Wednesday, April 29, 2009

Obama Turns 100 (Days) Old Today, Gets Spector Doll

During this artificial moment we pause to reflect on the results of all that Obama has done and discover...NOTHING. Which is exactly as it should be because the most difficult issues are the hardest to fix. There should be no major results, but rather, a variety of policies that will take hold as time progresses. 

Obama has proved a man of action, which is all that you can ask. He has moved on the policies he said he would, and attempted (and is attempting) to fix what is broken. 

For this celebratory day we give him an Arlen Spector action figure to play with . And if you click over to that L.A. Times link, you will see Obama looking just a bit too happy at his new toy. 
The returning Democrat said he looked forward to working with the White House on issues such as healthcare, immigration and climate change but warned that he will not be "an automatic 60th vote" for the president in the Senate.

If Democrat Al Franken is seated as Minnesota's new senator, as many expect, the president's party will have a 60-vote majority in the chamber -- a number that makes it filibuster-proof for measures supported by the caucus.
(L.A. Times)

Tuesday, April 28, 2009

Germans Step on Flowers, and Rightfully So

This puts a smile on the face today. It's the German government  sticking it to private equity firm J.C. Flowers. For the most part we applaud American finance and ingenuity and take a special pride in our ability to get deals done.

What we don't like is when these firms attempt to steamroll corporations (or governments) into action for self serving purposes or to cover their own bad judgment. If you don't like a company, then pull your money out. If you don't like their fundamental business, pull your money out. If you want them to pay a special dividend for no reason at all except for you to soak up their surplus cash, then pull you money out. And if you made an investment, and it goes sour, take your lumps and don't try to rook the taxpayer, even if German and not the home team.

Here we have J.C. Flowers attempting to have the German government lend them a helping hand with their 1.5 billion investment in failing German firm Hypo Real Estate. While other investors are willing to take a stub of money as compensation for shares, Mr. Flowers himself is holding tight, and threatening lawsuits.

Yes I am sure the Germans will get right on that, bending down to smell the dandelion flowers before pulling them from the lawn.

"We Really Don't Want to Give In," Say People Who Make Cars

Let's just cut to the chase and say that General Motor's bondholders are probably not stupid enough to take a haircut on a deal  that is greater than the haircut they would take if G.M. tumbles into bankruptcy. Time Magazine tells us as much:
Many Wall Streeters believe the prospects for such a major swap of GM stock for debt are dubious since bondholders expect to fare better in bankruptcy. Some bondholders are said to have positioned themselves for a bankruptcy filing by buying credit default swaps, which would pay off if GM filed for Chapter 11.
(Time Magazine)

G.M. seems to be counting on a lot of people (bondholders, taxpayers via government loans) being in Santa mode, hoping that the potential future value of near worthless equity will be enough of a carrot to avoid the bankruptcy applied spanking that it needs.

We get the impression that G.M. is still not taking the situation seriously. And what's with so much scheduled to happen in 2010? If you want me to take your equity, your stock, in place of my bonds or loans, I want stuff to happen yesterday. I want Pontiac dead in two months, or six months max.

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In related matters, who is wiser? Daimler selling the last 19.9% stake in Chrysler, or Fiat buying into (apparently without cash , if we recall correctly) the vision and world of Chrysler? We reflexively side with the Germans who have the better handle on things financial, but then again, how could the Italians mess up a deal with no cash outlay?

The question in our mind is do you want to hang your future on a workforce that even now is dragging its feet on saving their own life?
While the United Auto Workers union has accepted a deal in principle, its 26,800 members at Chrysler still have to formally vote on the proposal, the exact details of which have not been released.
(BBC-UK )

Wethinks the time for principals, or "in principal" is long gone and autoworkers should be offering up nubile daughters to the masses for each car purchase (for those with rock solid credit only though).

Monday, April 27, 2009

Every Time An American Goofs, Iceland Loses a Krona

See what you caused, Mr. Joe American mortgage holder? Who would have imagined that any number of Americans not paying their mortgages would ultimately lead to Iceland having a female and gay prime minister, the abandonment of the krona currency, and the desire to forsake Icelandic independence and join the European Union?
Buoyed by an election victory that gave a strong popular mandate to her three-month-old caretaker government, Iceland’s prime minister, Johanna Sigurdardottir, told cheering supporters early Sunday that she would move to protect the country’s battered economy by applying soon for membership in the European Union.
(N.Y. Times )

Is this not more evidence that not cleaning your plate has a direct causal relationship with starving Africans?  Yes moms and dads, have your kids make their beds or Russia can implode.

Wall Street Pay Bouncing Back, Conforming to Historical Reality

Here is some evidence to the contrary that 1) everything is different now on Wall Street and 2) the banking crisis and bank earnings are still at their worst.

Article after article has made the case that Wall Street is dead, and that high end college grads will be flocking to other fields because the financial world will not be the high salaried mecca that is has always been since the beginning of modern time.

Trust us when we say that predicting Wall Street's demise is the same as predicting the end of prostitution, or gambling, or eating, or breathing air. The places of business might move or disperse, the names might change, the structure of the firms might change (from investment bank to bank holding firm to privately held to...) and the compensation levels might fluctuate. That's about it. If you have a capitalist system, you then will have your money and finance men, and you will have your street of Wall, no matter what you actually call it.

Here arrives the New York Times to shock us with the news that compensation is quite lofty at the leading financial firms, and that, in effect, nothing is much different at all. We thank them for noticing the obvious, and perhaps they will use this news to become more tuned in to human nature.
If that pace continues all year, the money set aside for compensation suggests that workers at many banks will see their pay — much of it in bonuses — recover from the lows of last year.

“I just haven’t seen huge changes in the way people are talking about compensation,” said Sandy Gross, managing partner of Pinetum Partners, a financial recruiting firm. “Wall Street is being realistic. You have to retain your human capital.”
Brad Hintz, an analyst at Sanford C. Bernstein, was more critical. “Like everything on Wall Street, they’re starting to sin again,” he said. “As you see a recovery, you’ll see everybody’s compensation beginning to rise.”
(N.Y. Times)


Money being what it is--and what it is is like oxygen or blood--the men and women (meaning men) who can manage it, make it grow, put it to work, will always demand and receive more than the average share of bucks. Past, present, future.

Saturday, April 25, 2009

Daily Update: "Michelle Obama Not As Satanic As You Were Told She Was" Edition

Interesting article on First Lady Michelle Obama's changing image and high level of public support, and how she plays a big part in crafting that image, with little left to chance (or other people's whims). There will be some wandering restless conservative minds  who will see this as some sort of proof  of manipulation or staging, since the running theory during the campaign was that Michelle was angry at everyone. We still see the riffs on her height, and allusions to a type of manliness that only certain conservatives seem able to confirm.

We have one or two friends who could not put their finger on what was wrong with Ms. Obama, but knew she was really, really angry. One, a Democrat, repeated that propaganda to us, as though her candidate then, Hillary Clinton, was the face of happy delight. The Cain campaign and the Apparatus of the Republican Party helped that mindset immensely and successfully. The weaker the mind, the angrier she looked, and the more it mattered.
By focusing on her domestic persona and harnessing the fascination with her family, the first lady and her communications team have emerged as the key architects of one of the most remarkable political transformations in years. Only 10 months ago, Mrs. Obama was described as an angry black woman by some conservatives and as a liability to her husband. Now, she is widely admired for her warmth, and her vibrant and accessible manner, and her race seems almost an afterthought to many Americans. She has the highest favorability ratings of any incoming first lady since 1980, and is even more popular than the president.
(N.Y. Times)

What this should tell you, aside from reminding everyone of the nonsense of the campaign, is that people can be molded into believing anything. Sometimes it is good that minds can be changed, but such whim-y-ness on the part of the population can also be exploited for bad.

Right now we are looking at the Republicans as originators of the greater amount of thought manipulation as they try to convince the population that repairing the banking system, that stimulus that includes payments for the elderly or extended unemployment benefits, is bad, and the gateway to wanton socialism. Don't be fooled, as manipulation can come from all sides of the political landscape.

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In our bad news is good news category, and fitting with our thesis that the banking crisis hit bottom back in October, we see three banks failing and seized by regulators in Idaho, Michigan and Georgia. Nice to see all regions suffering equally, but that's not the good news in the bad. The good news is that U.S. Bank, the sixth largest in the nation, is there to take over various branches in Idaho . In all of this panic and concern, we need to remember that we have thousands of banks, and there will be more opening when opportunity or need presents itself. That is capitalism. Banks will continue to fail as we work through their long summer of lending promiscuity, but even now there are banks pulling profits and there to pick up the slack.

In related news--as in pulling profits-- PNC Financial came out with 22% rise in profit . Try not to derive maximum happiness from this news, but settle for gentle comfort, since they are still setting aside cash for increasing loan and lease losses. That will probably continue for a bit, and especially as the new unemployed hit the danger zone and become unable to maintain their mortgages. Most banks should be able to muddle their way through that likelihood.

PNC, based in Pittsburgh and the fifth largest bank in the country, posted net income of $460 million, up from $377 million in the same quarter last year. The results, released yesterday, were reduced by a $47 million preferred stock dividend payment to the federal government on its investment under the bailout program...
"PNC delivered strong financial results, the second highest net income quarter in our history," CEO Jim Rohr said in a statement.
(Pittsburgh Post-Gazette)


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If you are looking for signs that the Republican Party is getting its head together and returning to some core strengths, don't let a so-called re-emergence of Newt Gingrich ignite your enthusiasms. We've been searching for some sensible conservatives, who can balance necessary policies against ideology and come out with sensible solutions, while also being somewhat consistent on social/moral issues. Newt is not that guy, and his attempted self resurrection is worthy of immediate re-crucification, lest he gain some support and more of a platform only to implode due to his own constant moral hypocrisy during an election period when it matters.

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The other day when jay walking across a light rail track in Phoenix, and headed to work, the police were there in the facing parking lot to threaten or issue tickets. "Do you think you could cross at the light, because the train drivers are complaining, or can you afford a ticket?" said Mr. Officer to me. "Certainly," responded my voice, highly desirous of avoiding a $150 fine or ticket.

Upon recounting my story (and without undue commentary about the justice of it all), one of my least reliable friends said, "Why are you defending them! F*** the police. A judge will throw it out. I've had a jaywalking ticket thrown out." This friend will forever not be able to do an accurate analysis of the cost of her time, so I didn't go there, or suggest that it is the police that keeps me safe from people like her. You know, friendship and all. She is rather liberal, but in ignorant fashion, and holding a chip the size of Mt. Fuji against the police, who keep managing to arrest her for assorted violations that she insists should go unexamined.

Wednesday, April 22, 2009

Skeptics on Bank Earnings Missing the Point

There seems to be a bit of confusion on the economic front, with banks reporting profits that more than a few observers are finding quite unacceptable . New York Time's Dealbook puts it this way :
Another day, another attempt by a Wall Street bank to pull a bunny out of the hat, showing off an earnings report that it hopes will elicit oohs and aahs from the market. Goldman Sachs, JPMorgan Chase, Citigroup and, on Monday, Bank of America all tried to wow their audiences with what appeared to be — presto! — better-than-expected numbers.
But in each case, investors spotted the attempts at sleight of hand, and didn’t buy it for a second.
(N.Y. Times)

We are willing to go out on an admittedly weak branch and say that the skeptics have it exactly wrong, and we offer this with no contra evidence.  (What, you expected us to voice an opinion and back it up by research? Oh please. It's hot now in Phoenix and we are lazy).

But given that the financial reporters are generally always focused on the last major thing, and trying to recoup from not being in front of the last disaster, we find human nature a likely predictor that the reporters are a little behind the curve on this, and that those on the inside (of the banks) have a clearer picture of what is going on than those observing from afar.

Granted the banks are grabbing their earnings in every conceivable way, with some (Goldman) getting a certain amount of trading revenue in the process, and we still are not privy to the value of assets on their books, but we are of the opinion that the financial bottom occurred back in October or so, and that we are now in the process of gradual (upward) inclination.

Our theory is that all the ingenuity previously applied to milking the housing bubble in every conceivable fashion will thus be directed in fixing the balance sheet in every possible way. It's in the self interest of financial firms to get out from under the obligations to the Feds and thus have their salary pricing power restored. It does not really matter how they earn this income. Whether it's Bank of America disposing of assets at a profit, or Goldman doing proprietary trading, any such gain is one step farther away from being on the edge. The Times argues that the banks should be more focused on loaning and capturing the spread on borrowing costs to loan income, but most likely the banks are doing that to the extent they are capable of doing it, without resorting to the type of shifty bookmaking they did in the past where every breathing soul got the money they did not exactly deserve.

We shouldn't wait for the newspapers to tell us when the bottom is, or when all is okay with the banks, for when they do, it will surely be past the point of any true value.

I Have No Indian Name

Sometimes when you are at a loss for words, and heart is heavy, some lyrics or the arch of a tune can offer something that soothes. This song reminds me of someone I  sort of know who has gone through a difficult week.

WALELA: I HAVE NO INDIAN NAME 

Where was my grandmother, did you ever let her know
That you had a brown-skinned daughter,
you chose to let her go
Did she drown in dirty water,
Was she broken by the snow
When the Jesus people caught her,
like a little crippled doe
I have no Indian name, no I have no Indian name
Is the rainbow just a color for the blood inside my veins
I have no Indian name, no I have no Indian name
And my tears smoke the fire as I stand inside the rain
You forgot to kiss me mamma,
did you ever mean a thing
To the one who was my father,
Is he the one you blame
for this watered-down creation,
that you never called your own
Now I cry out to the spirit, there raven all alone
I have no Indian name, no I have no Indian name
Is the rainbow just a color for the blood inside my veins
I have no Indian name, no I have no Indian name
And my tears smoke the fire as I stand inside the rain
I have no Indian name, no I have no Indian name
Is the rainbow just a color for the blood inside my veins
I have no Indian name, no I
you forgot to kiss me mamma.....

Sunday, April 19, 2009

Daily Update: Ode to Obama and Bush, Change Agents Edition

Presidents often have the distinction of being damned if they do and damned if they don't, with Obama being a particularly robust target for such contradictions. Republicans, in the mental wilderness at present, have taken to mocking the lack of change when Obama appears to not be the radical they attempted to say he was, and yet, when he makes radical policy changes, he is evil incarnate and ready to usher us into a new order of socialism and general doom. That he has pretty much only lowered taxes and tinkered with a few issues (like stem cells) is quite surprising given the tax day tea protests that among other things were implying that he has in three months destroyed the American way of life.

Then again, there is a group of conservatives who have largely reset their historical frame of reference to election day, with all existing national conditions laid upon Obama.

People--voters and such--say they want change, but often become a bit apprehensive when actual change is presented to them. Hence the concept of talking to your enemies, whether Cuba, Venezuela or Iran,  causes concern all around, and yet the same concerned faces will go on and on about how politicians generally do nothing.

This week past we had Obama as change agent, not only shaking hands with the quirky and harmless Venezuelan President Hugo Chavez, but changing the laws on how Cubans in the United States and Cuba  can interact with each other. These outreaches cause a certain amount of paranoia on the right, and the type of paranoia that does not exist if one were trying to broker change between, say, Irish factions and England. (North Korean or Iranian killers being somewhat spookier than Irish ones).

Obama will not get credit for actually living up to his campaign promises any more than he will get credit when he seeks compromise to appeal to those with a more conservative outlook. Which is why,when in his shoes, you should do what you do, and as much as you can, critics dismissed. (We saw him straddling, yet making real change, in his handling of the torture issue ; he released information showing the torture tactics used by the Bush administration, while simultaneously granting a type of immunity to those who just were acting under what they thought we legal orders).

A friend asked  if Obama was perhaps doing too much and I agreed that he was sticking his hand in every pot. But that's called making the most of your opportunity because you don't want to leave the job with people saying, "Wow, an empty suit and nothing accomplished."  Which is what they will say if nothing actually changes.

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Speaking of empty accusations, we get some pleasant news from Iraq, which lends credence to the fact that former president Bush will likely have his reputation somewhat bolstered by a stable Iraq. It was a bold gamble to try to remake the Middle East, and the majority of the people, focused on the limited goal of weapons of mass destruction, missed the true vision. Or willfully ignored it. Bush was an optimist and hoped that by removing a dictator, such radical change would trigger a string of similar successes in other areas. It was a noble idea woefully executed. His defense department at the civilian level was a cabal of imbeciles, squandering his vision and making it less clear.

With Iraq, it has been a more difficult path than necessary because of the blunders, and only now are we starting to see the fruit, which we hope will accrue to Bush's reputation. Here, we find Iraqis returning to vice, and leisure, and relaxing. Clubs and bars are opening, curfews are ignored , and prostitution is flourishing. The prostitution we could do without , but to the extent it is a sign of a less coercive society, such is good. One does not want prowling religious authorities beating or bombing people into submission, instead using free speech to make their case.

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This was interesting, and falls into the category of "sometimes stuff happens no matter what you think you know". Ron Lieber, a personal finance reporter for the N.Y. Times (and the Wall Street Journal before that) discovered that his financial planner has been accused of fraud and stealing client funds. The reporter checked his records and found that he was not out any money, but the point he makes is that given intent, anyone can succeed at a criminal act.

I think we can derive a larger principal from this. There are a whole lot of things that happen in our lives, and the world. We can't control them all and sometimes the results of our actions, however well planned and intended, just don't pan out. Stuff happens. And happens. Life is complex with many people acting against each other to different purpose. But you don't stop living or hunker down in isolation because stuff happens. You don't stop doing, or attempting to change your world.

Hence this ode to Obama and Bush, men with at least one good idea.

Sunday, April 12, 2009

Happy Easter Captain Phillips

What they saw was the head and shoulders of two of the pirates emerging from the rear hatch of the lifeboat. Through the window of the front hatch they saw the third pirate, pointing his AK-47 at the back of Captain Phillips, who was seen to be tied up.

That was it: the provocation that fulfilled the president’s order to act only if the captain’s life was in imminent danger, and the opportunity of having clear shots at each captor. The order was given. Senior defense officials, themselves marveling at the skill of the snipers, said each took a target and fired one shot.

“This was an incredible team effort,” Admiral Gortney said when it was over. “And I am extremely proud of the tireless efforts of all the men and women who made this rescue possible.”
(N.Y. Times)

In case the main resurrection was not enough, or not your cup of tea,  this bit of of news puts a fine cap on the day. 

Saturday, April 11, 2009

Daily Update: Rebuilding the Temple Edition

On Thursday night we left the comfortable lair of Blax Alternate to venture out to a little church off  the main roads in an industrial section of Phoenix to catch a viewing of Mel Gibson's The Passion of the Christ. A small crowd of mostly women sat in the church's dining room, eating chips and sandwiches and popcorn while a laptop and projector placed Jesus up on the wall in the darkened room. Reaching for chips while Christ is being flogged to death creates vaguely guilt inducing feelings; I struggled to appear appropriately disinterested with each potato chip I placed in mouth.

Most people of course have come to love or hate this film, or just be indifferent entirely to the religious theme, but I am always impressed at the personification of evil in the film where both Satan and demons make appearances as tormentors of human souls. The presentation of evil being sourced from beyond the human mind is probably the film's most important feature, and a daily reminder tthat Jesus and Satan were once bros in heaven, and know each other's tricks, and work daily upon man to sway him one way or the other.

If you believe that sort of thing. We won't linger, atheists and Thomases no doubt among us thinking it all absurd. Though not nearly as absurd as Arizona State University being discinlined to give President Obama an honorary degree when he comes to speak at the school for graduation.  Something about lacking stature or achievement:
Something strange is going on at Arizona State University, which was fortunate enough to land President Obama as a commencement speaker only to snub him by withholding an honorary degree. “His body of work is yet to come,” spokeswoman Sharon Keeler, who probably can't believe she's being forced to defend this decision, told the AP. 
(New York Mag)

New York Magazine finds this all a bit political, as though someone, somewhere (McCain), might have his day dulled by the better than A.S.U. Ivy grad Obama being warmly toasted by one of America's premier institutions of non-learning (as in partying).

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NY Mag also has a short piece on web news pioneer Matt Drudge, whose long running conservative and liberarian commentary may only be superceded by his long running alleged homosexuality. If such is truly the case, it would be just another reminder that whole swathes of the political right need to be purged for hypocrisy. The Republicans, especially, need to remake themselves by matching moral talk to moral action, and by expanding their policy prescriptions beyond the mantra of cutting taxes.

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And finally, and in the same manner that Christ died and rose in three days, Time magazine implies the same for U.S. banks. It takes a little faith to travel with them on this, and it all reads a little naive, but they are probably right.
What banks are earning from the difference between the cost of capital and the income from lending is now great enough for the banking system to be self-sustaining again.
What will happen at this point is that bank stocks will not go up much more, but they will not dive sharply down either. There is enough evidence in comments from the CEOs of Citi and B of A and in the Wells Fargo earnings to show that the idea that banks are insolvent and probably in need of nationalization is no longer part of the consideration of how the problems with the system  will be settled.
(Time)

The piece actually says a bit more, suggesting the cleanup process will continue for many years, but we would agree with the fundamental assessment that the worst is over.

Sunday, April 5, 2009

Blackwater Still in Iraq Doing Its Job, Others Not So Much

Once upon a time several military contractors working in Iraq on behalf of the United States government accidentally (or deliberately depending on the observer) were overzealous in their tasks of protecting Americans and providing security. The result left Iraqis dead. The security men worked for a firm called Blackwater, who of course came under tons of fire, regardless of the fact that they handled their chief responsibility rather well.

Under strutiny by the government here and Iraqis abroad, that particular contract in Iraq was not renewed. Big commotion over, and all eyes move on.

People tend to believe that most things are exceptionally easy to do, or can be done better, or that there is an infinite supply of more capable, prepared, and honest folks who could have taken care of a given task much better than those under scrutiny.  This list of expertise usually begins in the minds of the unqualified  with their own name atop the list. "Why if they were so smart, why did...." and "Anybody could have done that better. I could have done it better."

But the truth is, you can't. For most tasks it makes sense to take the best trained, the smartest minds, the most focused. Since human nature is as it is, there will be mistakes. No task can be accomplished without error indefinately and error does not necessarily render someone incompetent.

As these things go, Blackwater did what any self respecting business would have done when faced with the pitch forked and angry. They changed their name to Xe.

According to the N.Y. Times, onward they go, still providing certain levels of security that more well meaning incompetents are unable to supply.  They are there because they can get the job done better than anyone else, short of the United States perhaps doing the wise thing and actually using its army for such tasks.
Despite the torrent of public criticism against Blackwater, American officials say they are relieved that the old guards will stay on. Otherwise, Triple Canopy, they say, would not be able to field enough qualified guards, with the proper security clearances, before the new contract goes into effect in May.
“There is just no other way to do it,” said one Western diplomat, speaking on the condition of anonymity because he is not permitted to discuss the issue publicly.
Critics of Blackwater said they worried that the same people might perpetuate what they believed was a corporate culture that disregarded Iraqis’ lives.
“They’re really all still there, and it’s back to business as usual,” said Susan Burke, an American lawyer who has filed three civil rights lawsuits against Blackwater on behalf of Iraqi civilians alleged to be victims of it.
(N.Y. Times)

This is not surprising. Some jobs need specialists, whether it involves repairing the financial industry or providing security.  The problems are resolved best by letting those most capable to do the job, but under a set of rules of engagement and regulation that reduce the risk of extended loss.

What always surprises us most is the general disrespect for those with past military service. The politicians and others will heap praise upon the active military man, but pile scorn atop those men when they seek out work in the field in which they were trained (all the while still relying on their skills in the dark of night).