Tuesday, May 19, 2009


So a writer from the New York Times plagiarizes a blogger. Nice.

If this damages Dowd's career -- or somehow harms the Times -- it'll certainly give credence to the idea that blogging is bad for reporting. Heh, heh.

What I wanna know, of course, is did Dowd sneak into Marshall's mother's basement to steal his words, or did she access them some other way?


Friday, May 08, 2009


I'm sure by now we've all heard that -- surprise, surprise, surprise! -- all the banks "passed" the so-called "Stress Tests." They passed, huh? Was it a gentleman's C? An over-inflated B+? Did they make the Dean's Treasury Secretary's list?

Anyhow, Yves at Naked Capitalism has a nice take-down of not only Treasury, but the fawning and shamelessly pro-bank reaction of our good friends in the mainstream press. Or as she put it, "[t]he unduly charitable coverage of the stress tests." Some highlights, starting with a few facts the NTY did not cover:
1. The fact quite a few of the banks negotiated their fundraising requirements down, calling the integrity of the process into question

2. No mention that the purpose of this exercise from the outset was to prove the banking system to be solvent. What kind of a test is that?

3. No mention that asset sales (the reason Citi was able to negotiate its fundraising down from $10 billion, and presumably others as well) are almost certain to be a non-starter.
The WSJ joined in on the self-serving fun as well:
The Wall Street Journal , in "How the Stress Tests Stopped the Market Bleeding," depicts Geithner, the Fed, and Obama as saviors of the market:
Mr. Geithner successfully beat back criticism that the examinations were a political ploy, leaving much of the number-crunching to the Federal Reserve. The stock market regained its footing as consumer confidence crept back. And several major banks reported unexpectedly strong earnings for the first quarter, boosting confidence about their long-term health.
[] the only critics Geithner "beat back" were some of the bankers themselves. The stock market regained its footing because it was oversold and Citi and Bank of America said they'd had a good January and February. The consumer confidence numbers are stronger in no small measure because stock market movements are included in the computation! In fact, in the Conference Board's release, the stock market rally was the single biggest contributor to the improvement in sentiment.
As to the press' breathless prattling that Wall St. has been saved from the dangers and horror of "nationalization" or receivership, Yves noted:
The illogic is breathtaking. It has now become conventional wisdom that a bankruptcy is the only way to straighten out GM, yet there is no realistic plan for getting the banking industry into a configuration that reduces systemic risk or end incentives for banks to gamble with their now explicit government backstop or a realistic plan to clean up the bad assets (we do not believe the PPIP will succeed). Receivership for the weakest banks is a far better approach for taxpayers and the economy, yet the Journal is touting the line that what is best for incumbent bank management is surely best for America.
Finally, she observed that many of the real villains escaped notice, as usual:
And the other big shortcoming is that the securities and derivatives exposures at the big capital markets players (Citi, BofA, JP Morgan) were given the short shrift.
Nothing new here, huh?

Check out the whole piece. It'll put some of this in better perspective.

Have a nice weekend.


Wednesday, May 06, 2009


First Pontiac, and now Dom DeLuise. As that first link makes clear, Pontiac had some strong pop culture connections: the GTO, Knight Rider's Kit, and of course, Burt's black Trans-Am from Smokey & the Bandit. And, as some of you may recall, that's a car I talked about right here a little over two years ago.

Those ubiquitous mid-70's through mid-80's memories. We even owned an '84 Grand Prix.

And, of course, who seemed to be Burt's sidekick in many of his iconic movies (but not Smokey & the Bandit)? Dom DeLuise. DeLuise sits in my memories through two separate comedy franchises of my youth: the Burt Crew, with its fast cars and hot chicks and blooper outtakes as the credits roled. And also Mel Brooks. DeLuise seemed to be in every Mel Brooks movie. The obnoxious gay director at the end of Blazing Saddles. The hideous emperor, dispatching with food & lives in History of the World, Part I. Pizza the Hut in Space Balls. He was even in Silent Movie, right?

The franchise that made the black Trans Am, and the fat guy who made me laugh in Burt Reynold's movies. Both gone in the same week. The older you get, the more the icons of your youth pass along.

At least the memories remain.


Monday, May 04, 2009


Yves has a solid take on the continuing special relationship between Goldman Sachs and . . . well, everyone in power. A highlight or two:
The "all animals are created equal, but some are more equal than others" logic appears to operate in full force as far as Goldman is concerned. Violations of normal rules of conduct are not merely tolerated, but are asserted to be acceptable.

Now admittedly, the latest news tidbit, of former Goldman co-chairman Steven Friedman staying on as chairman of the New York Fed after Goldman became a bank holding company, isn't as troubling as when current Goldman chief Lloyd Blankfein was the only Wall Street denizen to meet with Hank Paulson when the Treasury was deciding what to do about AIG. Readers may recall that Goldman had the biggest exposure to AIG and thus had the most to benefit from a course of action that would be generous to counterparties (who had chosen of their own cognizance to enter into contracts with the big insurer).

What is disturbing [] is the moral blindness of too many of the key actors, namely Friedman himself and some Fed officials.

* * *
It's bad enough that Friedman owned Goldman shares while involved in policy discussions that would affect the bank. The fact that he went and bought more shares is breathtaking. Of course, this shows a huge deficiency in Fed procedures. Directors should be barred from trading stocks in any institution regulated by the Fed. While it is technically not inside information (you need to be an insider of the company in question, that is, have a fiduciary duty to its shareholders), it certainly raises the specter of trading on privileged information.

It would be a scandal if someone on the FOMC were to be found to be trading interest rate futures. Being party to discussions about regulatory policy (as in having advance knowledge of how things are likely to play out) means one similarly has advance knowledge of facts that investors would find important.

* * *
Recall that in the waning days of the Bush Administration, it wasn't clear how bank friendly the new Administration would be. Even thought Geithner was Treasury secretary designate, there was some discussion in the press as to the divergent views within the Obama economic policy team, and whether that would create creative friction or conflict. Conflict (or having Volcker, who is not a fan of innovative finance, have a strong voice) could have kept bank valuations at bay.

Thus while Goldman's stock was arguably cheap, cheap stocks can get cheaper. One of the important inputs to the wisdom of going long would be knowing how bank friendly the new Administration's policies would be. To think that Friedman didn't have some insight into that question by virtue of his advantaged position is naive.
Check out the whole piece. Another factoid in a continuing, and sadly consistent, story.

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Friday, May 01, 2009


Too exhausted to post this morning, but check out this piece in Salon, titled "The Prophets Of Doom" (H/T Ritholtz), discussing 14 folks who've been the biggest critics of Obama's outrageous economic policies. I would imagine no small portion of these folks also tee'd off on Bush, so that should tell you that this ain't necessarily a partisan group.

A few clowns in the mix -- Michele Bachmann & Jim Cramer, notably -- and I'm certainly no fan of that big phony, Paul Krugman, but otherwise, there are some strong entries here, including many that I've either linked to, or focused on: Ritholtz, Yves, Jim Rogers, William Black, Simon Johnson, Roubini. Check it out. At very least, it'll give you some names and links if you're looking for more more sources to learn what's really going on.

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