Numerian's blog

Ahoy There! Piracy is the newest security threat

Tue, 18 Nov 2008 08:37:36 -0800

Asymmetrical warfare, the Pentagon calls it. The U.S. spends a minimum of $600 billion on its Defense Department budget, but the real security threats come from terrorists or pirates with minuscule budgets and attack forces numbering 20 or less.

The latest outrage is this week's commandeering of a Very Large Crude Carrier, the Star Sirius, off the coast of Somalia. VLCC means that the carrier is holding $100 million of crude oil, destined for the United States. This is a vessel taller than the Chrysler Building, yet it was successfully overtaken by 15 pirates who captured the crew, and had the carrier taken to a Somali port where it is now surrounded by hundreds of other pirates.

Lessons Learned on the Loading Dock

Tue, 04 Nov 2008 22:52:14 -0800

Martin Luther King brought his campaign for civil rights to Chicago in 1965, giving my father yet another excuse to rail on and on about Negroes not knowing their place. When he was at home he was restricted to the term “Negro” – our mother saw to that – but to the embarrassment of everyone in our family he was allowed to let loose whenever his own parents held a family party with his many brothers and sisters.

We kids would sit quietly in their living room, while in the kitchen the aunts and uncles, plus Grandpa and Grandma and our Dad, would tell the latest jokes about the "coons" or "spades" they met showing off their Cadillacs, or lazing around the streets. There was a decided overtone of superiority to these conversations; it seemed to make my Dad’s family feel much better to talk about the ignorant and indolent blacks they would come across from time to time. But there was also an undercurrent of fear; the blacks were beginning to move into yet another neighborhood, they would say, branching out like a menace to all the nice communities where the sons of white immigrants from Europe made their living as tradesmen, steelworkers, or in other manual labor.

Onward Christianist Soldiers

Sat, 25 Oct 2008 20:39:15 -0700

Republican leaders are already talking, albeit sotto voce and usually with anonymity, about Barack Obama’s landslide victory, and who is to blame. Being Republican means never having to say you’re sorry – it’s the Love Story approach to politics – but that doesn’t mean you can’t throw mud at some other guy in the party when everything has gone badly wrong.

Quite a gaggle of GOP geese are doing just that in a U.K. Telegraph article here. On one side are the apostates who have already criticized the party or even endorsed Barack Obama. This includes “intellectuals” like David Brooks, Andrew Sullivan, Doug Kmiec, and Peggy Noonan, as well as party stalwarts like Scott McClellan, David Frum, Matthew Dowd, and Kenneth Adelman.

More after the jump.

And What About Bridget?

Wed, 22 Oct 2008 05:44:58 -0700

With Barack Obama’s 85 year old grandmother in the hospital after a fall, we are reminded about the extraordinary role she and her husband played in Obama’s life. It was not easy for a white couple in Kansas to take on a black teenager as their son when his mother died, and Obama’s biography testifies to the enormous influence both of his grandparents have had on him, allowing him to find his way with confidence in both black and white society.

We don’t hear much about white couples who have faced the challenges of raising African-American children, or of mixed couples who have endured the prejudice that dates back to miscegenation laws. Which makes it all the more curious that we hear very little about Bridget McCain.

Who Got it Right? How About The Agonist!

Sat, 18 Oct 2008 04:11:43 -0700

It's no longer possible for the bank executives who brought us this all-consuming financial crisis to plead "No one could have seen it coming!" Even the mainstream media are on to this falsity. They are publishing top ten lists of the perpetrators who caused the financial crash, and the now-celebrated few who predicted it, among them Nouriel Roubini, Robert Schiller, and Warren Buffett. But they tend to miss the blogs that, even more so than the professional economists, predicted quite well what would happen and how it would go down (literally). To help redress that omission, the blogs need to speak up. It is time, therefore, for one blog that got it right to lay out its case. It is time to do some serious bragging here at The Agonist!

Panic Seizes Stock Market

Thu, 09 Oct 2008 16:50:16 -0700

We have finally moved into the panic and capitulation mode for the stock market. Today's 7.3% decline in the Dow Jones brings that index down nearly 40% from a year ago when it reached its all time high. Where will this end?

No one of course can answer that question, other than to say markets do not go down forever. All the reasonable stopping-off places, such as support levels set during the run-up from 2003 to 2007, have been swept aside, and we are rapidly approaching the starting point of this whole rally, which coincided with the invasion of Iraq in 2003.

How fitting for George Bush that he should end his career with a stock market crash, equivalent over the past week to the worst historical crash of 1987 (albeit that one occurred in one day). In both cases, computerized trading has exacerbated the selling, because computers dispassionately send in sell orders every time a support level is broken. Some have even suggested that short selling in financial stocks, which is now legal again as of today, was the cause of this afternoon's crash. Maybe, but remember that the entire market has been under huge pressure the minute this ban was put into place.

Buzz it, Digg it, Heat it

Who Will Buy?

Mon, 06 Oct 2008 21:36:28 -0700

There’ll never be a day so sunny,
It could not happen twice.
Where is the man with all the money?
It's cheap at half the price!

From the Musical Oliver

Henry Paulson has turned into our very own Oliver now that he has gotten permission from the Congress to start peddling toxic mortgage securities and credit default swaps. Soon Old Hank is going to be out on the street corner with his bucket of goodies, glowing bright green with radioactivity. He’ll be looking for the man with all the money, willing to purchase something at half the price, or better.

George Bush With Lipstick

Fri, 03 Oct 2008 05:46:03 -0700

At my recent high school reunion you couldn’t help but notice that the jocks and cheerleaders and popular kids sat in one corner of the room, while little pockets of high school’s “dispossessed” were scattered elsewhere. These were the nerds, brains, unpopular kids, future homemakers, auto mechanics – everybody else who was not quite cool enough.

I didn’t realize it at the time, but we had a Sarah Palin in our midst. A bubbly, enthusiastic, friendly organizer who had been head of the cheerleading squad. I thought she had done a fine job planning the reunion, so I was surprised at how much resentment there was towards her from other women not among her crowd. These women were successful in business, or as lawyers, or teachers, or medical professionals. Two or three were writers, and one was a professional musician.

What Are They Hiding?

Tue, 30 Sep 2008 11:38:28 -0700

We are now down to five major US financial institutions that pose some degree of systemic risk to other banks, largely through their derivatives portfolios: Citibank, Bank of America, JP Morgan Chase, Goldman Sachs, and Morgan Stanley. All of these institutions are now commercial banks, subject to Federal Reserve oversight, and with immediate access to Fed liquidity. Goldman Sachs and Morgan Stanley, which were the last of the two great investment banks, are now focused on building up a consumer deposit base as a means to avoid large daily borrowings of short term funds.

With the obsession going on in Congress over a massive bailout of “the market”, aren’t we now really talking about a massive bailout of these five institutions? Is it really worth all this trouble for just five banks? Perhaps there are some better ways to handle the problem.

Buzzed, Dugg and Heated

Hold to Maturity Accounting = Hold on to Your Wallet

Wed, 24 Sep 2008 16:36:59 -0700

I’ve been flipping through my accounting books trying to find something about the “hold to maturity” accounting that Fed Chairman Ben Bernanke was talking about yesterday at the Senate hearings on the bailout. I haven’t been able to find anything exactly described as “hold to maturity” accounting, or a hold to maturity price, and on the internet all you get is references to Ben Bernanke’s speech yesterday. Maybe this is something new the government has come up with.

I have a pretty good idea what he means, though, and what he intends to do. There has been an esoteric discussion going on for a year now in the financial industry about how to move away from mark to market accounting, also called fair value accounting. This is the practice of taking your portfolio at the end of every month and valuing it at current prices in the market at the day of valuation. Any gains or losses when comparing today’s value to last month’s value go right to the income statement as a gain or loss. Mark to market accounting was a wonderful, wonderful thing for the financial industry when markets in general were going up. Valuations of the portfolio were going up as well, so income was rising, and along with that came fat bonuses for Wall Street. Now that the market is going down, valuations are declining, losses are being declared, and bonuses have disappeared, there is an earnest debate over whether some other type of accounting is needed.

Vote this up at Buzzflash and/or at NewsHeat

Are the Bond Vigilantes Back?

Mon, 22 Sep 2008 20:34:36 -0700

Poor President Clinton had a lot more to worry about during his two presidential terms than Newt Gingrich or Monica Lewinsky. There were the bond vigilantes, short for the bond market, which seemed to have a habit of selling off US Treasuries any time it looked like the Clinton administration might be trying to bust the budget. It didn't help that Alan Greenspan during the 1990s constantly lectured Clinton and the Congress about the dangers of budget deficits. All of this may have been to the good - the budget deficit actually shifted to a surplus by the time Clinton left office, and there was hope that the US could start either retiring the public debt, or deal with its long term funding requirements for Social Security and Medicare.

Morgan Stanley to Market: Stop the Insanity!

Wed, 17 Sep 2008 20:17:26 -0700

It must be a mad, mad world when one day you announce company earnings that beat all analyst estimates, and the next day your stock falls 24%. Worse yet, the credit default swap market, whose traders are paid to estimate your chances of survival, price your company at levels indicating you are one step removed from bankruptcy.

These people must be insane. That’s what John Mack thinks, CEO of Morgan Stanley. He spelled it out in a memo to all employees today, backed up by comments from his chief financial officer.

In a memo to employees today, Mack said the management committee is 'taking every step possible to stop this irresponsible action in the market' and urged employees to contact clients to reassure them that the firm is performing strongly and has plenty of capital.

'There is no rational basis for the movements in our stock or credit default spreads,' Mack wrote in the memo. 'We're in the midst of a market controlled by fear and rumors, and short sellers are driving our stock down.'

Markets are reacting to 'rumor and fear,' Colm Kelleher, Morgan Stanley's finance chief, said yesterday after the New York-based company reported better-than-estimated earnings for the third quarter.

Somebody is not quite grounded in reality, that’s for sure. But who?

Aggregated at Buzzflash and NewsHeat

Princess of Pork

Tue, 09 Sep 2008 10:50:52 -0700

Thousands of people are flocking to John McCain’s campaign rallies to see Mrs. Maverick, Governor Sarah Palin. They better hold on to their pocketbooks, because Governor Palin is the undisputed welfare queen among our nation’s governors.

We know that Sarah Palin was anything but fiscally responsible when it came to running the town of Wasilla, Alaska. Wasilla had no debt when she arrived as mayor, but is now dealing with $19 million in debt left over from construction of a hockey rink and sports facility. She also finagled $27 million in federal tax revenue as an earmark for the hockey rink, thanks to her connections with the lubricious Alaska senator, Ted Stevens. The purchase of the land for the hockey rink was so mismanaged that lawsuits are still working their way through courts, and will ultimately cost the good people of Wasilla even more.

Trannie Mae, Anyone?

Mon, 08 Sep 2008 06:40:28 -0700

You might have noticed in the past few weeks the proposals to merge Fannie Mae and Freddie Mac into one giant mortgage company called Frannie Mae.

That's out the window now that the Treasury has taken these two companies into conservatorship. Since we don't have an official name yet for the new combined company, I propose calling it the Treasury National Mortgage Association, or Trannie Mae.

The securities they issue will be called Trannies.

Yeah, I know, it's a bit LGBT, but isn't that what our economy has become, neither capitalism nor socialism, some sort of mixture of the two?

Trannies are the perfect securities for our new socialized capitalism.

Why the Surge has Failed

Sun, 31 Aug 2008 09:06:24 -0700

As we head into the Republican convention, expect the triumphal wing of the Republican Party to promote the success of the Surge. Neocon commentators on FOX News last week – such as Bill Kristol, Fred Barnes and Morton Kondracke – were criticizing Barack Obama for failing even to mention the Surge. They weren’t really expecting him to do so, because “of course” the Surge has been such a success.

This argument about the success of the Surge is John McCain’s antidote to any criticism Obama may direct at him for his early support of the Iraq War and his poor judgment in continuing to defend it. The picture we will receive is of John McCain standing bravely against the countervailing political winds, defending instead an unpopular Surge and an unpopular president, because it was the correct, prescient thing to do.