Tuesday, March 31, 2009

This week, Guantánamo!!! It was an incredible experience.

We arrived in Gitmo on Friday and stared going around the town, everybody knew Crystle and I were coming so the first thing we did was attend a big lunch and then we visited one of the bars they have in the base. We talked about Gitmo and what is was like living there. The next days we had a wonderful time, this truly was a memorable trip! We hung out with the guys from the East Coast and they showed us the boat inside and out, how they work and what they do, we took a ride around the land and it was a loooot of fun!

We also met the Military dogs, and they did a very nice demonstration of their skills. All the guys from the Army were amazing with us.

We visited the Detainees camps and we saw the jails, where they shower, how the recreate themselves with movies, classes of art, books. It was very interesting.

We took a ride with the Marines around the land to see the division of Gitmo and Cuba while they were informed us with a little bit of history.

The water in Guantánamo Bay is soooo beautiful! It was unbelievable, we were able to enjoy it for at least an hour. We went to the glass beach, and realized the name of it comes from the little pieces of broken glass from hundred of years ago. It is pretty to see all the colors shining with the sun. That day we met a beautiful lady named Rebeca who does wonders with the glasses from the beach. She creates jewelry with it and of course I bought a necklace from her that will remind me of Guantánamo Bay :)

I didn’t want to leave, it was such a relaxing place, so calm and beautiful.
“It’s just a crime the way it puts people in limbo. They first off have gone through the grief of losing their house, then they move out and find out that they still own it and have responsibility for it.”

Sunday, March 29, 2009

Phrase of the Day

Via Greenwald,

Newsweek's Evan Thomas in the magazine's cover story:

If you are of the establishment persuasion (and I am), reading Krugman makes you uneasy. You hope he's wrong, and you sense he's being a little harsh (especially about Geithner), but you have a creeping feeling that he knows something that others cannot, or will not, see. By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring.But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking. The in crowd of any age can be deceived by self-confidence, as Liaquat Ahamed has shown in "Lords of Finance," his new book about the folly of central bankers before the Great Depression, and David Halberstam revealed in his Vietnam War classic, "The Best and the Brightest." Krugman may be exaggerating the decay of the financial system or the devotion of Obama's team to preserving it. But what if he's right, or part right?
In 2003, thousands of American soldiers were unexpectedly uprooted from Afghanistan and sent off to fight in a long and bloody war overseas. After serving multiple tours of duty in Iraq, the vast majority of these troops said they couldn't wait to get back and have their lives return to normal.

Saturday, March 28, 2009

Suppose a bank is sitting on a $10 million package of collateralized debt obligations (CDOs) that was put together by, say, Countrywide out of junk mortgages. Given the high proportion of fraud (and a recent Fitch study found that every package it examined was rife with financial fraud), this package may be worth at most only $2 million as defaults loom on Alt-A “liars’ loan” mortgages and subprime mortgages where the mortgage brokers also have lied in filling out the forms for hapless borrowers or witting operators taking out mortgages at far more than properties were worth and pocketing the excess.

The bank now offers $3 million to buy back this mortgage. What the hell, the more they bid, the more they get from the government. So why not bid $5 million. (In practice, friendly banks may bid for each other’s junk CDOs.) The government – that is, the hapless FDIC – puts up 85 per cent of $5 million to buy this – namely, $4,250,000. The bank only needs to put up 15 per cent – namely, $750,000.

Here’s the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.

The more the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85 per cent. So the strategy is to overpay, overpay, and overpay. Paying 15 per cent is a small price to pay for getting the government to put in 85 per cent to take the most toxic waste off your books.
Two hundred schoolchildren in Britain, some as young as 13, have been identified as potential terrorists by a police scheme that aims to spot youngsters who are "vulnerable" to Islamic radicalisation.

Tuesday, March 24, 2009

I have been asking "if the toxic sludge is so under-priced, why isn't Warren Buffet buying it ?" Turns out that Mr Buffet had a better idea, get the US Treasury to pay him to buy it -- he's one of the inventors of the Geithner plan.
The U.S. government is basically using the taxpayer to guarantee against downside risk on the value of these assets, while giving the upside, or potential profits, to private investors, he said.

"Quite frankly, this amounts to robbery of the American people..."
Buying toxic assets is "nice" for banks, but solves nothing. Bailing out AIG, oddly enough, could be seen at least as a step in the right direction - the problem of course being that if you're going to take care of all potential liabilities, the total bill might be in tens of trillions, rather than mere trillions - with a lot of that money going to the smart hedge funds that bet on things going badly in various markets and for various institutions (cf Pauslon above).

Given all that, we have several routes:

* one that gives a lot of money to banks that do not deserve it to solve their asset problem, but still do not make them creditworthy (the current Geithner plan), which gives stock markets a temporary boost, taxpayers permanent pain, and solves nothing;

* one that does help them get rid of their real problem (huge contingent liabilities on bets that are turning sour), but is vastly more expensive than the mind-numbing numbers we're throwing around already, and gives all the money to hedgies: the AIG route, multiplied ten or hundred-fold;

* one that acknowledges that the issue is liabilities rather than assets, and that focuses on the fact that a lot of these liabilities are wholy unrelated to any economic or financial activity, and are contingent rather than actual - ie nobody loses anything if they are cancelled. If a 100:1 bet you made is cancelled, your actual loss is not 100, it is 1 - something that could be paid back to you.

So far, the second route has been used when an emergency beckoned (AIG et al); the first route has been used massively but the Treasury does not seem tired of it yet, and the third one seems anathema.

From the comments

It sounds like you can easily get a generous Geithner Gift. Just pay a million for toxic waste worth a thousand.

Find a friend who has has toxic waste worth a thousand. Give him $150,000 of your own money and a $850,000 Geithner Gift (uh, sorry, loan).

Strangely enough, the waste isn’t worth a million. What a surprise. The government cruelly seizes the waste. How sad. But you and your friend can find consolation in the $849,000.

Please tell me I’ve misunderstood the plan.

Sunday, March 22, 2009

Saturday, March 21, 2009

US federal regulators have warned of a “rampant Ponzimonium” as they disclosed they are investigating “hundreds” of possible scams in the aftermath of the $50bn fraud allegedly perpetrated by Bernard Madoff.
People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. And so the gambling-addict leaders of companies like AIG end up not penniless and in jail, but with an Alien-style death grip on the Treasury and the Federal Reserve — "our partners in the government," as Liddy put it with a shockingly casual matter-of-factness after the most recent bailout.

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.
Dead babies, mothers weeping on their children's graves, a gun aimed at a child and bombed-out mosques - these are a few examples of the images Israel Defense Forces soldiers design these days to print on shirts they order to mark the end of training, or of field duty. The slogans accompanying the drawings are not exactly anemic either: A T-shirt for infantry snipers bears the inscription "Better use Durex," next to a picture of a dead Palestinian baby, with his weeping mother and a teddy bear beside him. A sharpshooter's T-shirt from the Givati Brigade's Shaked battalion shows a pregnant Palestinian woman with a bull's-eye superimposed on her belly, with the slogan, in English, "1 shot, 2 kills." A "graduation" shirt for those who have completed another snipers course depicts a Palestinian baby, who grows into a combative boy and then an armed adult, with the inscription, "No matter how it begins, we'll put an end to it."

There are also plenty of shirts with blatant sexual messages. For example, the Lavi battalion produced a shirt featuring a drawing of a soldier next to a young woman with bruises, and the slogan, "Bet you got raped!" A few of the images underscore actions whose existence the army officially denies - such as "confirming the kill" (shooting a bullet into an enemy victim's head from close range, to ensure he is dead), or harming religious sites, or female or child non-combatants.

Friday, March 20, 2009

In the crisis of 2009 the mounting evidence of fraud, conflicts of interest, indifference to suffering, repudiation of responsibility, and systemic absence of individual moral judgment produced an administrative economic massacre of such proportion that it constitutes an economic crime against humanity.
Everybody is rushing to condemn AIG's bonuses, but this simple scandal is obscuring the real disgrace at the insurance giant: Why are AIG's counterparties getting paid back in full, to the tune of tens of billions of taxpayer dollars?

For the answer to this question, we need to go back to the very first decision to bail out AIG, made, we are told, by then-Treasury Secretary Henry Paulson, then-New York Fed official Timothy Geithner, Goldman Sachs CEO Lloyd Blankfein, and Fed Chairman Ben Bernanke last fall. Post-Lehman's collapse, they feared a systemic failure could be triggered by AIG's inability to pay the counterparties to all the sophisticated instruments AIG had sold. And who were AIG's trading partners? No shock here: Goldman, Bank of America, Merrill Lynch, UBS, JPMorgan Chase, Morgan Stanley, Deutsche Bank, Barclays, and on it goes. So now we know for sure what we already surmised: The AIG bailout has been a way to hide an enormous second round of cash to the same group that had received TARP money already.

So here are several questions that should be answered, in public, under oath, to clear the air:

What was the precise conversation among Bernanke, Geithner, Paulson, and Blankfein that preceded the initial $80 billion grant?

Was it already known who the counterparties were and what the exposure was for each of the counterparties?

What did Goldman, and all the other counterparties, know about AIG's financial condition at the time they executed the swaps or other contracts? Had they done adequate due diligence to see whether they were buying real protection? And why shouldn't they bear a percentage of the risk of failure of their own counterparty?

What is the deeper relationship between Goldman and AIG? Didn't they almost merge a few years ago but did not because Goldman couldn't get its arms around the black box that is AIG? If that is true, why should Goldman get bailed out? After all, they should have known as well as anybody that a big part of AIG's business model was not to pay on insurance it had issued.

Why weren't the counterparties immediately and fully disclosed?

Failure to answer these questions will feed the populist rage that is metastasizing very quickly.
Delay is not innocuous. When a bank’s insolvency is ignored, the incentives for normal prudent banking collapse. Management has nothing to lose. It may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution—nomenklatura privatization, as the Russians would say—through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own.

The most likely scenario, should the Geithner plan go through, is a combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil.

Thursday, March 19, 2009

Courage Is The Primary Virtue

March 16th was the sixth anniversary of Rachel Corrie's death. (Seems more recent doesn't it.)

NAIMA SHAYER: [translated] On that last day, she didn’t want to leave our house. She’d get to the door and then rush back to hold and kiss us goodbye again. I asked her, “What’s wrong? Do you think you’re going to die today?” She did this a few times, as if she didn’t want to leave us.

That evening, my niece told me that Rachel Corrie had been killed by an Israeli bulldozer and had watched it on television. I didn’t believe her at first and thought she must have been lying.

All of us in the house were crying. She had stayed with us for over twenty days. I remember, whenever she was late, she’d call and apologize. If she got later than 7:00, she’d let us know. Once she got stuck at a checkpoint and called so we wouldn’t worry. She was just like one of us, a member of our family. She was so good to us.

ABU JAMEEL: [translated] Very few people live up to Rachel’s example. Honestly, even today, I remember her. I can see her: slender, fair, beautiful, wearing a kafia. She was graceful and so courageous, never afraid.

My house was near an Israeli watchtower near the wall. She’d be there with her megaphone, shouting, “Please, don’t fire. There are children here.” She had an open spirit, a pure spirit. She was a great person, irreplaceable. Rachel’s life should be recorded in history.

At the conference on the idea of communism in London three days before, organiser Slavoj Zizek urged his audience:

We must resist the temptation to act. We must refuse being told that children are dying of hunger in Africa or in the slums of India, for this is the philosophy of the present times. They don’t want us to think.

Oh yes that terrible temptation to act, which plagues that audience, stalks it everywhere with its blandishments and meretricious seductions, from which they know not where to hide. But one must be strong, be firm, one mustn't play into their hands, you see. Like Rachel Corrie, the hysterics of Seattle and Genoa, the antiwar protesting puppets of Bush, the shoe hurling journalists of Iraq, Free Gaza, or the millions of French strikers today.

The charismatic theorist's urgent appeal will no doubt be scrupulously obeyed. In fact it was already being obeyed before it was even made. But now, intransigent refusal to act can be self-righteous too, its protagonists can congratulate themselves, how brave and strong we are to resist the temptation to which weaklings and dupes like Corrie succumb.

Monday, March 16, 2009

...the real issue is fraud. Why is no one at Treasury willing to use the F word? Who would it embarrass? There is not reason for NOT pursuing that angle, save that AIG must have the 5x7 glossies on some pretty influential people, or that pursuing fraud at AIG would, via a daisy chain of connections, reveal that fraud was pervasive, and the Treasury is desperate to preserve the false image that the system has integrity.
El Salvador's former rebel group-turned-political party has claimed victory in the country's presidential election.

Jubilant supporters of the Farabundo Marti National Liberation Front (FMLN) poured into the streets of San Salvador in the early hours of Monday, after Mauricio Funes, the FMLN leader, declared that he had won.
As a lesson in how capitalism works, the strike was invaluable. It showed that the state was not neutral and could easily expand its powers to criminalise labour activity. It laid bare the bias of the media and the strategic impotence of the Labour party leadership, which needed the miners to win to remain viable but felt it could not support them and remain credible.

As a lesson in how socialism might work it was edifying. Women kept these communities functioning, and supporters and donations flooded in from across the country and the world. I still recall the conversations of Nottingham miners as they adjusted their worldviews - or at least their language - to the arrival of lesbian and gay, black and feminist support groups. At times I thought the sheer determination to win would carry us through.

Saturday, March 14, 2009


Congress has no oversight of it. It’s an executive assassination ring essentially, and it’s been going on and on and on. Just today in the Times there was a story that its leaders, a three star admiral named [William H.] McRaven, ordered a stop to it because there were so many collateral deaths.

Under President Bush’s authority, they’ve been going into countries, not talking to the ambassador or the CIA station chief, and finding people on a list and executing them and leaving. That’s been going on, in the name of all of us.

Tuesday, March 10, 2009

Thursday, March 05, 2009

Like Frankenstein's monster, Thatcherism has turned on its creators.

Is there anybody out there willing to stand up – on this, of all days – and raise a toast to the wilful destruction of our manufacturing industry and its replacement by the financial services sector? Yes, there were unions who were resistant to change, but whoever came up with the idea that the solution to this problem was to import cars rather than make them ourselves sacrificed more than just the entire engineering skills base.
Everything about this so called "Tea Party" movement was pre-planned--from the supposedly "spontaneous rant" of CNBC stock market reporter, Rick Santelli, to the presumed ground-level organizing of protests all over the country. Fake, fake, fake--like a product launch staged covertly to look like a spontaneous trend.

Monday, March 02, 2009

DETROIT — It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card.

The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.

Not $75,000. Remove a zero—it's seven thousand five hundred dollars, substantially less than the lowest-price car on the new-car market.
The federal government agreed Sunday night to provide an additional $30 billion in taxpayer money to the American International Group and loosen the terms of its huge loan to the insurer, which is preparing to report a $62 billion loss on Monday, the biggest quarterly loss in history, people involved in the discussions said.
They do what they want, these people, and you and I are cut out of the conversation. I'm sure they're dimly aware we still exist. They must spot us occasionally, through the window, jumping up and down in the cold with our funny placards . . . although come to think of it, they can't even see us through the window, since they banned peaceful protest within a mile of Parliament.
And wide-open, loosely regulated financial systems characterized many of the other recipients of large capital inflows. This may explain the almost eerie correlation between conservative praise two or three years ago and economic disaster today. “Reforms have made Iceland a Nordic tiger,” declared a paper from the Cato Institute. “How Ireland Became the Celtic Tiger” was the title of one Heritage Foundation article; “The Estonian Economic Miracle” was the title of another.