

We also have to deal with a divided Palestinian polity, and we will not (yet) negotiate with Hamas.

So, Movingforwardville will host another round of talking about talking, accompanied by phony gestures like temporary settlement halts and independence declarations.

Victory won’t be declared, thumbscrews will not be tightened, and we’ll wait around for yet another pivotal/inconclusive/provocative/defensive bit of unilateralism.

Gorilla is relatively optimistic: “Oh well, it’s not like Afghanistan, we’ve still got another 90 years or so to achieve a truly bleak level of quagmire!”

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The Dollar Carry Trade

Tuesday, August 25th, 2009

Simon Johnson has beaten Gorilla to the punch via a very informative post at Baseline Scenario.

While we’re all waiting for the toxic shoe to get unstuck from bank balance sheets (they’re raising capital furiously, coz they know the big losses have just begun), the dollar has replaced the yen as the new carry trade currency (borrow cheaply in dollars, lend profitably in other currencies, in this case Asian ones, as emerging markets are growing a bit).

Thus Wall Street speculation begins again, particularly in commodities. How else does one explain a 50% increase in oil prices when the global economy is essentially not growing, unless one believes, as no economist I know does, in super duper growth just around the corner?

The risk of course is the dollar might appreciate, just as the yen did. So the next bubble watch is on.

Gorilla advises: “Time to go long moral hazard again!”

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“The Lawyers Did It”

Tuesday, August 25th, 2009

How does the SEC justify Bank of America’s failure to inform shareholders about the bonuses paid to Merrill Lynch executives prior to the companies’ merger?

By blaming the lawyers!

After all, if you’re the chief executive of Bank of America or Merrill Lynch, you aren’t responsible for your own decisions if they were largely made by lawyers your company employs. This is very curious, in that the same executives are supposed to be responsible for all financial statements they sign off on under Sarbanes-Oakley.

But these boys are clever, they managed to set things up so that their patently unethical and illegal non-disclosure of material facts was protected by attorney-client privilege!!!

Bank Of America remains insolvent, so their shareholders are screwed either way. Executives won’t be able to cover that up much longer (unless they manage to buy off Congress and change the accounting rules again), so we should see Goingbackwardville pushing back against the phony reforms of Movingforwardville by the end of the year.

Gorilla sums it up: “When the rubber stamp meets the road on Wall Street, you can bet the SEC will be changing the tires!!!”

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A Trip To Renditionville

Tuesday, August 25th, 2009

Here’s what one former constitutional lawyer once promised about the practice of extraordinary rendition, that is the delivery of terrorism suspects for interrogation to other countries where they might be tortured:

“This means ending the practices of shipping away prisoners in the dead of night to be tortured in far-off countries, of detaining thousands without charge or trial, of maintaining a network of secret prisons to jail people beyond the reach of the law.”

And of course that promise, like the ones about cleaning up Wall Street and reforming Washington in Movingforwardville, meant absolutely nothing. Oh, we’ve closed the CIA prisons (but we don’t actually know what the CIA is doing or whether there are other prisons being used by non-CIA personnel).

Does torture continue? We don’t know. Habeas corpus remains a distant dream, and extraordinary rendition continues.

This time we’ll be sending along a State Department bureaucrat, who might suggest the destination country isn’t a paragon, but essentially the United States of America continues to be complicit in torture, kidnapping, and the destruction of what used to be the rule of law. It’s business as usual, just as it is on Wall Street.

Such a policy is both cowardly and unnecessary, since very little if any actionable intelligence has been produced as a result of these practices (this being the real story of the 2004 CIA Inspector General’s report and the obstruction of justice that attempted to quash it).

Gorilla thinks: “When I’m spirited away in the dead of night to be tortured, it’ll be comforting to know there’s a dip along for the trip!”

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