Tuesday Linkage
These are the items that I found worth reading today:
• Regulation two-fer:
- – --Wall Street Loses as Small Banks Win (WSJ)
- - -Reform Bill Adds Layers of Oversight (NYT)• 4 bln yanked from U.S. stock funds in February (Reuters)
• Lehman Two-fer:
- – -At Lehman, Watchdogs Saw It All (NYT)
- - -Lehman Whistle-Blower’s Fate: Fired (WSJ)• Oil companies look at permanent refinery cutbacks (LATimes)
• Eliot Spitzer and William Black call for an immediate Congressional investigation of Lehman’s accounting deception and the release of relevant emails and internal documents (New Deal 2.0)
• Andrew Lo, MIT: Physics Envy May Be Hazardous To Your Wealth! (Quantitative Finance > Risk Management)
• Pink Floyd, Queen May Ditch EMI (Bloomberg)
• Chat Roulette + Improv Piano = Hilarious (Video)
What are you reading?
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March 16th, 2010 at 4:49 pm
“…Oil companies look at permanent refinery cutbacks …”
…because it’s a bad business. Coupled with the massive investment in EXISTING refinery capacity puts to bed that nonsense the right wing screech, “We haven’t built a new refinery in this country in twenty five years.”
EXISTING refineries got all that investment in the last twenty five years you Right Wing Media Mouthpieces.
March 16th, 2010 at 4:53 pm
Elizabeth Warren Expresses Guarded Support For Dodd Fin Reg Bill
UPDATE: Sen. Brown, Too
http://news.firedoglake.com/2010/03/15/elizabeth-warren-expresses-guarded-support-for-dodd-finreg-bill/
Copies of the “American Financial Stability Act of 2010″ summary and legislation are out, as well as a transcript of Chairman Dodd’s prepared statement. And he seems to have picked up some important support: Elizabeth Warren, the brainchild behind the Consumer Financial Protection Agency and a key progressive on financial regulation.
In a statement, Warren notes:
“Since bringing our economy to the brink of collapse, Wall Street has spent more than a year and hundreds of millions of dollars in an all-out effort to block financial reform. Despite the banks’ ferocious lobbying for business as usual, Chairman Dodd took an important step today by advancing new laws to prevent the next crisis. We’re now heading toward a series of votes in which the choice will be clear: families or banks.”
That sounds like a cautious endorsement. A source close to Warren notes she is concerned that the new watchdog’s enforcement powers may not be vigorous enough and that there are several provisions, such as one governing the treatment of non-banks, which need strengthening. The CFPA debate will continue.
March 16th, 2010 at 4:56 pm
Dick Fuld? Not a bad guy (and other contrarian takes on LEH)
http://ftalphaville.ft.com/blog/2010/03/16/175856/dick-fuld-not-a-bad-guy-and-other-contrarian-takes-on-leh/
While it was inevitable, FT Alphaville is nonetheless impressed at the speed with which the contrarian camp has come out in defence of Lehman Brothers, post Valukas.
First up, Chazzer “Crazy Like a Fox Business Anchor” G, moonlighting at The Daily Beast:
March 16th, 2010 at 5:13 pm
Oil companies look at permanent refinery cutbacks
so in a couple of years down the road during the next energy “crisis” all of the usual wingnuts will come out of the woodwork saying it’s all the environmentalists fault that there are supply problems because no new refineries have built since the 1970s, etc. We’ve heard it all before.
March 16th, 2010 at 5:14 pm
“Then consider something else: For all the time spent on this report, and the amount of evidence collected, and the high-ranking executives interviewed, there’s very little here to show that for all their recklessness, Fuld, Callan, and the rest of the crew knew that what they were doing was illegal.”
________________
They had better be able to prove they didn’t have access to corporate counsel, CPAs, or a lick of common sense. Plausible deniability is not a cover for fraud.
March 16th, 2010 at 5:17 pm
There’s also the legal catch 22: “. . . knew or should have known . . .”
March 16th, 2010 at 5:36 pm
“Critics complained that no new U.S. refinery had been built since 1976, leaving the country’s gasoline supplies vulnerable. In fact, between 1998 and 2009, U.S. refining capacity increased by 2.2 million barrels a day, to 17.67 million barrels a day, with the addition of equipment and with improved processes at existing facilities, Energy Department data show.”
Critics such as Sen. Dick Shelby. You know Shelby — he’s the guy who muscles all the defense money to Alabama for boondoggles that DoD doesn’t want, then has the balls to complain about wasteful spending and earmarks.
Conservatives don’t have a monopoly on cluelessness, but they do have a controlling market share. If Shelby and his ilk had won the day just a couple of years ago, today we’d be staring down the barrel of another gun requiring us taxpayers to bail out the “stranded investment” in brand new refineries (an argument that the telcos have used successfully for decades).
Socialize the risk, not the reward: That’s modern conservatism in a nutshell.
March 16th, 2010 at 5:41 pm
By JOSH GERSTEIN | 3/9/10
President Barack Obama’s embrace of a national database to store the DNA of people arrested but not necessarily convicted of a crime is heartening to backers of the policy but disappointing to criminal-justice reformers, who view it as an invasion of privacy.
Others also worry the practice would adversely affect minorities.
In an interview aired Saturday on “America’s Most Wanted,” Obama expressed strong agreement as host John Walsh extolled the virtues of collecting DNA at the time of an arrest and putting it into a single, national database.
“We have 18 states who are taking DNA upon arrest,” Walsh said. “It’s no different than fingerprinting or a booking photo. (wtf?)… Since those states have been doing it, it has cleared 200 people that are innocent from jail.”
“It’s the right thing to do,” Obama replied. “This is where the national registry becomes so important, because what you have is individual states — they may have a database, but if they’re not sharing it with the state next door, you’ve got a guy from Illinois driving over into Indiana, and they’re not talking to each other.” …
http://www.politico.com/news/stories/0310/34097.html –that is some High-Grade Agitprop..
~~
http://www.amazon.com/Code-46-Tim-Robbins/dp/B00067BBMI
“Amazon.com
Like Gattaca did before it, Code 46 extrapolates from the present to posit a chilling, dystopian look at our genetically regimented future. In the corporate-controlled, near-future scenario presented by prolific director Michael Winterbottom and his regular screenwriter Frank Cottrell Boyce, nations and languages have merged to form a polyglot society in which genetic imperfections are avoided by the strict enforcement of Code 46, which prohibits sex between people who share 100%, 50%, or even 25% matching DNA. As an insurance-fraud investigator in Shanghai to investigate the issuance of forged passports (a major offense in an overcrowded world), Tim Robbins meets his prime suspect (Samantha Morton, echoing her role in Minority Report), and their violation of Code 46 has tragic and ultimately dehumanizing repercussions. Fascinating as a “what-if” scenario, Winterbottom’s film is more successful as a melancholy mood-piece than a science-fiction tale. While the plot and characters suffer from occasionally vague definition, Code 46 offers a fascinating study of human longing in an age of oppressive globalization. –Jeff Shannon
~~
March 16th, 2010 at 5:49 pm
Refining Capacitity is one part of it, Ownership Concentration, is another..
~~
(The following article by Rudolph J. R. Peritz is taken from the U.S. Department of State publication, Historians on America.)
The Sherman Anti-Trust Act of 1890
By Rudolph J. R. Peritz
In 1890, the United States pioneered competition law and significantly strengthened the future of free markets in the American system by adopting a new federal statute: the Sherman Anti-Trust Act. For the first time in history, a national government had taken responsibility to investigate and, if necessary, prosecute monopolies and price-fixing cartels. Over time, the results of this act, denounced by captains of industry at the time of its passage, would become clear. By limiting a business’s ability to dominate its competitors in the marketplace, the new law made the American economic system more dynamic and more open to new competitors and new technologies. The next century saw great economic expansion and heightened living standards in the United States…”
http://www.america.gov/st/educ-english/2008/April/20080423212813eaifas0.42149.html
http://legal-dictionary.thefreedictionary.com/Sherman+Anti-Trust+Act
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Sherman+Anti-Trust+Act
it, too, was Good, while it lasted..
is The Sherman Anti-Trust Act dead letter Law?
what say ye AG “Bag” Holder?
March 16th, 2010 at 5:51 pm
“Oil companies look at permanent refinery cutbacks”
I do not understand why folks are projecting paranoia about future criticism.
The point of the article is that for a variety of reasons there is a permanent paradigm shift in fuel consumption to a lower level. This was not anticipated by companies who invested billions in refinery upgrades who now wish they never had because they are losing money hand over fist.
They acknowledge, in spite of their best projections of future demand, they were wrong. They are saying they don’t need additional refineries now, they will never need additional refineries and in fact they must permanently shut down and write off many of their least efficient operations.
Consider it a victory and move on.
March 16th, 2010 at 6:20 pm
Re: refineries – read between the lines. It says gasoline refined from increasingly expensive to extract oil sources is not competitive with a great variety of energy sources, most especially electricity sources, on $/mile basis. Demand will not return before technology is available to consumers that permits this trade-off.
Nissan says they’ll sell you one of their new-fangled electric cars later this year (in select markets) at a minimal price premium compared to it’s gasoline competitors. And the Chinese say they’ll be selling their first cars in the US as early as December. Since these too will be electric, this could make the economics even more convincing for consumers, further chipping away at refinery demand. With 100K mile battery warranties and ~$.02 per mile electricity costs when you charge while you sleep, the economics for consumers will become as apparent as the idea that you should trade your land line for a cell was a decade ago (i.e. it’ll take a while for people to accept the new reality, but eventually most will). Investing in oil refineries would be like investing in two strand copper for phone lines when cell phones were poised to take off. I suspect that future volatility and demand for other refined products may mean that those few refineries which do survive could be profitable though, in the long run.
March 16th, 2010 at 6:40 pm
I am disappointed with the LA Times didn’t speak at all about one of the most important factors in the refinery cuts. I have no doubt that the US will consume more petroleum products in 5 years than we did this year if Cap & Trade and other industry killing legislation doesn’t get enacted. I would guess that if Cap & Trade was not in the works, there would be no permanent cuts in production and prices would remain low. This is Obama & Al Gore’s dream since they look to profit personally from Cap & Trade. Please wake up the people of California to the effects of bad legislation that will only cause the rich to get richer and the poor to be punished by unneededly high energy prices!
March 16th, 2010 at 6:46 pm
The Pew “”Project for Excellence in Journalism” made its annual report, “The state of the news media” yesterday (http://www.stateofthemedia.org/2010). Mostly just the usual depressing news about falling revenues in the MSM. But one interesting quote:
“Is there some collaborative model that would allow citizens and journalists to have the best of both worlds and add more capacity here?”
How about making use of the expertise of bloggers? I’m glad Reuters took on Felix Salmon, but rather than using him as an entertaining blogger, they should have him collaborating with their reporters, who often make mistakes he could correct. Most newspapers should stop trying to report on the housing market on their own, and just syndicate Calculated Risk. Barry does get some circulation, but a syndicated column on the direction of the markets would be a big step up from the usual commentary.
March 16th, 2010 at 6:51 pm
I am Googling the “creative destruction” strategy promulgated by Profs. Cloward & Piven of Columbia Univ. back in the 60’s, i.e., Overwhelm the Capitalist System with reckless financial demands until it implodes, after which the Marxists will build their Utopia.
Poss explanation of the current Municipal finance debacle (unfunded liabilities and pending backruptcies….)
March 16th, 2010 at 6:53 pm
Watching financial talking heads (and a few wannabes) on videos posted from this morning’s MSNBC’s Morning Joe.
http://www.msnbc.msn.com/id/3096434/ns/msnbc_tv/
then scroll down to Morning Joe and be sure to click 9 on the box above the video icons there so you can see all the MJ videos being offered. The Michael Lewis discussion is interesting, and Ratigan’s discussion of the resistance to the health care bill is cool, if familiar to most of the readers here. Worth watching: Mort Zuckerman having his butt handed to him by Lewis.
March 16th, 2010 at 7:04 pm
Re: Oil
By Jim Jubak
“What ever happened to $200-a-barrel oil?
Those 2008 predictions of sky-high prices may not have been as wrong as they were premature. ”
“Remember Arjun Murti’s time in the sun when, in May 2008, the analyst at Goldman Sachs predicted that oil would soon hit $200 a barrel? A number of other prognosticators weren’t far behind. T. Boone Pickens predicted in 2008 that oil would hit $150 before the year was out. Some guy named Jim Jubak in April 2008 called for $180 a barrel within two years.
In case you haven’t noticed, all of us were wrong. Oil peaked at $147 a barrel in summer 2008 and then plunged to $35 a barrel by June 2009.
Let me rephrase that: We weren’t wrong; we were early.”
http://articles.moneycentral.msn.com/Investing/JubaksJournal/will-oil-hit-200-dollars-after-all.aspx?OCID=eml_msnnl_6009.13.2.12&REFCD=emmsnnl_6009.13.2.12
March 16th, 2010 at 7:13 pm
Toyota closing CA plant ending 4,700 jobs in state where unemployment rate already 12.5%, and 20 % in some counties:
http://www.nytimes.com/2010/03/16/opinion/16herbert.html?th&emc=th
California has been very, very good to Toyota. It is one of the largest markets in the world for the popular Prius hybrid. Nearly 18 percent of all Toyotas sold in the U.S. are sold in California. The state has showered the company with benefits, including large-scale infrastructure improvements for its operations and millions of dollars for worker training. California is one of the key reasons that Toyota is the wealthiest carmaker on the planet. ….
The company is planning to shut down the assembly plant in Fremont, Calif., that makes Corollas and the Tacoma compact pickup. The plant closure will throw 4,700 experienced, highly skilled and dedicated employees onto the street during the worst job market since the Depression, and it will jeopardize nearly 20,000 other jobs around the state. …
The NUMMI plant is a heck of a lot more viable than the nonstop dissembling of top Toyota executives. The company could keep the plant open and profitable if it wanted to. But, instead, it has decided to shift the production of these vehicles to Japan, Canada, Mexico and Texas. …
Those who are trumpeting the alleged fact that the recession is over should consider that the unemployment rate in California in January (the last month for which complete statistics are available) was a mind-numbing 12.5 percent. That was the fifth worst in the nation. In eight California counties, the jobless rate — not the underemployment rate, mind you, but the official jobless rate — was higher than 20 percent. Those counties are suffering through a depression.
Green shoots provided by NAFTA. As if Toyota needed more bad PR.
Well, I guess the elites know they are in control.
March 16th, 2010 at 7:18 pm
Chuck Schumer engaging in the great American tradition of finding foreign scapegoats for homegrown problems. I know he’s making a fool of himself trying to gain votes, but would somebody please shut this idiot up. He’s such an embarrassment.
March 16th, 2010 at 7:26 pm
From SFGate:
http://www.sfgate.com/cgi-bin/article.cgi?f=/baycitynews/a/2010/03/16/cranes16.DTL
A ship carrying three new container cranes arrived at the Port of Oakland this morning after passing under the Golden Gate Bridge and the Bay Bridge with more room to spare than officials had anticipated.
The three 253-foot-tall cranes arrived from Shanghai, China, and had to be folded over to pass cleanly under the bridges.
A commenter: “The Chinese cranes said ‘hi’ to the Chinese steel on the new Bay Bridge span.”
March 16th, 2010 at 7:26 pm
Toyota was targeted and they got the point. Japan is re-thinking its relationship with China.
Thanks for the art.
March 16th, 2010 at 7:49 pm
“$4B pulled from stock funds in February”.
Right before the longest up run since 1982 and MTD +5% increase in March.
Shows flows = 0. Its actually logical that price adjusts to lead flows. (High prices PRE-cede inflows, and low prices (late Jan) PRECEDE outflows (as cited?). Maybe.
March 16th, 2010 at 7:51 pm
Corporate Debt Coming Due May Squeeze Credit
“With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.
The United States government alone will need to borrow nearly $2 trillion in 2012, to bridge the projected budget deficit for that year and to refinance existing debt.
Indeed, worries about the growth of national, or sovereign, debt prompted Moody’s Investors Service to warn on Monday that the United States and other Western nations were moving “substantially” closer to losing their top-notch Aaa credit ratings.
Sovereign debt aside, the approaching scramble for corporate financing could strain the broader economy as jobs are cut, consumer spending is scaled back and credit is tightened for both consumers and businesses. “
March 16th, 2010 at 7:59 pm
I haven’t read all the replies and I’m probably on the losing side of this post, but I happen to agree with Mr. Mason on this. The arrogance of the U.S. is showing after selling ourselves down the toilet. Why should China change when we gave them a path that helps them take the advantage?
http://seekingalpha.com/article/193689-why-should-china-change?source=hp_wc
March 16th, 2010 at 8:41 pm
“In recent years, economic research has suggested that moderate changes in the tax law don’t actually have a huge impact on growth. You don’t need econometrics to grasp this, either. Just look at the last 20 years. Economic growth after Bill Clinton’s tax increases was far more rapid than economic growth after George W. Bush’s tax cuts. Despite the Bush tax cuts, average annual growth over the last decade — even before the Great Recession began — was slower than in any decade since World War II.
The biggest hurdle to solving the deficit problem will be politics, not economics.”
http://www.nytimes.com/2010/03/17/business/economy/17leonhardt.html?hp
March 16th, 2010 at 9:20 pm
tawm, good topic..
see: “ Can capitalism survive? No. I do not think it can.” Thus opens Schumpeter’s prologue to a section of his 1942 book, Capitalism, Soci@lism and Democracy. One might think, on the basis of the quote, that Schumpeter was a M@rxist. But the analysis that led Schumpeter to his conclusion differed totally from Karl M@rx’s. M@rx believed that capitalism would be destroyed by its enemies (the proletariat), whom capitalism had purportedly exploited, and he relished the prospect. Schumpeter believed that capitalism would be destroyed by its successes, that it would spawn a large intellectual class that made its living by attacking the very bourgeois system of private property and freedom so necessary for the intellectual class’s existence. And unlike M@rx, Schumpeter did not relish the destruction of capitalism. “If a doctor predicts that his patient will die presently,” he wrote, “this does not mean that he desires it.”
Capitalism, Soci@lism, and Democracy is much more than a prognosis of capitalism’s future. It is also a sparkling defense of capitalism on the grounds that capitalism sparks entrepreneurship. Indeed, Schumpeter was among the first to lay out a clear concept of entrepreneurship. He distinguished inventions from the entrepreneur’s innovations. Schumpeter pointed out that entrepreneurs innovate not just by figuring out how to use inventions, but also by introducing new means of production, new products, and new forms of organization. These innovations, he argued, take just as much skill and daring as does the process of invention…”
http://www.econlib.org/library/Enc/bios/Schumpeter.html
v.
“When “Keynes at Harvard” was first published it was attacked by a group of economists because Alfred Marshall, the late British economist and Joseph Schumpeter, the Austrian economist, were mentioned as soci@lists. Soon it became apparent that this was an oblique attack motivated by other considerations. Most of the criticisms came from within the Economists National Committee on Monetary Policy. Since we were in touch with Professor Olin Glen Saxon, a member of the N.C.M.P., we were able to trace the Furies from the front row, so to speak.
In a conference at Yale University Professor Saxon observed that most of the criticism was motivated by envy and jealousy over the fact that this was the first factual exposure of the soci@list bias underlying Keynes’ theories. He pointed out that alleged conservative economists smarting under the embarrassment of wrestling with the Keynesian web, “strained at a gnat, and swallowed a camel.”
Strenuous efforts were made by these ‘conservative’ economists to uncover the “professors” who were the architects of Keynes at Harvard. Confidential information passed through the academic underworld that no less than five apostate economists were the compilers of the book. Now the humiliating knowledge that the book was researched and written without imposing academic credentials. Professor Saxon vetted the book after it was set in page proof, only making a few last minute suggestions. He fully agreed that both Marshall and Schumpeter were soci@lists to the bone. He knew Schumpeter intimately and was convinced that he was a soci@list of the F@bian variety…”
http://keynesatharvard.org/book/KeynesatHarvard-ch11.html
@=a, WP-estilio..
March 16th, 2010 at 9:40 pm
I just finished reading Denninger’s latest ticker:
http://market-ticker.denninger.net/archives/2087-A-Very-Serious-Warning-To-Nancy-Pelosi.html
Can someone clue me in what the heck he is talking about?
March 16th, 2010 at 10:14 pm
@Pete from CA:
Conservatives (particularly Tea Partiers) are being told that the House is not going to vote on the Senate Bill.
That actually has been debunked.
http://www.huffingtonpost.com/2010/03/16/health-care-opponents-dem_n_501353.html
March 16th, 2010 at 11:04 pm
@Pete: deem and pass.
I find this thread fascinating in that you link to clear constitutional text that the court ruled rule against in a previously Pelosi law suit challenging it as unconstitutional.
There is so much BS in the way Congress is run to avoid being on record for unpopular votes.
Why don’t we just rename our Congress JUNTA and be done with it.
Time for a change you can believe in. And trust.
March 16th, 2010 at 11:38 pm
Man, I still can’t believe Elliot Spitzer is out there writing serious sounding shit after the 100% fraudulent existence he pretended was his gravitas was exposed, sinking ny even deeper into it’s cesspool of malfeasance.
It still pisses me off to see how he thinks we wants to hear all the important sounding stuff he wants to tell us about. Piss off Spitz, and McConnell and Gregg and Shelley Silver and the rest of the lying, self important morons who exist to get re-elected by virtue of america’s apathy and corruption alone.
I mean, DAMN man. Shut up and get unemployed already, like the rest of us.
March 16th, 2010 at 11:42 pm
Thanks for the link OkieLawyer.
March 17th, 2010 at 12:49 am
So true, Venn. I used to hear that one a lot. And, when years ago when I was dumber than I am now, I used to repeat it a lot.
March 17th, 2010 at 12:56 am
>> Conservatives don’t have a monopoly on cluelessness, but they do have a controlling market share.
LOL! Can’t wait for to see the sales promotions later this year, to see how they both upgrade their packaging.
March 17th, 2010 at 1:04 am
DC @ 8:41, I wish it were true. But, unfortunately, I consider that analysis superficial. So many larger factors were at work over many, many years.
March 17th, 2010 at 10:07 am
also worth reading today…
” Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Hypo Real Estate Holding AG’s Depfa Bank Plc unit were charged with fraud linked to the sale of derivatives to the City of Milan.
Judge Simone Luerti scheduled the trial of the four firms, 11 bankers and two former city officials for May 6, Prosecutor Alfredo Robledo said after a hearing in Milan today. The banks allegedly misled the city on swaps that adjusted interest payments on 1.7 billion euros ($2.3 billion) of borrowing”
http://www.bloomberg.com/apps/news?pid=20601087&sid=avhfZfkuB3T0&pos=2