SANTA SHOOTS THREE

DAMN!! --- and I get upset when I got coal in my stocking.

Gunman in Santa Suit Kills 3


Published: December 25, 2008

In a bizarre Christmas Eve rampage, a 45-year-old man in a Santa Claus outfit showed up at a party in a Los Angeles suburb and opened fire at a group of revelers, killing three people and injuring at least three others, including two children, the police said on Thursday.

The suspect, identified by witnesses as Bruce Jeffrey Pardo, later killed himself, the police said.

The shooting, which may have been prompted by a marital dispute, occurred just before midnight Wednesday at a two-story home on a cul de sac in Covina, a small town about 22 miles east of Los Angeles.

Investigators said that about 30 people were inside the home celebrating when the costumed man knocked on the door. When a guest opened the door, the man stepped inside the house, pulled out a handgun, and immediately started shooting, Lieut. Pat Buchanan of the Covina Police Department said in a telephone interview.

Officers quickly responded to a burst of 911 calls, and arrived at the house moments later to find that shots were still being fired inside. They also found the house engulfed in flames, but kept firefighters from getting too close until it appeared that the shooting had stopped. The police said there were three bodies inside the house, which have yet to be identified. Three survivors were transported to the hospital, two of whom had gunshot wounds, Lieutenant Buchanan said. They were described only as an 8-year-old, a 13-year-old, and a 16-year-old.

Witnesses said Mr. Pardo stripped off his Santa outfit after the shootings and fled in street clothes. Lieut. Buchanan said he had been having problems with his wife, the homeowner, who may have been a victim and whose name was not made public. It was also unclear what connection Mr. Pardo had to the injured children and the other victims, he said.

“We don’t know if they were residents of the house or not,” Lieutenant Buchanan.

Covina, a suburb that boasts the slogan “One mile square and all there,” sits at the foot of the San Gabriel Mountains in the San Gabriel Valley. It has become a scenic backdrop for films and shows, including several episodes of the television series “Roswell” and the hit show “Knight Rider.

Just You Wait

I'll be 70 in April. My right knee hurts. I've discovered allergies I never had before. Right shoulder barks if I try to do almost anything. For the first time in my life, my stomach complains if I happen to eat something it does not like. I now suffer from various and sundry GI "upsets". My feet are always numb -- and cold. Fingertips tingle -- lose all feeling and function when it's cold. Hips and back ache -- all the time.

It's called entering old age. Anyone who says "age is just a number" -- hasn't entered old age.

I still "feel" young, and often "think young" -- I just cannot do some of the things I set out to do.

When I was young, I played sports, was very fit and active. People wondered at how strong I was. Today, some of the "minor injuries" from the past come back to haunt me. Thumbs that were "sprained" now have much less strength, etc., etc., etc.

I've lost a significant amount of muscle mass in the last ten years.

This is what happens. If you continue to work out, and don't have any major bad habits to give up, I think you can push "entering old age" back a few years.

I'm not even sure about that -- many of my current complaints mirror those of my late Mother, a couple my late Father. Perhaps genetics has something to do with it-- no matter what you do.

Some years ago, I worked with an old guy selling cars. When you asked him how he felt -- all he'd say is "thank God I've got my mobility". As you age that phrase becomes more and more meaningful.

One good thing (thank you Martha Stewart) is beginning to accept the changes that come with advancing age. Stay fit, work out, walk, BUT -- do not negate the realities of advancing age. As they say about athletes, "stay within yourself".

MERRY CHRISTMAS

US Economy Shrinks as IMF Warns of Great Depression

Tuesday 23 December 2008

»

by: Agence France-Presse

Stocks continue to fall worldwide as the IMF warns of another possible "Great Depression" in the US.

Washington - The US economy shrank in the third quarter, official data confirmed Tuesday, as the IMF's top economist warned of a second Great Depression offering no respite from relentless gloom ahead of Christmas.

The abrupt 0.5 percent contraction of gross domestic product (GDP) in the world's largest economy was seen as marking the start of a steep downturn for the United States after GDP growth of 2.8 percent in the second quarter.

Stocks on Wall Street rose in early trading, however, as the contraction had been expected and was unrevised from a previous estimate. The Dow Jones Industrial Average was up 0.54 percent and the Nasdaq rose 0.60 percent.

"This report is largely old news," said John Ryding at RDQ Economics, who forecast fourth-quarter data out next month would be far bleaker.

"Given signs that the recession has deepened in the current quarter, we look for around a 6.0 percent drop in real GDP," he said.

Britain's economy also shrank by 0.6 percent in the three months to September compared to the previous quarter, against a previous estimate of 0.5-percent contraction, the Office for National Statistics said.

Britain and the United States will be in recession if their economies contract again in the fourth quarter, according to the traditional definition of a recession as two consecutive quarters of negative economic growth.

The IMF's top economist, Olivier Blanchard, maintained that governments around the world should boost domestic demand in order to avoid another Great Depression similar to the global downturn that shook the world in the 1930's.

"Consumer and business confidence indexes have never fallen so far since they began. The coming months will be very bad," Blanchard said in an interview with the French newspaper Le Monde.

"It is imperative to stifle this loss of confidence, to restart household consumption, if we want to prevent this recession developing into a Great Depression," he added.

New data out in France offered some relief, showing that household consumption of manufactured goods - a key growth indicator - rallied 0.3 percent last month after slumping in October.

"It is a first small Christmas present for the French economy," said Alexander Law, an economist at the Xerfi research centre in Paris.

The European Central Bank also issued some heartening pre-Christmas data showing that the eurozone's current account deficit had narrowed to 6.4 billion euros (9 billion dollars) in October from 8.8 billion euros in September.

But elsewhere in Europe the news was more downbeat. Retail sales in Italy went down 0.3 percent in October, Denmark's economy contracted 0.4 percent in the third quarter and the Dutch economy had zero growth, official data showed.

Finland's unemployment rate rose to 6.0 percent in November from 5.8 percent in October and the Polish central bank cut its key lending rate by 75 basis points to 5.00 percent in a bid to fend off a recession.

In Ukraine, thousands of people took to the streets for a union-led protest to demand higher wages and more social protection in the former Soviet republic, which has been hit hard by the global economic crisis.

News of weakening growth also sent the British pound sliding under 1.0550 euros, nearing a record low of 1.0463 reached last week, as dealers bet on more interest rate cuts from the Bank of England and forecast parity with the euro.

The dollar exchange rate also drifted lower against the euro and the yen.

European stocks rose in early afternoon trading after the announcement of US GDP figures, with the FTSE 100 index in London up 0.85 percent, the Frankfurt Dax up 0.73 percent and the CAC 40 in Paris up 0.92 percent.

Asian stocks closed mostly down, with the Hong Kong stock market shedding 2.8 percent and Shanghai sinking 4.55 percent as a smaller-than-expected Chinese interest rate cut failed to boost market sentiment.

Oil prices went up slightly in New York, rising above 40 dollars per barrel.

Energy analysts were also keeping a close eye on a meeting of key world natural gas exporters in Moscow amid fears of a "gas OPEC" similar to the Vienna-based oil cartel that could raise gas prices for Western consumers.

Russian Prime Minister Vladimir Putin said at the forum that the "era of cheap gas" was coming to an end and Venezuelan Energy Minister Rafael Ramirez argued that gas exporters' group should be based on the "same principles" as OPEC.

Question

At Cafe Americain, Jesse asks, "What is at the heart of the US financial crisis?"

He then goes on to compare it all to a huge Ponzi scheme.

It has been looking more and more like that for a while. Even the attempt to blame everything on labor, the unions, seems to be an attempt to deflect blame for what they think will happen.

The concerted efforts to put blame, fault, on anyone but the heads of this outsized Ponzi scheme does not bode well for our collective futures. Please go to:

http://jessescrossroadscafe.blogspot.com/
To read the rest of this.

Barry Ritholtz - The Big Picture

Office of Thrift Supervision is Asshat Central
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By Barry Ritholtz - December 24th, 2008, 3:30AM

I am trying to figure out who is the biggest jerk in this story. It is a challenge, given the collection of utter clowns and ne’er-do-wells that run that office.

First, you have some moron who helped cost the government a hundred large back in the 1980s ($100B). How this idiot ever ended up in a position of responsibility in any regulatory agency again is beyond my comprehension.

for the rest of this post, please go to "The Big Picture"

http://www.ritholtz.com/blog/2008/12/ots-asshat-central/

Office of Thrift Supervision

So, we now have more information about the ideologues our Current administration put in charge.

How they can still claim it's all Clinton's, or Obama's fault is beyond me.

We might just well collapse because of failed ideology. The moral weakness will be that of our "Conservative Ideologues", our "no-government/no-regulation" dreamers -- the ones who built Ayn-Randish-Castles-In-The-Sky -- and actually lived in them for a long time, while bilking the people who work to keep our nation going.

Now we are staring at a collapse, at reduced circumstances -- all because some folks put ideology before performance, reality, nation. These men who called anyone who even asked a question a "traitor", are, themselves traitors. How anyone can continue to follow these crooks is totally beyond me.

They are "economic criminals" -- didn't the old Red Chinese have some "cures" for that condition? I think quite a number of these felons (that's what they are) should be put into some of the "new, improved" Privatized Jails in the "Prison Industrial Complex" -- to enjoy the "fruits" of "enhanced efficiency".

These folks have waged class war against every American Worker.

We really need some change -- real change.

not long ago

Not long ago, I was called a fool for saying the economy did not make sense.

Now I see respected "pundits" saying stuff that would have had folks calling you a fool not that long ago. You would have been told to take off your tin foil hat, etc., etc. In fact, anything said would be dismissed, laughed at, and you might well have been (virtually) spat upon.

Now it has become (almost) "conventional wisdom".

Things ain't good. The Republicans who are trying to prevent any public works, infrastructure, recovery program, had best be sure of their stance. They might just roadblock themselves out of office.

"New Realities" From When Giants Fail

December 23, 2008
Acknowledging New Realities

A few years ago, it would have been career suicide for a mainstream prognosticator to publicly predict the kind of devastating and wide-ranging financial meltdown that has materialized over the past 18 months.

Now, though, with the world as we know it being turned upside down by the day, a small number of analysts are beginning to forecast social, economic, and geopolitical outcomes like those described in Financial Armageddon, as well as in my soon-to-be-released book, When Giants Fall.

In "The Major Risks for 2009: Tariffs, Wars, Currency, etc.," Paul Kedrosky, publisher of Infectious Greed, highlights one such perspective.

In the spirit of my earlier post about 2008's surprises, etc., what surprises lie ahead in 2009? Here is Merrill Lynch's David Rosenberg on the subject:

We continue to believe that trade protectionism, competitive devaluations and military conflicts are the major risks for investors for 2009 - this is, after all, the most broadly based global recession (according to the IMF, not just us) in the post-WWII era....Since the G20 meeting in Washington in October, five of those countries - Russia, India, Indonesia, Brazil and Argentina - have announced their intentions to raise import tariffs or otherwise restrict trade. Russia has announced plans to raise tariffs on autos; India has already lifted duties on iron, steel and soy; Brazil and Argentina are putting together a case within Mercosur for boosting external tariffs. Vietnam just raised taxes on steel imports to 12% from 8%. The EU said it may reimpose duties of 79% on a paper-binder component in retaliation against China. French President Sarkozy has established a $7.5 bln fund to invest in domestic companies so as to avoid foreign takeovers. China has reinstated export rebates and now we see that US steel, textile and paper markets intend to file complaints against Chinese imports, and did anyone notice that this auto-bailout excludes foreign companies?

I'd add to David's risks sovereign defaults, especially in emerging markets; a potential banking crisis in smaller regional banks and thrifts in U.S.; a bursting of the Treasury bubble (admittedly not much of a surprise, and one that may not happen until 2010), etc.

"Clean Coal"

Please go to Pharyngula and see what happens when coal sludge, left over from burning coal escapes into the environment.

Nasty stuff.

From "The Big Picture

Note from "Another Old Woman": There are so many really smart people out here in the "blogosphere", I consider it an honor to be able to read, and repost them. Thank you Barry Ritholtz for all the sensible, well written information and opinion you post on the web.


RIP Chicago School of Economics: 1976-2008

By Barry Ritholtz - December 23rd, 2008, 7:03AM

Some time ago, I asked if “Milton Friedman was the next economist whose once lauded reputation may soon slide ?”

Turns out it happened much quicker than expected. A long Bloomberg piece, Friedman Would Be Roiled as Chicago Disciples Rue Repudiation, discusses the tarnishment of the Chicago school of thought.

Its long overdue. From the efficient-market theories, to the concept of man as rational profit maximizers, much of the edifice that is was the Chicago school of economics is based on a foundation that is false, disproven or otherwise questionable.

I first encountered the Chicago theory in law school. The Chicagoists somehow read into law a market efficiency component that was never there. I recoiled against it — not because of the libertarianism, which I embraced. Rather, it seemed a backdoor way to circumvent democracy, and force into the legal system rules that were never debated, voted on, or agreed to by a representative government. I found the extremist legal theories of Judges like Richard Posner and Frank Easterbrook intellectually repulsive. They were undemocratic, anti-representative government. When I told a professor that the law and economics movement was an attempt at a political coup, he laughed and said, try to stop it.

I disliked the neoclassical price theory. It was authoritarian, a worship of a form of mob rule outside of the usual legal channels. The view that regulation and other government intervention is always inefficient compared to a free market has now been made laughable. Its always the extremists that seem to control a discipline or school of thought. If I have any dogma, its extremism in all forms is undesirable (I know, radical, huh)

If there is one silver lining in the entire collapse, its that this group of intellectual charlatans have been revealed as utterly wanting. Oh, there will be some pushback by the Chicagoans. (Watch the comments for the cute little protests from law students who never practiced a day in their lives, and the biz school kiddies who never executed a single trade).

Anyway, here’s an excerpt from today’s Bloomberg:

“When Friedman’s Platonic ideas of free-market virtues are put into practice, they have too often generated a systemic orgy of competitive greed — whose remedies, ironically, entail countermeasures of nationalization,” Marshall Sahlins, an emeritus professor of anthropology, said during the debate, speaking in a room adorned with murals of female students parading through the campus in medieval gowns. Sahlins, 77, noted a few weeks later socialist and capitalist countries alike are regulating or nationalizing financial institutions in a rebuff to Friedman.

Off campus, the global meltdown is stirring anti-Chicago economists, who were voices in the wilderness during decades of lax government oversight of markets. Joseph Stiglitz, who won one of Columbia’s economics Nobels, says the approach of Friedman and his followers helped cause today’s turmoil.

‘Bears the Blame’ “The Chicago School bears the blame for providing a seeming intellectual foundation for the idea that markets are self- adjusting and the best role for government is to do nothing,” says Stiglitz, 65, who received his Nobel in 2001.

University of Texas economist James Galbraith says Friedman’s ideology has run its course. He says hands-off policies were convenient for American capitalists after World War II as they vied with government-favored labor unions at home and Soviet expansion overseas.

“The inability of Friedman’s successors to say anything useful about what’s happening in financial markets today means their influence is finished,” he says.

Instead, Galbraith, 56, says policy-makers are rediscovering the ideas of his father, Harvard professor John Kenneth Galbraith, and economist John Maynard Keynes of the University of Cambridge. Keynes, who died in 1946, argued that governments should spend to combat the unemployment that free markets tolerate. Galbraith, who died in 2006, rejected mathematical models and technical analyses as divorced from reality.”

That’s the phrase that best sums up the Chicago School: “Divorced from Reality.”

Chicago School repudiation? Good riddance!

Gang Rape of Lesbian in San Francisco

Thanks to Rev. Rick, the LDS Church, and all the homophobes in Ca. As the police say, the number of, and severity of attacks increase when there is any sort of anti-Gay initiative. Keep it up, pretty soon it will be open season on us all.

Lesbian's brutal gang rape investigated in Calif.
Email this Story

Dec 23, 12:32 AM (ET)

By LISA LEFF

SAN FRANCISCO (AP) - A woman in the San Francisco Bay area was jumped by four men, taunted for being a lesbian, repeatedly raped and left naked outside an abandoned apartment building, authorities said Monday.

Detectives say the 28-year-old victim was attacked Dec. 13 after she got out of her car, which bore a rainbow gay pride sticker. The men, who ranged from their late teens to their 30s, made comments indicating they knew her sexual orientation, said Richmond police Lt. Mark Gagan.

"It just pushes it beyond fathomable," he said. "The level of trauma - physical and emotional - this victim has suffered is extreme."

Authorities are characterizing the attack as a hate crime but declined to reveal why they think the woman was singled out because of her sexual orientation. Gagan would say only that the victim lived openly with a female partner and had a rainbow flag sticker on her car.

The 45-minute attack began when one of the men approached the woman as she crossed the street, struck her with a blunt object, ordered her to disrobe and sexually assaulted her on the spot with the help of the other men.

When the group saw another person approaching, they forced the victim back into her car and took her to a burned-out apartment building, where she was raped again inside and outside the vehicle. The assailants took her wallet and drove off in her car. Officers found the car abandoned two days later.

The woman sought help from a nearby resident, and she was examined at a hospital. Although the victim said she did not know her attackers, detectives hope someone in the community knows them. One of the men went by the nickname "Blue" and another was called "Pato," according to authorities.

Richmond police are offering a $10,000 award for information leading to the arrest of the attackers.

Gay rights advocates note that hate crimes based on sexual orientation have increased nationwide as of late. There were 1,415 such crimes in 2006 and 1,460 in 2007, both times making up about 16 percent of the total, according to the FBI.

Avy Skolnik, a coordinator with the New York-based National Coalition of Anti-Violence Programs, noted that gay, lesbian and transgender crime victims may be more reluctant than heterosexual victims to contact police.

"Assailants target LGBT people of all gender identities with sexual assault," he said. "Such targeting is one of the most cruel, dehumanizing and violent forms of hate violence that our communities experience."

Skolnik said the group plans to analyze hate crime data to see whether fluctuations may be related to the gay marriage bans that appeared on ballots this year in California, Arizona and Florida.

"Anytime there is an anti-LGBT initiative, we tend to see spikes both in the numbers and the severity of attacks," he said. "People feel this extra entitlement to act out their prejudice."

---

Associated Press writer Haven Daley in Richmond contributed to this report.

"WHERE'S MY BAILOUT" - by way of The Big Picture

Calculated Risk - again

Once again, Calculated Risk exposes stuff out in plain sight. I guess many in "the corporate media (TM)" do not want this stuff out there -- after all, it might further destroy confidence in banks, the markets, and every "investment" out there.

Is ALL of it just a variation on a "Ponzi" scheme?

Monday, December 22, 2008

OTS Official Accused of Backdating IndyMac Capital Infusion

by CalculatedRisk on 12/22/2008 08:14:00 PM

From the WSJ: OTS Let IndyMac Backdate Infusion

The Treasury Department's inspector general is probing the Office of Thrift Supervision for permitting a backdated capital infusion into IndyMac Bancorp a few months before its collapse in July.

The infusion allowed the bank to be classified as "well capitalized," instead of "adequately capitalized," at the end of the first quarter. That let IndyMac avoid having to take certain steps with the Federal Deposit Insurance Corp.

A top OTS official, West Region Director Darrel Dochow, was removed from his current duties in connection with the inquiry, according to letters released Monday by the office of Sen. Charles Grassley (R., Iowa). An OTS spokesman said Mr. Dochow wasn't available for comment.

In a letter to Sen. Grassley, Treasury Inspector General Eric M. Thorson said the probe would examine why Mr. Dochow allowed IndyMac to record $18 million in capital as received from its holding company before March 31, 2008, even though the injection occurred after that date.

This was the culture at the OTS - anything to help the "customers". The OTS competed with other regulators for "customers" (aka banks), and the OTS offered more "flexible" supervision - perhaps even backdating capital infusions!

For a great article on the OTS, see the WaPo: Banking Regulator Played Advocate Over Enforcer

When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007.

The benefits were clear: Countrywide's new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank's mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch.

But OTS was not an effective regulator.

What a weird regulatory structure. And finally, here is the head of OTS taking a chainsaw to regulations in 2003.

This photo from 2003 shows two regulators: John Reich (then Vice Chairman of the FDIC and later at the OTS) and James Gilleran of the Office of Thrift Supervision (with the chainsaw) and representatives of three banker trade associations: James McLaughlin of the American Bankers Association, Harry Doherty of America's Community Bankers, and Ken Guenther of the Independent Community Bankers of America

From Time Magazine

Obama = what I call a "soft bigot", but still a BIGOT

The Problem for Gays with Rick Warren — and Obama

By John Cloud Thursday, Dec. 18, 2008

Pastor Rick Warren

About three years ago, a reporter at Fortune asked Rick Warren, the successful pastor whom the President-elect has asked to pray at his Inauguration, about homosexuality. "I'm no homophobic guy," Warren said. His proof? He has dined with gays; he has a church "full of people who are caring for gays who are dying of AIDS"; he believes that "in the hierarchy of evil ... homosexuality is not the worst sin." So gays get to eat — sometimes even with Rick Warren! Then they get to die of AIDS — possibly under the care of Rick Warren's congregants. And when they go to hell, they won't be quite as far down in Satan's pit as other evildoers.

But Warren did have a message of hope for gays: they can magically become heterosexuals. (He didn't explain how, but I suspect he thinks praying really hard would do it, as if most of us who grew up gay and evangelical hadn't tried that every night as teenagers.) Homosexuality, Pastor Warren explained in the virtually content-free language of the dogmatist, is "not the natural way." And then he went right for the ick factor, the way middle-school boys do: "Certain body parts are meant to fit together."

More recently, Warren told Beliefnet that he thinks allowing a gay couple to marry is similar to allowing "a brother and sister to be together and call that marriage." He then helpfully added that he's also "opposed to an older guy marrying a child and calling that a marriage." The reporter, who may have been a little surprised, asked, "Do you think those are equivalent to gays getting married?" "Oh, I do," Warren immediately answered. I wish the reporter had asked the next logical follow-up: If gays are like child-sex offenders, shouldn't we incarcerate them?

Rick Warren may occasionally sound more open-minded than Jerry Falwell, another plump Evangelical who once played a prominent role in U.S. politics. But he's not. Gays and lesbians are angry that Barack Obama has honored Warren, but they shouldn't be surprised. Obama has proved himself repeatedly to be a very tolerant, very rational-sounding sort of bigot. He is far too careful and measured a man to say anything about body parts fitting together or marriage being reserved for the nonpedophilic, but all the same, he opposes equality for gay people when it comes to the basic recognition of their relationships. He did throughout his campaign, one that featured appearances by Donnie McClurkin, a Christian entertainer who preaches that homosexuals can become heterosexuals.

Obama reminds me a little bit of Richard Russell Jr., the longtime Senator from Georgia who — as historian Robert Caro has noted — cultivated a reputation as a thoughtful, tolerant politician even as he defended inequality and segregation for decades. Obama gave a wonderfully Russellian defense of Warren on Thursday at a press conference. Americans, he said, need to "come together" even when they disagree on social issues. "That dialogue is part of what my campaign is all about," he said. Russell would often use the same tactic to deflect criticism of his civil rights record. It was a distraction, Russell said, from the important business of the day uniting all Americans. Obama also said today that he is a "fierce advocate for equality" for gays, which is — given his opposition to equal marriage rights — simply a lie. It recalls the time Russell said, "I'm as interested in the Negro people of my state as anyone in the Senate. I love them."

Many gays I know gave money to Obama, which mystified me. The favored explanation was that he doesn't "really" believe gays shouldn't be allowed to marry; he just has to say that in order to win. People seemed to feel that once he had won, he would find a way — in his contemplative style — to help convince Americans that gay people really do deserve basic equality. Instead, he has found a way to insult gay people deeply.

In California, some gay activists are planning to put marriage on the 2010 ballot so that Proposition 8 — which (thanks partly to Warren's support) passed last month, banning marriage equality in the state — can be undone. Gays will need to reach older, religious, and African-American voters in order to overturn Prop. 8 (those three groups all voted disproportionately for it). If gays hoped that President Obama would help, they may want to reconsider.

The only piece of good news is that Obama loves to raise money, and he won't want significant gay donors to stop organizing fundraisers for him. Having picked Warren to pray at the Inauguration and Republican Robert Gates to stay on at the Department of Defense (where Gates will likely continue the policy of investigating gay service members — a policy he has the legal power to end with the stroke of a pen), Obama will now have to do something nice for the gays. Today, the Washington Times brings news that some retired military leaders are supporting William White, an openly gay man who is chief operating officer of the Intrepid Museum Foundation, to be Secretary of the Navy. That would be cool. But I'm not getting my hopes up.

This by way of "ANGRY BEAR"

Monday, December 22, 2008

ataxingmatter Linda Beale asks the neglected question of the day

cross posted from ataxingmatter

Madoff's ponzi scheme tax losses and union workers' home losses

Wall Street has not had a good year (and of course, the taxpayers have borne the brunt of the resulting chaos). Credit default swaps, for several years the darlings of the industry, have become a giant albatross around taxpayers' necks, especially through the AIG bailout. Stocks have plummeted, as financial institutions' speculative hayday that funded unmerited, oversize executive bonuses (see, e.g., On Wall Street, Bonuses, not Profits, were Real, NY Times, Dec. 17, 2008) has crashed with the shaky mortgages at the foundation of so many CDOs and other securitizations, which of course means many individual homeowners are out in the cold.

And then there's the Madoff scandal--a highly respected figure on Wall Street (he was once on the SEC advisory council) who has admitted to defrauding investors to the tune of at least $50 billion in a ponzi scheme that the SEC was warned about, investigated, and then decided, just a year ago, not to pursue. The SEC has egg on its face (not the first time under Republican-appointed pro-industry commissioners), and investors have pockets with big holes rather than lots of gold coins. See, e.g.,

* SEC Release 2008-293, SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme, Dec. 11, 2008;
* Berenson & Enriques, SEC Says it Missed Signals on Madoff Fraud Case, NY Times, Dec. 16, 2008;
* Scheer & Westbrook, Madoff 'Tragedy' Said to have Escaped Investigation by SEC, Bloomberg.com, Dec. 16, 2008 (no inspection of books since registration as investment adviser in 2006);
* Neumiester, Fallout over Madoff Ripples through Washington, Wash. Post, Dec. 18, 2008;
* Editorial, Swindle of the Century, Wash. Post, Dec. 17, 2008;
* Haughney, Madoff Scandal Shaking Real Estate Industry, NY Times, Dec. 17, 2008;
* Greenwell, Area Jewish Groups Take a Hit Financially, Wash. Post, Dec. 17, 2008;
* SIPC Chief: Madoff Falsified Books to Hide Losses, AP, Dec. 16, 2008;
* Reuters, FACTBOX: Firms Exposed to Madoff Fraud (lists major firms with losses);
* Reuters, Madoff Bad Omen for Fund of Hedge Funds Industry, Dec. 17, 2008.

And why, pray tell, can a guy who is caught stealing a piece of pizza go to jail for life in California on a "three counts and you are out" rule, while Madoff is not even in jail after stealing $50 billion even though he couldn't put up the bail set by the judge? See Alex Berenson, Authorities Ease Madoff's Bail Terms, NY Times, Dec. 17, 2008).

What's the tax angle (gotta get that in somewhere, haven't I?)? Investors who've lost money to Madoff get a chance for relief under the tax code. See Donmoyer, Madoff's Victims May Recover Losses Through Tax Code, Bloomberg.com, Dec. 18, 2008.

Capital-gains taxes paid by investors [already too low, in ataxingmatter's opinion] may be refundable for 2005 through 2007, lawyers said. In addition, they said investors probably can convince the Internal Revenue Service they are victims of theft, which would let them deduct losses from their income taxes dating back to 2005. Any unused theft losses could be used to reduce tax liabilities for the next 20 years.

In other words, investors--the darlings of the Wall Street world and the darlings of the tax code because of their preferential rate on capital gains and other provisions like the charitable deduction for untaxed value rather than just investment basis--have an existing remedy that will likely provide substantial relief. Another bailout, if you will, through tax code provisions--especially if the IRS permits the "theft" deduction. (Note that theft losses would be deductible against ordinary income, usually taxed for wealthy investors at the top rate of 35%, whereas investors have been paying only the very low preferential rates when they have tax gains--nifty, huh? Should the "theft loss" be able to trump the investment loss provision in this context to provide that benefit? Seems like an answer based on a coherent interpretation of the Code provisions should be "no" in this context.)

Once again, worth pointing out a few things here.

The country has spent a lot of money and a lot of time talking about shoring up Wall Street (oops, the financial system). There are various "escape valves" (such as the loss deduction) that provide relief of some sort for wealthy investors who have, undoubtedly, also lost money as financial institutions and other companies lose market capitalization and even go into bankruptcy. But the country hasn't done much to get at the heart of the problem--providing relief to homeowners with mortgage debt that is driving them out of house and home, letting homeowners modify their mortgage loans in bankruptcy, and setting standards for the TARP money so that banks are not allowed to continue the high-falutin' lifestyle of huge bonuses built on speculative bets in the financial markets but rather are required to modify some loans and use the money to find a way to refinance some loans on better terms for the homeonwers, and, in the cases of subprime loans that were pushed on people who should have been offered better terms, requiring the banks to "eat" the difference and modify the loans to reasonable terms.

For instance, bonuses, not quite as big as before but still extraordinary in scope, are still flowing on Wall Street.

Critics say bonuses never should have been so big in the first place, because they were based on ephemeral earnings. These people contend that Wall Street’s pay structure, in which bonuses are based on short-term profits, encouraged employees to act like gamblers at a casino — and let them collect their winnings while the roulette wheel was still spinning. See On Wall Street, above. (I might add--and let the taxpayers take the brunt of the damage in a nifty scheme for privatizing gains and socializing losses.)

Meanwhile, homeowners continue to lose homes. Here's an anecdote to bring this down to the "real people" level. I spoke at length with a union member in Detroit two days ago who told me of a recent meeting of about 1300 union members. Of the 1300, only a handful said they were not in danger of losing their homes to foreclosure! More than half were already in foreclosure. Many were facing imminent default. And the rest were very worried that they would end up defaulting before 12 months passed, including the person with whom I spoke. He'd bought a modest home several years ago, prudently basing his mortgage on his base pay without taking into account the extra pay he often received for overtime. Yet he says most have already seen their take-home go down, and he expects their base pay to go down by at least one-fourth before this is over. And if that happens, he simply won't be able to make his mortgage payments.

Let's hope the new Congress reassesses the TARP program and makes modifications that should have been included in the beginning--harsher terms retroactively, along with much more stringent oversight, for the banks that get the money; much more consideration and problem resolution for the homeowners at the heart of the crisis

From "When Giants Fall"

Once again, the author of the blog "When Giants Fall" has something worth reading -- more food for thought:

Molehills into Mountains

According to the optimists, people are smarter and more sophisticated than they used to be. We have better tools and methods for coping with challenges than our ancestors did. Most importantly, we've learned from their mistakes, and will do whatever we can to avoid turning molehills into mountains.

Why then, as the Telegraph's Ambrose Evans-Pritchard reports in "Protectionist Dominoes Are Beginning to Tumble Across the World," does it seem like we are poised to endure an ugly déjà vu nightmare all over again?

The riots have begun. Civil protest is breaking out in cities across Russia, China, and beyond.

Greece has been in turmoil for 11 days. The mood seems to have turned "pre-insurrectionary" in parts of Athens - to borrow from the Marxist handbook.

This is a foretaste of what the world may face as the "crisis of capitalism" - another Marxist phase making a comeback - starts to turn two hundred million lives upside down.

We are advancing to the political stage of this global train wreck. Regimes are being tested. Those relying on perma-boom to mask a lack of democratic or ancestral legitimacy may try to gain time by the usual methods: trade barriers, saber-rattling, and barbed wire.

Dominique Strauss-Kahn, the head of the International Monetary Fund, is worried enough to ditch a half-century of IMF orthodoxy, calling for a fiscal boost worth 2pc of world GDP to "prevent global depression".

"If we are not able to do that, then social unrest may happen in many countries, including advanced economies. We are facing an unprecedented decline in output. All around the planet, the people have reacted with feelings going from surprise to anger, and from anger to fear," he said.

Russia has begun to shut down trade as it adjusts to the shock of Urals oil below $40 a barrel. It has imposed import tariffs of 30pc on cars, 15pc on farm kit, and 95pc on poultry (above quota levels). "It is possible during the financial crisis to support domestic producers by raising customs duties," said Premier Vladimir Putin.

Russia is not alone. India and Vietnam have imposed steel tariffs. Indonesia is resorting to special "licences" to choke off imports.

The Kremlin is alarmed by a 13pc fall in industrial output over the last five months. There have been street protests in Moscow, St Petersburg, Kaliningrad, Vladivostok and Barnaul. Police crushed "Dissent Marchers" holding copies of Russia's constitution above their heads in Moscow's Triumfalnaya Square.

"Russia has not seen anything like these nationwide protests before," said Boris Kagarlitsky from Moscow's Globalization Institute.

The Duma is widening the treason law to catch most forms of political dissent, and unwelcome forms of journalism. Jury trials for state crimes are to be abolished.

Yevgeny Kiseloyov at the Moscow Times said it feels eerily like December 1 1934 when Stalin unveiled his "Enemies of the People" law, kicking off the Great Terror.

The omens are not good in China either. Taxis are being bugged by state police. The great unknown is how Beijing will respond as its state-directed export strategy hits a brick wall, leaving exposed a vast eyesore of concrete and excess plant.

Exports fell 2.2pc in November. Toy, textile, footwear, and furniture plants are being closed across Guangdong, now the riot hub of South China. Some 40m Chinese workers are expected to lose their jobs. Party officials have warned of "mass-scale social turmoil".

The Politburo is giving mixed signals. We don't yet know how much of the country's plan to boost domestic demand through a $586bn stimulus package is real, and how much is a wish-list sent to party bosses in the hinterland without funding.

Shortly after President Hu Jintao said China is "losing competitive edge in the world market", we saw a move towards export subsidies for the steel industry and a dip in the yuan peg - even though China already has the world's biggest reserves ($2 trillion) and the biggest trade surplus ($40bn a month).

So is the Communist Party mulling a 1930s "beggar-thy-neighbour" strategy of devaluation to export its way out of trouble? Such raw mercantilism can only draw a sharp retort from Washington and Brussels in this climate.

"During a global slowdown, you can't have countries trying to take advantage of others by manipulating their currencies," said Frank Vargo from the US National Association of Manufacturers.

It is a view shared entirely by President-elect Barack Obama. "China must change its currency practices. Because it pegs its currency at an artificially low rate, China is running massive current account surpluses. This is not good for American firms and workers, not good for the world," he said in October. The new intake of radical Democrats on Capitol Hill will hold him to it.

There has been much talk lately of America's Smoot-Hawley Tariff Act, which set off the protectionist dominoes in 1930. It is usually invoked by free traders to make the wrong point. The relevant message of Smoot-Hawley is that America was then the big exporter, playing the China role. By resorting to tariffs, it set off retaliation, and was the biggest victim of its own folly.

Britain and the Dominions retreated into Imperial Preference. Other countries joined. This became the "growth bloc" of the 1930s, free from the deflation constraints of the Gold Standard. High tariffs stopped the stimulus leaking out.

It was a successful strategy - given the awful alternatives - and was the key reason why Britain's economy contracted by just 5pc during the Depression, against 15pc for France, and 30pc for the US.

Could we see such a closed "growth bloc" emerging now, this time led by the US, entailing a massive rupture of world's trading system? Perhaps.

This crisis has already brought us a monetary revolution as interest rates approach zero across the G10. It may overturn the "New World Order" as well, unless we move with great care in grim months ahead. This is where events turn dangerous.

The last great era of globalisation peaked just before 1914. You know the rest of the story

upset

I haven't been feeling well recently. Cold, stomach problems, etc. In addition, I've really been bummed out by the Rick Warren invitation issued by Obama.

We have been thrown under the bus -- AGAIN!

We've been relegated to "pet" status. Our feelings, needs, have been (once again) pushed aside, then ignored.

It's more important to make common cause with someone who would see us dead rather than affirm our humanity.

It is time to oppose ALL bigots -- even "soft bigots". Those who have gay and lesbian friends, who actually have them over for dinner -- but who cannot even begin to "understand" why we even want "special rights" (IE: EQUAL RIGHTS).

We have an ex-"friend" who, when confronted with the IDEA of "gay marriage" blurted out, "But, you've got to have standards.".

I can no longer look at the man, or his wife (at least she was more honest about her feelings, usually finding an excuse for not getting together).

People like that often use us as a way to "prove" how "liberal" they are. Many of them appear to see us as "pets", or well trained children. They are incapable of seeing us as totally human -- usually due to religion and tradition.

I do not care what they think. I would rather have no one than "friends" like that. All they do is bring you down, destroy any good feelings you have for yourself.

What I do want is simply EQUAL RIGHTS. The same rights of CITIZENSHIP other folks have.

I do not care if 70% of the Black Community votes against me. Nor do I care if a majority of older Whites, Latino folks, etc. oppose my rights.

In a Democratic Republic no ones rights should ever be up for a vote.

Always remember: Majority Rule, Minority Rights".

If you can vote away my rights, I can band together with others -- and vote away yours. It's that simple.

From Financial Armageddon

An Apt Reflection of an Era

Throughout history, it has not been unusual to see major frauds come to light after bubbles have burst.

While the going is good, cheap money, accommodating counterparties, and the general rise in asset prices help to keep all sorts of shaky ships afloat. Later, when circumstances turn sour, the miscreants' luck runs out and things start falling apart.

To Paul Krugman, though, the recent discovery of one of the biggest scams of all time has more significance than its tabloid appeal.

In an Op-Ed for the New York Times, "The Madoff Economy," the Nobel Prize-winning economist asserts that the fraud was an apt reflection of an era of greed and hubris.

The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend.

Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?

The financial services industry has claimed an ever-growing share of the nation’s income over the past generation, making the people who run the industry incredibly rich. Yet, at this point, it looks as if much of the industry has been destroying value, not creating it. And it’s not just a matter of money: the vast riches achieved by those who managed other people’s money have had a corrupting effect on our society as a whole.

Let’s start with those paychecks. Last year, the average salary of employees in “securities, commodity contracts, and investments” was more than four times the average salary in the rest of the economy. Earning a million dollars was nothing special, and even incomes of $20 million or more were fairly common. The incomes of the richest Americans have exploded over the past generation, even as wages of ordinary workers have stagnated; high pay on Wall Street was a major cause of that divergence.

But surely those financial superstars must have been earning their millions, right? No, not necessarily. The pay system on Wall Street lavishly rewards the appearance of profit, even if that appearance later turns out to have been an illusion.

Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.

O.K., maybe my example wasn’t hypothetical after all.

So, how different is what Wall Street in general did from the Madoff affair? Well, Mr. Madoff allegedly skipped a few steps, simply stealing his clients’ money rather than collecting big fees while exposing investors to risks they didn’t understand. And while Mr. Madoff was apparently a self-conscious fraud, many people on Wall Street believed their own hype. Still, the end result was the same (except for the house arrest): the money managers got rich; the investors saw their money disappear.

We’re talking about a lot of money here. In recent years the finance sector accounted for 8 percent of America’s G.D.P., up from less than 5 percent a generation earlier. If that extra 3 percent was money for nothing — and it probably was — we’re talking about $400 billion a year in waste, fraud and abuse.

But the costs of America’s Ponzi era surely went beyond the direct waste of dollars and cents.

At the crudest level, Wall Street’s ill-gotten gains corrupted and continue to corrupt politics, in a nicely bipartisan way. From Bush administration officials like Christopher Cox, chairman of the Securities and Exchange Commission, who looked the other way as evidence of financial fraud mounted, to Democrats who still haven’t closed the outrageous tax loophole that benefits executives at hedge funds and private equity firms (hello, Senator Schumer), politicians have walked when money talked.

Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

After all, that’s why so many people trusted Mr. Madoff.

Now, as we survey the wreckage and try to understand how things can have gone so wrong, so fast, the answer is actually quite simple: What we’re looking at now are the consequences of a world gone Madoff.

This from "Angry Bear" - another economics blog

Thursday, December 18, 2008

The Point at which I stopped giving Barry O the benefit of the doubt

As quoted by Greg Sargent:

I am fierce advocate for equality for gay and -- well, let me start by talking about my own views. I think it is no secret that I am a fierce advocate for equality for gay and lesbian Americans. It is something I have been consistent on and something I intend to continue to be consistent on during my presidency.

As Edith Keeler once noted, "A lie is a very poor way to say 'hello.'"

The next four years will be an improvement. But, as John Aravosis notes:

Great, then where are the racists, Mr. Obama? We don't see you embracing too many of them in the name of learning to agree to disagree. Or does your desire to create a new "atmosphere," and reach out to our enemies, stop when it's your own people, your own children, you'd be betraying? Funny how you only reach across the aisle when it's someone else's family, gay families in particular, getting the shaft.

Why so upset?

Why am I so upset about Rick Warren and Obama?

Simply because it shows Pres. Elect Obama does not see LGBT Americans as equal to other Americans. If he were to see us as equal, speech like Warrens, though protected, would not be acceptable. Rick represents a small segment of Americans. Most folks support Women's Rights - including abortion. Most folks support equality between the sexes. Most folks support support some level of gay rights. Most support stem cell research. Warren opposes all those things - and others.

In our nation, "all are created equal" -- we all know that's not true -- but -- our history has been of movement toward that ideal.

The current right-wing-uber-religious-movement has been one of moving away from traditional American ideals. In a very real sense these folks are anti-American.

To honor American Ideals, Pres. Elect Obama must stem that tide, must move back toward accepting ALL Americans as worthy of EQUAL rights. Anything less is unacceptable.

screwed again

I supported Hillary Clinton. I saw her as far better qualified, and far closer to being "progressive" in most of her positions. She is a "policy wonk", she's very, very, smart, and she works hard. She proved that as Senator from New York.

She lost. Obama won. I never quite understood why.

Doesn't matter. I supported Obama. I saw his charm, his enthusiasm. Granted, the McClurkin thing threw me, as did his admiration for Reagan. I believe in that same speech, he spoke of "the excesses of the 60's and 70's.

That told me he had no real knowledge of the 60's and 70's. That was the era that made it possible for him to become President. I remember thinking, "the 'excess' that gave HIM a chance to be president was O.K. -- but everything else needed a Reagan to destroy unions, question rights of women, and totally ignore the AIDS crisis (at least until Rock Hudson died)".

Now, Rick Warren, another right-wing-anti-gay-anti-women-anti-choice-preacher is giving the invocation at Obama's inauguration.

Wonderfuckingful!

This man (Obama) does not understand. If he does, we are due for another 4 or 8 years of no progress. Adding Warren is not about "diversity", it's not about "inclusion" -- it's about discrimination, and prejudice against a group of AMERICAN CITIZENS. It's about elevating a man who wants to make me disappear, do away with me, deny me equal rights with other citizens.

This is still a Secular Democratic Republic. Rick Warren is free to preach against me. He is free to deny me membership in his church. He can deny me marriage in his church. I do not give a damn about that.

What he should not be allowed to do is to force society to live by his rules, by his specific interpretation of his Holy Book. He hates me as much as Fred Phelps does -- he is just a little less violent about it.

This is about basic rights of citizenship, not about "inclusion", or "diversity".

Warren wants to deny me my rights -- it's as simple as that.

HOMELESS

Back in 1951, when I was in the 7th grade at P.S. 148 in Queens, N.Y., Mrs. Kennedy was our teacher. I guess you could call her a "liberal" -- but, then again, if you were not rich, and lived through both the Great Depression, and WWII, folks today would call you a "Liberal", a "Socialist", and perhaps even a "Commie", just for being happy you have a real job, and we defeated Fascism.

Anyway, she HATED the English. She hated what they did to Ireland. Even in the 7th grade we knew enough to discount some of her anti-English rants. We were not "damaged", nor were we "brainwashed". In fact, if there was "brainwashing going on -- it was at the hands of the Anglophiles.

During one of our Social Studies surveys , she took the textbook, and pointed to pictures of the homeless in the streets of Bombay (that's what they called it then), and other Asian cities. She pointed those pictures out and said, "look closely at these -- that will NEVER happen here in the USA because we CARE about each other.".

Sadly she was wrong. We have lost all sense of community. We do not give a damn about the homeless. We don't give a damn about "the least of us" -- this in a nation that loudly proclaims how "Christian" it is.

Today the "mantra" is -- "they brought it on themselves" -- that's the very first thing said, no matter what the reason for the problems. We have become a mean, tight fisted, judgemental, society. We are fed fear of damn near everything, and everybody -- except those in OUR Church, which leaves us open to all sorts of scams.

We trust the Madoffs, but won't give five bucks to the bum on the street. We avoid the amputee beggars, the obviously non functional old drunk -- even when we are en route to a fancy restaurant where we will spend well over $100.00 on food - plus some fancy drinks. Why not let the old dude get his buzz on. He will never be "rehabilitated", we do not know what he accomplished earlier in life, we don't know his demons -- and, he will never have a chance at salvaging his life if we let him die.

We do not want to see "those people". Too many of us are afraid THAT could be us if our "luck" turns bad.

There is no reason for homelessness in our society. There is no reason each and every person in the USA (EVERYONE) is not covered by health insurance -- all we have to do is remember Mrs. Kennedy.

In the USA we care about each other.

From Jesse's Cafe Americain

We give these folks money. We shovel it at them. Our children, and grandchildren will be paying for this "bailout", this "TARP" for a long time. I've had a nasty, lingering cold. This morning I slept in. I got up depressed, angry, and out of sorts --- then I read the following --- geez, how long are we going to let them walk all over us like this?

This has nothing to do with being conservative or liberal, nothing to do with Republican or Democrat -- it has to do with providing a framework, a set of rules. It may well be time to let all these firms, and their quasi-legal "Ponzi schemes" collapse! (can you tell I'm angry?)

17 December 2008

Goldman Sachs Offshores Its Profits and Reduces Its Taxes to 1%

"With the right hand out begging for bailout money, the left is hiding it offshore."

In fairness to Goldman, if there can be such a thing, they are taking a lot of writeoffs to reduce their taxes this year, in addition to offshoring their profits into foreign venues with favorable tax rates. That is just globalization, right?

As an aside, for some time now I have wondered if globalization has become just another enabler, wherein multinational financial corporations can play a larger set of jurisdictions and peoples against one another for the benefit of an elite minority. International trade based on an exchange of competitive advantage and surplus is a good idea.

Using globalization to undermine the values of certain countries with regard to the environment, healthcare, child labor, living standards, and the domestic laws is exploitation and victimization of the many by the few.

It is a way to reduce free nations to the lowest common denominator of victimization and indentured servitude. It does not have to be this way, but it all too often give rise to the slave and opium trade.

Without regulation free trade swiftly degenerates into manipulation and exploitation. Free trade is not a natural good in and of itself. It can be a highly destructive force, devastating entire economies.

It is never surprising anymore to see how many initiatives promoted by a certain political class like deregulation, globalization, and competitiveness are nothing more than facades for campaigns of organized looting.

We can comfort ourselves with the knowledge that most of the bailout money is being given out in bonuses anyway, and surely those multi-millionaire employees will be paying some income tax. Unless they are engaging in aggressive management of their tax returns. You think?

This from "The Economic Populist"

There are times when other folks say things you are thinking far better, and more completely than you can. Here is another example:

Wall Street's Culture of Corruption

• wall street crash regulation corruption

Now that the largest Ponzi Scheme in history has blown up, and the victims are tallied, questions are finally being asked about Bernard Madoff that should have been asked a long time ago. Like "who was minding the store?"

The answers aren't pretty.

For instance, yesterday it was revealed that Madoff's daughter was married to the SEC compliance examiner, Eric Swanson.

Swanson was at the commission in 2003 when the agency was examining the madoff firm. More importantly, he was also part of the SEC team that was conducting the actual inquiry into the firm.

Even worse, the SEC was warned repeatedly as far back as 1999, that Madoff was running a Ponzi scheme.

Bernard Madoff's firm managed $17.1 billion in assets, he declared this past January in his investment adviser filing with the SEC. He also checked the box showing that he had between one and five employees who performed investment advisory functions, including research, at the firm.

"That's unheard of," Peter Henning, a former SEC attorney and prosecutor, told ProPublica. "You wouldn't have a mutual fund run by one person. You have to have someone out there doing the research."

But there's no evidence that anyone paid much attention to the filing. According to reports, the SEC never inspected Madoff's firm, which first registered as an investment adviser in September 2006. That's despite years of suspicion of Madoff's remarkably consistent returns.

One whistleblower, a former exec at a rival firm, wrote the SEC as early as 1999 to warn that Madoff was running the "world's largest Ponzi Scheme." He repeated his warnings to the SEC through this past April. There were other critics and naysayers, including a 2001 article in Barron's questioning Madoff's unrealistically consistent returns.

Before I go any further I want to put this entire scam into perspective.

In 1995 the 233-year old Barrings Bank failed with $1.5 Billion in losses due to a rogue trader named Nick Leeson. The same year Toshihide Iguchi nearly crashed Resona Holdings with $1.1 Billion in losses. In 2003 John Rusnak got seven years in prison for bank fraud at Allfirst bank at a cost of $691 Million. Chen Jiulin bankrupted China Aviation Oil after $550 Million in losses from insider trading. He also got 51 months in jail. And earlier this year Jerome Kerviel has sent Societe Generale to the brink of collapse with $4.9 Billion in losses.

Now compare that to Madoff's $50 Billion Ponzi Scheme.
This dwarfs anything else on record. To put it another way, this is a larger amount than the government spends on the EPA, Department of Labor, Department of Interior, and NASA combined.

Too Big To Jail

Bernard Madoff was not some "rogue trader" like the other ones I listed above. Madoff was the former chairman of NASDAQ. He was a multi-decade icon on Wall Street.
Madoff was just like everyone else on Wall Street, or at least what everyone on Wall Street wanted to be. That's why his downfall is so disturbing and should cause people to question the very institutions that we trust our life savings with. It's almost as if people are willing participants in a widely known scam.

But before one cries too big of a river for those who lost it all in what appears to be the biggest Ponzi Scheme of all time, one should note that a number of people interviewed said they figured Madoff was "cheating" since he was a market maker and had returns they couldn't explain - they just didn't think he was cheating them! A knowing scam? You decide.

The true scam here isn't Madoff though. Its that this sort of attitude - bed, bribe, lie, browbeat and cajole - has become all of what Wall Street is about over the last ten years.
...
Is all this an accident? Or is it racketeering?

What sort of denial does it take to give your money to a known crook and yet still think that the crook will only take other people's money? It's because they knew Madoff was a crook is why they invested with him.

It's harder to define where the corruption ends than it where it begins. As the blogger Jesse puts it:

Bernard Madoff was exposed because declining prices crippled the mechanism of his fraud, as they always do. To his detriment he was not an integral segment of the banking system. If he had been, he might have merely been declared insolvent, retained his honor and his bonuses, been backstopped by the NY Fed, and put into an arranged merger.

Bernie Madoff's mistake was in not incorporating his fraud on a broader scale....

We believe that there are much greater deceptions being covered up now as we speak, not involving individuals so much as entire companies who have engaged in wanton accounting and securities fraud for the past twenty years.

History informs us that most of the perpetrators will never be prosecuted, and even though exposed will eventually once again become respected members of society. This is how it was after the Crash of 1929.

The reason for this is that the frauds cut so deeply into the establishment and so far and wide beyond the financial system into the government that they are literally too big to jail.

The last bubble to fail that will expose these remaining Ponzi schemese is the US dollar and the Treasury bonds. They are the products of a nation that has been overtaken by a rogue culture of sociopaths and swindlers.

Bernie Madoff was no rogue trader. He was successful for as long as he was because he blended in, he was one of the crowd, he was an independent player within the greatest financial swindle in history, the US financial markets and ultimately the US dollar.

What Jesse is saying is that the rot of corruption extends all the way down to the very source of the American Dollar. Other well-known writers also echo this sentiment.

The rot of corruption naturally extends to Washington, where Madoff extended large campaign contributions to Democratic politicians in exchange for influence.
This culture of corruption extends all the way to the Obama Administration in the form of Timothy Geithner, the soon-to-be Treasury Secretary.

It was Geithner, not Paulson, for example, who put together the original rescue plan for the American International Group.

And, of course, Geithner also oversaw and regulated an entire industry whose decline has delivered a further blow to an already weakened U.S. economy. Under his watch, some of the biggest institutions that were the responsibility of the New York Fed -- Bear Stearns, Lehman Brothers, Merrill Lynch and most recently, Citigroup -- faltered.

If you'll recall, when the Wall Street bailout was being debated, there was a controversial phone call between the Fed and Wall Street executives. The overpaid CEO's were concerned about wording in the bailout that some rogue Democratic politicians had put in the bailout that would limit CEO pay. A representative at the Fed went out of his way to assure the overpaid and corrupt Wall Street bankers that their pay was safe, and that the wording was unenforceable.
The Federal Reserve representative on that phone call was Timothy Geithner.

fishing stuff

Since it's really cold and windy out right now -- I do not want to go fishing. When I can't go -- I tend to talk about it.

Fishing is about accessories - rods, reels, line, hooks, lures, etc. In many ways it's about fashion. It's also about technology. Better rods, reels, line, lures, etc.

A baitcasting reel for fresh water fishing can cost over $400.00 -- not that long ago, prices like that were reserved for big game saltwater reels.

There are also brand spanking new rods out there. For example, a company named E21 makes "Carrot Stix" -- these high tech fishing rods are designed by Ken Whiting (called "the wizard of rods").

That's right -- we now have "rod designers" - they custom design the action for the specific species sought, and the specific fishing style used. Carrot Stix are made from NANO cellulose bio fibers (processed carrots), graphite, and Scandium - a super strong metal used by Smith & Wesson to make the frames of some of their ultra light weight revolvers.

These rods are supposed to be ultra light (in weight), sensitive, and very strong. You can have the combination of light weight, great stiffness ("heavy action"), strength, and flexibility.

Today we have flourocarbon lines that match the specific gravity of water - they just about disappear.

Among all the reels offered, Shimano has a couple that have computerized anti-backlash systems. Micro-processors that adjust spool brakeing to prevent over-runs (backlash).

As you can see, there's all sorts of high tech, and "designer" fishing equipment out there -- and I just covered a small portion of the fresh water fishing market.

Now, what is the cost benefit ratio withthis super expensive stuff?

I ask because I recently bought two baitcasting "combos" for $24.94 each. They consist of a nicely made graphite rod, and a name brand baitcasting reel. Granted this was a "CLOSEOUT!!" sale but the equipment seems very well made, well suited to its purpose, and tailored to my specific needs. Although the reels seem well made, with all the features I want, I hesitate to use them -- they don't cost enough.

The rods retail for $39.99, I'm not sure about the reel. The combo for $24.94 seems too good. Of course, a reel that was touted as "the next best thing" a couple of years ago - and sold for $130.00 - is now being flogged for $59.99.

So, what is the real price/value situation? When, and at what point, do you "get what you pay for"? Is fishing tackle now like audio equipment? Is the overall quality so much better than it was 30 years ago that today's mid-range stuff is better, or as good as, the "best" from back then?

Does that additional 2, 3, 4, 500.00 dollars just add minimal quality? Is it even perceptible by "another old lady", or an average angler?

Which brings more pleasure - owning "the best", or "discovering" the bargain?

Does that $50.00 hand crafted, swim bait earn its keep -- or does it just make you THINK you have an edge?

Another question -- would I buy all that expensive stuff if I could afford it? If I were younger, and as rabid about fishing as I was back then -- would I scrimp and save for that "magic rod" - the one that would give me that little edge?

Not long before I stopped going party boat fishing (this back on Long Island) to take care of my elderly mother, I bought a very nice rod for bottom fishing. It weighed about half of what a regular rod with that power weighed. It was like a feather (well, not quite - it just seemed that way). The difference it made was amazing. It was more sensitive, the light weight allowed me to set the hook quicker (helping to make up for my slower reflexes), and the light weight made it easier on my wrist, forearm, arm, and shoulder. Less pain the next day.

In that case, there really was a pronounced benefit - made a huge difference. Of course, I still used an old fiberglass rod I made back in the late 1970's. It was an very fast action, fairly light tip, with a heavy reinforced butt - an old Laminglass live bait rod blank that I trimmed a bit. That rod has caught 30 lb. Codfish, 32lb. Striped Bass, 12lb. Blackfish, 17lb Bluefish, 5lb. Seabass, countless Ling, and even a Lobster. It was not ideally suited to all those different forms of fishing -- but we managed.

Perhaps that's the real secret -- enthusiasm, trust, and a willingness to work at getting better skills -- if the super-duper equipment helps you, I guess it's worth it

From Jesse's Cafe Americain

A Brief History of the Greatest Financial Fraud in History

It is essential to realize and remember that this is no accident, no unhappy confluence of disparate elements that just happened to come together.

This was a deliberate and methodical attempt to overturn long standing regulations and safeguards to recreate the banking conditions that helped to create the bubble economy of the 1920's.

The purpose was to allow the inordinate increase in wealth of a few greedy individuals driven by a rapacious will to power.

They did not care what havoc they wreaked on the rest of the world in the process. We have been here before when certain personality types have been able to hijack a society. Sometimes it is financial, at other times criminal, and too often political, with even an occasional coup d'etat.

Laws exist to protect society from the actions of aberrant personalities. It does not shock us when they wield a gun. Why then does it surprise us when they utilize a pen, a glib personal patina, a reckless disregard for others, and a persistent, amoral cunning?

The strength of the professional conman is that emotions do not cloud the force of their actions because they have long since ceased to listen to their conscience. And this is their weakness because, dulled by excess, their judgement allows them to go too far. Thereby they expose their unbridled greed and undermine their schemes, which operate best behind closed doors and under cover of darkness. Transparency and the light of exposure are their enemies.

Until there is reform and a restoration of justice there will be no sustained and genuine recovery.

PBS Frontline: The Long Demise of Glass-Steagall

Whiners?

There are still some folks out there who think our economy is just fine. They still think the rest of us "whiners" (thanks Phil Gramm). Unfortunately, in their world of hyper-individualism, we are all either "winners" or "losers". as more and more of them become "losers" there might just be some measure of confusion -- too bad!

The fact all economic indicators are trending down, states are running out of money for unemployment benefits, and Wall Street is being exposed as THE great "Ponzi scheme" is blowing right past these fools.

Remember these are the same folks who will sit and tell you how Social Security is a "Ponzi scheme", and how we MUST invest in the stock market -- or other private financial "instruments".

I always wonder how many of these "experts" will thank their lucky stars all of their "fixes" for Social Security were ignored, pushed aside. It may well be all they have to retire on.

We now have cases of well-to-do folks being plunged into just-getting-by-land. Thanks Mr. Madoff.

Like many other folks, I wonder how he managed to keep all those plates spinning for so long. It's like an "I Love Lucy" plot -- except it doesn't end with, "Oh Lucy", "Oh Desi" -- music -- fade.

The Old Man seems to be the "designated guilty party" -- family members, employees, all uninvolved, get away scot free --- one old guy keeping 50 BILLION plates up there spinning --- what a guy!

Looking at it, I'd say he's a really good Dad.

In addition, AIG no longer looks like an Insurance Company --- I think it's more like a purpose built money shredding machine -- everything in, nothing out -- no wonder they have to pay such high "retention pay" -- plain, ordinary folks (like UAW auto workers, or housewives) might not be quite as efficient turning billions into NOTHING.

Does anyone think all that TAXPAYER money might have gone into "fixing" their "Ponzi scheme"?

As I said before, right now, all of Wall Street seems to be THE "Ponzi scheme".

Perhaps our Labor Day holiday should be eliminated -- to be replaced by "Ponzi Day".

Well, it really doesn't matter -- after all, our "betters" have pronounced us to be a "Post Industrial Society".

If we are really lucky, we might soon be elevated to "Hunter - Gatherer" -- but first, we might go through the "third world, exploited for both our human and natural resources" period.

Onr thing you can be sure of -- no matter what happens, no matter how many people suffer, no matter how many starve -- our Republican "betters" will be there telling us how we are not "conservative" enough, how we must "privatize", how having any sort of "safety net" just makes people "weak".

At least we can depend on that.

From Calculated Risk -- once again, Hoocoodanode?

Fitch Warns on Alt-A

by CalculatedRisk on 12/15/2008 01:55:00 PM

From HousingWire: Fitch: Alt-A Mortgages Deteriorating More Rapidly than Expected

Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS.

Hoocoodanode?

From "When Giants Fall"

December 14, 2008

Taking It to the Streets

Numerous studies and anecdotal reports have highlighted a growing divide in many Western nations between the haves and have-nots.

Up until recently, those on the lower rungs of the economic ladder have kept fairly quiet, subdued by reassurances from politicians and business leaders that the long-running global boom would eventually trickle down to the benefit of all.

Now, with financial systems seizing up, economies falling apart, bankers being bailed out by the thousands, and the promise of nirvana suddenly morphing into a mirage, suppressed anger is beginning to well up -- and boil over.

To be sure, no one should be all that surprised to see the social mood turning ugly at the same time that economic conditions are heading in the same direction.

The real question, then, is when are we going to see developments like those discussed in the following Observer commentary, "In Athens, Middle-Class Rioters Are Buying Rocks. This Chaos Isn't Over," taking place right here in the United States?

Helena Smith has reported from Greece for two decades, but had never seen anything like the riots that swept the country last week. Here she tries to make sense of an eruption of anger

How much tear gas can a nation take? How many stones can it collect? To ask such questions of an EU member state that is supposed to be as sophisticated as it is modern might seem far-fetched, even silly.

To ask them four years after that country basked in the glory of staging one of the most successful Olympic Games might be considered absurd. But yesterday, as Greece entered a second week of pitched battles between rock-throwing protesters and riot police - with security forces turning to Israel and Germany to replenish depleted reserves of toxic gases to contain the angry crowds - such questions did not seem foolish. Or, I'm sad to say, remotely absurd.

Athens is in a mess and it's not just the rubble or burned-out buildings or charred cars and firebombed rubbish bins and smashed pavements that now stand as testimony to unrest not seen since the collapse of military rule in 1974. Twenty-two years after I moved to Greece I have looked into eyes full of anger and despair. At night, as marauding mobs of Molotov-cocktail wielding youths have run through the city's ancient streets, I have closed the shutters of the windows to my home. My friends have done the same.

Those of us who live here - who have seen how frayed the fabric of public order can become - now know, in no uncertain terms, that the orgy of violence that has gripped this beautiful land masks a deeper malaise. It is a sickness that starts not so much at the top but at the bottom of Greek society, in the ranks of its troubled youth. For many these are a lost generation, raised in an education system that is undeniably shambolic and hit by whopping levels of unemployment (70 per cent among the 18-25s) in a country where joblessness this month jumped to 7.4 per cent. If they can find work remuneration rarely rises above €700 (this is, after all, the self-styled €700 generation), never mind the number of qualifications it took to get the job. Often polyglot PhD holders will be serving tourists at tables in resorts. One in five Greeks lives beneath the poverty line. Exposed to the ills of Greek society as never before, they have also become increasingly frustrated witnesses of allegations of corruption implicating senior conservative government officials and a series of scandals that have so far cost four ministers their jobs.

With these grievances in mind, young people (who would not normally see themselves as revolutionaries and are a far-cry from the 'extremists' Prime Minister Costas Karamanlis says are behind the disturbances) have begun stockpiling stones, rocks and crushed marble slabs from Salonika in the north to the resort islands of Corfu and Crete in the south.

They have also started selling them on - at three stones a euro - to other protesters whose parents may live in Hollywood-style opulence, or indeed on the breadline, but who are bonded by a common desire to hurl them at that hated symbol of authority: the police.

The ferocity of the riots has numbed Greeks. Yet I write this knowing that the protests are not going to end soon. Greece's children have been startled by their own success - and by reports of copycat attacks across Europe - and almost unanimously they believe they are on a winner.

'It's like a smouldering fire,' says Yiannis Yiatrakis who preferred to leave his study of abstract mathematics to take to the streets of Athens last week. 'The flames may die down but the coals will simmer. One little thing, and you'll see it will ignite again. Ours is a future without work, without hope. Our grievances are so big, so many. Only a very strong government can stop the rot.'

So how did it come to this? How did a country more usually associated with sun-kissed beaches and the good life erupt into a spasm of destruction that has shaken it to the core? How could an entire generation - most of whom were not even born when I arrived here - go unnoticed and yet nurture such burning rage? And who is to blame? Greek society, the state, or a political system running on empty that no longer inspires confidence or trust?

Like so many, I was forced to ask all these questions last week as I walked through scarred streets that in more ways than one have become their battlefield. My hope is that those in power, the crooked politicians, the corrupt judiciary, the scandal-ridden church, will ultimately tour the same routes.

It began with one death, one bullet, fired in anger by a hot-headed policemen in the heart of Athens' edgy Exarchia district on last Saturday. At the time most Greeks - including those who are compelled financially to live with their parents into their late thirties - were sitting in front of their TV sets or were out at their local tavernas.

No one thought they would wake up to a revolt in the streets. But the death of Alexandros Grigoropoulos, a tousled-haired teenager from the rich northern suburbs was the match that lit the inferno. If the killing had happened in any of the capital's wealthy satellite suburbs, the reaction might well have been more subdued.

Exarchia, however, is Athens' answer to Harlem (without the racial component). It is here that anarchists, artists, addicts, radical leftists, students and their teachers rub shoulders in streets crammed with bars and cafes that are covered with the graffiti of dissent. It is Athens's hub of political ferment; a backdrop of tensions between anti-establishment groups and the police.

Within an hour of the boy's death thousands of protesters had gathered in Exarchia's lawless central square screaming, 'cops, pigs, murderers,' and wanting revenge. At first, it is true, the assortment of self-styled anarchists who have long colonised Exarchia piggy-backed on the tragedy, seeing it as the perfect opportunity to live out their nihilistic goals of wreaking havoc. But then middle-class kids - children had got good degrees at universities in Britain but back in Greece were unable to find work in a system that thrives on graft, cronyism and nepotism - joined the protests and very quickly it became glaringly clear that this was their moment, too. Theirs was a frustration not only born of pent-up anger but outrage at the way ministers in the scandal-tainted conservative government have also enriched themselves in their five short years in power.

Now the million-dollar question is whether protests that started so spontaneously can morph into a more organised movement of civil unrest. What is certain is that Karamanlis's handling of the disturbances will go down as a case study of what not to do in a crisis. Seemingly disoriented and removed, the government's popularity has dropped dramatically over the past week. Even diehard conservatives have called me to say they'll be jumping ship. So far, Karamanlis has roundly rejected demands that he call early elections which means Greece will be saddled with a lame-duck government (the New Democrats are anyway hampered by a razor-thin one-seat majority in the 200-member parliament) for several months yet.

With daily demonstrations planned in the weeks ahead Greek youth are not going to give in easily. Far from calming spirits, the tear gas that has been used so liberally against them has only stoked their ire.

A fragile democracy
From the bitter civil war that raged between 1946 and 1949 to the 1967-74 military dictatorship, Greece's postwar history has been more tumultuous than most. The defeat of the communist EAM party with the help of British and US forces in 1949 led to decades of authoritarian right-wing rule.

Thousands of leftwingers were imprisoned or sent to labour camps. The right-left divide was later reinforced on 21 April 1967 when in a coup a group of US-backed junior officers, known as the Colonels, seized power.

In a spontaneous uprising on 17 November 1973, students at Athens Polytechnic rebelled against the regime, leading to the Colonels' fall in July 1974. The restoration of democracy under the late Konstantinos Karamanlis laid the foundations for a reconciliation between left and right under Andreas Papandreou, who introduced socialist government to Greece in 1981.