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Obama Backpedals To Save His Presidency
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President Obama's demotion of his Chief of Staff, Bill Daley, has drawn quite a bit of attention – despite efforts by the White House to downplay the significance of that event. The demotion of Daley is significant because it indicates that Obama is now trying to back away from his original strategy of helping Wall Street at the expense of Main Street. This move appears to be an attempt by Obama to re-cast himself as a populist, in response to the widespread success of the Occupy Wall Street movement.
In September of 2010, I wrote a piece entitled, "Where Obama Went Wrong". Despite the subsequent spin by right-wing pundits, to the effect that voters had been enamored with the Tea Party's emphasis on smaller government, the true reasons for the mid-term disaster for the Democrats had become obvious:
During the past week, we've been bombarded with explanations from across the political spectrum, concerning how President Obama has gone from wildly-popular cult hero to radioactive force on the 2010 campaign trail. For many Democrats facing re-election bids in November, the presence of Obama at one of their campaign rallies could be reminiscent of the appearance of William Macy's character from the movie, The Cooler. Wikipedia's discussion of the film provided this definition:
In gambling parlance, a "cooler" is an unlucky individual whose presence at the tables results in a streak of bad luck for the other players.
The American people are hurting because their President sold them out immediately after he was elected. When faced with the choice of bailing out the zombie banks or putting those banks through temporary receivership (the "Swedish approach" – wherein the bank shareholders and bondholders would take financial "haircuts") Obama chose to bail out the banks at taxpayer expense. So here we are . . . in a Japanese-style "lost decade". In case you don't remember the debate from early 2009 – peruse this February 10, 2009 posting from the Calculated Risk website. After reading that, try not to cry after looking at this recent piece by Barry Ritholtz of The Big Picture entitled, "We Should Have Gone Swedish . . ."
Back in December of 2009, Bill Daley – a minion of The Dimon Dog at JPMorgan Chase – wrote an op-ed piece for The Washington Post, which resonated with Wall Street's tool in the White House. Daley claimed that Obama and other Democrats were elected to office in 2008 because voters had embraced some pseudo-centrist ideas, which Daley referenced in these terms:
These independents and Republicans supported Democrats based on a message indicating that the party would be a true Big Tent — that we would welcome a diversity of views even on tough issues such as abortion, gun rights and the role of government in the economy.
All that is required for the Democratic Party to recover its political footing is to acknowledge that the agenda of the party's most liberal supporters has not won the support of a majority of Americans — and, based on that recognition, to steer a more moderate course on the key issues of the day, from health care to the economy to the environment to Afghanistan.
Unfortunately, Obama was pre-disposed to accept this rationale, keeping his policy decisions on a trajectory which has proven as damaging to his own political future as it has been to the future of the American middle class.
On November 8, Jonathan Chait wrote a piece for New York magazine's Daily Intel blog, wherein he explained that the demotion of Bill Daley revealed a "course correction" by Obama, in order to a pursue a strategy "in line with the realities of public opinion". Jonathan Chait explained how the ideas espoused by Daley in his 2009 Washington Post editorial, had been a blueprint for failure:
Daley, pursuing his theory, heavily courted business leaders. He made long-term deficit reduction a top priority, and spent hours with Republican leaders, meeting them three-quarters of the way in hopes of securing a deal that would demonstrate his centrism and bipartisanship. The effort failed completely.
The effort failed because Daley's analysis – which is also the analysis of David Brooks and Michael Bloomberg – was fatally incorrect. Americans were not itching for Obama to make peace with corporate America. Americans are in an angry, populist mood – distrustful of government, but even more distrustful of business. In the most recent NBC/The Wall Street Journal poll, 60 percent of Americans strongly agreed with the following statement:
The current economic structure of the country is out of balance and favors a very small proportion of the rich over the rest of the country. America needs to reduce the power of major banks and corporations and demand greater accountability and transparency. The government should not provide financial aid to corporations and should not provide tax breaks to the rich.
At the website of economist Brad DeLong, a number of comments were posted in response to Jonathan Chait's essay. One can only hope that our President has the same, clear understanding of this situation as do the individuals who posted these comments:
Full Employment Hawk said:
. . . The defeat of the Democrats was due to the fact that the Obama administration did too little, not because it did too much.
Daley's view that it was because the moderately progressive policies of the Obama administration were too far left for the center was totally wrong. And listening to Daley's advice to further shift from job creation to deficit reduction was a major blunder that reinforced the blunder of the first two years of dropping the ball on making the economy grow fast enough for the unemployment rate to be coming down significantly by the time of the Fall election.
In reply to the comment posted by Full Employment Hawk, a reader, identified as "urban legend" said this:
Obama should have been making the point over and over and over and over that getting more money into the hands of more Americans — principally right now by creating jobs — is the most pro-business stance you can take. Continuing to let the 1% dictate everything in their favor is the most anti-business thing you can do. We are the ones who want demand to rise for the goods and services of American business. Right-wingers don't care much about that. What they do care about is maintaining their theology against all the evidence of its massive failure.
At Politico, Jonathan Chait's essay provoked the following comment from Ben Smith:
It is entirely possible that no staff shift, and no ideological shift, can save Obama from a bad economy. You don't get to run controlled experiments in politics.
But it does seem worth noting that this argument pre-dates Daley: It's the substance of the 2008 debate between Hillary Clinton and Obama, with Clinton portraying Obama as naive in his dream of bipartisan unity, and the Republicans as an implacable foe. It's the Clinton view, the '90s view, that has prevailed here.
Indeed, it would be nice for all of us if Obama could get a "Mulligan" for his mishandling of the economic crisis. Unfortunately, this ain't golf.
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Trouble Ahead
September 19th, 2011 Posted in Uncategorized
Sep, 19 2011
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Forget about what you've been told by the "rose-colored glasses" crowd. We are headed for more economic trouble. On September 17, economist Lakshman Achuthan gave his prognosis for the economy to Guy Raz, of NPR's All Things Considered:
Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute, says all of his economic indicators point to more sputtering ahead.
"The risk of a new recession is quite high," he says.
In Toronto, Michael Babad of The Globe And Mail saw fit to focus on the latest forecast from "Dr. Doom":
Nouriel Roubini, the New York University professor who forecast the financial crisis, went further today, warning that "we are entering a recession." The question isn't whether there will be a double-dip, he said on Twitter, but rather how deep it will be.
And the answer, added the chairman and co-founder of Roubini Global Economics, depends on the response of policy makers and developments in the euro zone's ongoing crisis.
As Gretchen Morgenson reported for The New York Times, the European sovereign debt crisis is already beginning to "wash up on American shores". The steep exposure of European banks to the sovereign debt of eurozone countries has become a problem for the United States:
Some of these banks are growing desperate for dollars. Fearing the worst, investors are pulling back, refusing to roll over the banks' commercial paper, those short-term i.o.u.'s that are the lifeblood of commerce. Others are refusing to renew certificates of deposit. European banks need this money, in dollars, to extend loans to American companies and to pay their own debts.
Worries over the banks' exposure to shaky European government debt have unsettled markets over there – shares of big French banks have taken a beating – but it is unclear how much this mess will hurt the economy back here. American stock markets, at least, seem a bit blasé about it all: the Standard & Poor's 500-stock index rose 5.3 percent last week.
Last Thursday, I expressed my suspicion that the recent stock market exuberance was based on widespread expectation of another round of quantitative easing. This next round is being referred to as "QE3". QE3 is good news for Wall Street because of those POMO auctions, wherein the New York Fed purchases Treasury securities – worth billions of dollars – on a daily basis. After the auctions, the Primary Dealers take the sales proceeds to their proprietary trading desks, where the funds are leveraged and used to purchase high-beta, Russell 2000 stocks. You saw the results during QE2: A booming stock market – despite a stalled economy.
I believe that the European debt situation will become the controlling factor, which will turn the tide in favor of QE3 at the September 20-21 Federal Open Market Committee meeting.
Most pundits have expressed doubts that the Fed would undertake another round of quantitative easing. Bill McBride of Calculated Risk put it this way:
QE3 is unlikely at the September meeting, but not impossible – however most observers think the FOMC will announce a program to change the composition of their balance sheet (extend maturities). It is also possible that the FOMC will announce a reduction in the interest rate paid on excess reserves (currently 0.25%).
Tim Duy expressed a more skeptical outlook at his Fed Watch website:
Even more unlikely is another round of quantitative easing. I don't think there is much appetite at the Fed for additional asset purchases given the inflation numbers and the stability of longer-term inflation expectations relative to the events that prompted last fall's QE2.
On the other hand, hedge fund manager Bill Fleckenstein presents a more persuasive case that the Fed can be expected to react to the "massive red ink in world equity markets" (due to floundering European bank stocks) by resorting to its favorite panacea – money printing:
So, to sum up my expectations, I believe that not only will we get a bold new round of QE from the Fed this week, but other central banks will join the party. (The Bank of Japan and Swiss National Bank are already printing money in an attempt to weaken their currencies.) If that happens, I believe that assets (stocks, bonds and commodities) will rally rather dramatically, at least for a while, with the length and size of the rally depending on the individual idea/asset.
If no QE is announced, and we basically see nothing done, it will probably be safe to short stocks for investors who can handle that strategy. Markets would be pummeled until the central planners (i.e., these bankers) are forced to react to the carnage. Such is the nature of the paper-money-central-bank-moral-hazard standard that is currently in place.
The Fed will announce its decision at 2:15 on Wednesday, September 21. Even if the FOMC proceeds with QE3, its beneficial effects will (again) be limited to the stock market. The real American economy will continue to stagnate through its "lost decade", which began in 2007.
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Morgenson Watch Continues
May 30th, 2011 Posted in Uncategorized
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I was recently reminded of the late Tanta (a/k/a Doris Dungey) of the Calculated Risk blog, who wrote the recurring "Morgenson Watch" for that site.
As soon as I saw the title of Gretchen Morgenson's most recent article at the top of the Sunday link list at Real Clear Politics, I suspected there would be trouble: "U.S. Has Binged. Soon It'll Be Time to Pay the Tab." After reading as far as the first sentence of the second paragraph, my concern was validated. Here's how the piece began:
SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation's growing debt load. This $14.3 trillion issue is front and center – exactly where it should be.
Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy.
The Peterson Institute was formerly the Institute for International Economics, founded by C. Fred Bergsten. It was subsequently taken over by the Peter G. Peterson Foundation, a foundation established and managed by Richard Nixon's former Commerce Secretary (and co-founder of Blackstone Group), Pete Peterson. The Peterson Institute is a "think tank" (i.e. propaganda mill) most recognized for its advocacy of "economic austerity" (which usually involves protecting the interests of the wealthy at the expense of the middle class and the impoverished).
Yves Smith of Naked Capitalism, is always quick to rebut the pronouncements of those economists, acting as "hired guns" to spread the gospel of the Peterson Institute. Needless to say, once Gretchen Morgenson began to parrot the Peterson Institute dogma in her aforementioned article, Yves Smith didn't hesitate to pounce:
I'm generally a Gretchen Morgenson fan, since she's one of the few writers with a decent bully pulpit who regularly ferrets out misconduct in the corporate and finance arenas. But when she wanders off her regular terrain, the results are mixed, and her current piece is a prime example. She also sometimes pens articles based on a single source, which creates the risk of serving as a mouthpiece for a particular point of view.
(As an aside, a good example of this process has been Ms. Morgenson's continuing fixation on "mortgage mania" as a cause of the financial crisis after having been upbraided by Barry Ritholtz – twice – for "pushing the Fannie-Freddie CRA meme".)
After pointing out Morgenson's uncritical acceptance of the economic model used in the Peterson Institute report (by Gagnon and Hinterschweiger) Yves Smith directed our attention to the very large elephant in the room: the proven fact that au-scare-ity doesn't work in our post-financial crisis, anemic-growth milieu. Ms. Smith focused on this aspect of the Peterson Institute report:
It also stunningly shows the howler of the Eurozone showing improvements in debt to GDP ratios as a result of the austerity programs being implemented. The examples of Latvia and Ireland have demonstrated that austerity measures have worsened debt to GDP ratios, dramatically in both cases, and the same deflationary dynamics look to be kicking in for Spain.
The article repeats the hoary cliche that deficit cuts must be made to "reassure the markets" as in appease the Bond Gods. Gee, how is that working out in Europe, the Peterson Institute's obedient student?
Ms. Smith supported her argument with this report, which appeared in Bloomberg News on May 27:
European confidence in the economic outlook weakened for a third straight month in May as the region's worsening debt crisis and surging commodity costs clouded growth prospects.
An index of executive and consumer sentiment in the 17- member euro region slipped to 105.5 from 106.1 in April, the European Commission in Brussels said today. Economists had forecast a drop to 105.7, the median of 27 estimates in a Bloomberg survey showed. The euro-area economy is showing signs of a slowdown as governments toughen austerity measures to lower budget gaps as investors grow increasingly concerned that Greece may default, while oil-driven inflation squeezes household incomes. European manufacturing growth slowed this month….
Be sure to read Yves Smith's entire essay, which addressed the tired canard about those phantom "bond vigilantes", etc. Ms. Smith's closing paragraph deserves repetition:
But the idea of government spending has become anathema in the US, despite plenty of targets (start with our crumbing infrastructure). The banks got first dibs on the "fix the economy" money in the crisis, and continue to balk at measures that would shrink a bloated and highly leveraged banking sector down to a more reasonable size. Evidence already shows the size of the banking sector is constraining growth, yet a full bore campaign is on to gut social spending out of a concern that sometime down the road the size of the government sector will serve as a drag on the economy. In addition, the banksters need to preserve their ability to go back to the well the next time they crash the markets for fun and profit. So the attack on deficits is financial services industry ideology, packaged to make it look like it's good for the little guy. We have too many people who should know better like Morgenson enabling it.
The reader comments to Ms. Smith's essay were quite interesting. Many of the readers who have been outraged by Smith's ongoing rebuttals to the Peterson Institute gospel and other Austerian dogma would do well to familiarize themselves with this bit of legalese:
EXCLUSION OF SOCIAL SECURITY FROM ALL BUDGETS Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104 Stat. 1388-623, provided that: Notwithstanding any other provision of law, the receipts and disbursements of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund shall not be counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of – (1) the budget of the United States Government as submitted by the President, (2) the congressional budget, or (3) the Balanced Budget and Emergency Deficit Control Act of 1985.
I include myself among those who are "generally" Gretchen Morgenson fans. Nevertheless, it has become obvious that with Tanta gone, the spirit of "Morgenson Watch" shall endure for as long as the frailties of being a New York Times pundit continue to manifest themselves.
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The Wrong Playbook
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President Obama is still getting it wrong. Nevertheless, we keep hearing that he is such a clever politician. Count me among those who believe that the Republicans are setting Obama up for failure and a loss to whatever goofball happens to win the GOP Presidential nomination in 2012 – solely because of a deteriorating economy. Obama had the chance to really save the economy and "right the ship". When he had the opportunity to confront the greatest economic crisis since the Great Depression, President Obama violated Rahm Emanuel's infamous doctrine, "You never want a serious crisis to go to waste". The new President immediately made a point of squandering the opportunity to overcome that crisis. I voiced my frustration about this on October 7, 2010:
The trouble began immediately after President Obama assumed office. I wasn't the only one pulling out my hair in February of 2009, when our new President decided to follow the advice of Larry Summers and "Turbo" Tim Geithner. That decision resulted in a breach of Obama's now-infamous campaign promise of "no more trickle-down economics". Obama decided to do more for the zombie banks of Wall Street and less for Main Street – by sparing the banks from temporary receivership (also referred to as "temporary nationalization") while spending less on financial stimulus. Obama ignored the 50 economists surveyed by Bloomberg News, who warned that an $800 billion stimulus package would be inadequate. At the Calculated Risk website, Bill McBride lamented Obama's strident posturing in an interview conducted by Terry Moran of ABC News, when the President actually laughed off the idea of implementing the so-called "Swedish solution" of putting those insolvent banks through temporary receivership.
In September of 2009, I discussed a fantastic report by Australian economist Steve Keen, who explained how the "money multiplier" myth, fed to Obama by the very people who caused the financial crisis, was the wrong paradigm to be starting from in attempting to save the economy. The Australian professor (Steve Keen) was right and Team Obama was wrong. In analyzing Australia's approach to the financial crisis, economist Joseph Stiglitz made this observation on August 5, 2010:
Kevin Rudd, who was prime minister when the crisis struck, put in place one of the best-designed Keynesian stimulus packages of any country in the world. He realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place.
Rudd's stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries.
On October 6, 2010, Michael Heath of Bloomberg BusinessWeek provided the latest chapter in the story of how America did it wrong while Australia did it right:
Australian Employers Added 49,500 Workers in September
Australian employers in September added the most workers in eight months, driving the country's currency toward a record and bolstering the case for the central bank to resume raising interest rates.
The number of people employed rose 49,500 from August, the seventh straight gain, the statistics bureau said in Sydney today. The figure was more than double the median estimate of a 20,000 increase in a Bloomberg News survey of 25 economists. The jobless rate held at 5.1 percent.
Meanwhile, America's jobless rate has been hovering around 9 percent and the Federal Reserve found it necessary to print-up another $600 billion for a controversial second round of quantitative easing. If that $600 billion had been used for the 2009 economic stimulus (and if the stimulus program had been more infrastructure-oriented) we would probably have enjoyed a result closer to that experienced by Australia. Instead, President Obama chose to follow Japan's strategy of perpetual bank bailouts (by way of the Fed's "zero interest rate policy" or ZIRP and multiple rounds of quantitative easing), sending America's economy into our own "lost decade".
The only member of the Clinton administration who deserves Obama's ear is being ignored. Bill Clinton's Secretary of Labor, Robert Reich, has been repeatedly emphasizing that President Obama is making a huge mistake by attempting to follow the Clinton playbook:
Many of President Obama's current aides worked for Clinton and vividly recall Clinton's own midterm shellacking in 1994 and his re-election two years later – and they think the president should follow Clinton's script. Obama should distance himself from congressional Democrats, embrace deficit reduction and seek guidance from big business. They assume that because triangulation worked for Clinton, it will work for Obama.
They're wrong. Clinton's shift to the right didn't win him re-election in 1996. He was re-elected because of the strength of the economic recovery.
By the spring of 1995, the American economy already had bounced back, averaging 200,000 new jobs per month. By early 1996, it was roaring – creating 434,000 new jobs in February alone.
Obama's 2011 reality has us losing nearly 400,000 jobs per month. Nevertheless, there is this misguided belief that the "wealth effect" caused by inflated stock prices and the current asset bubble will somehow make the Clinton strategy relevant. It won't. Instead, President Obama will adopt a strategy of "austerity lite", which will send America into a second recession dip and alienate voters just in time for the 2012 elections. Professor Reich recently warned of this:
House Majority Leader Eric Cantor recently stated the Republican view succinctly: "Less government spending equals more private sector jobs."
In the past I've often wondered whether they're knaves or fools. Now I'm sure. Republicans wouldn't mind a double-dip recession between now and Election Day 2012.
They figure it's the one sure way to unseat Obama. They know that when the economy is heading downward, voters always fire the boss. Call them knaves.
What about the Democrats? Most know how fragile the economy is but they're afraid to say it because the White House wants to paint a more positive picture.
And most of them are afraid of calling for what must be done because it runs so counter to the dominant deficit-cutting theme in our nation's capital that they fear being marginalized. So they're reduced to mumbling "don't cut so much." Call them fools.
If inviting a double-dip recession weren't dumb enough – how about a second financial crisis? Just add more systemic risk and presto! The banks won't have any problems because the Fed and the Treasury will provide another round of bailouts. Edward Harrison of Credit Writedowns recently wrote an essay focused on Treasury Secretary Geithner's belief that we need big banks to be even bigger.
Even if the Republicans nominate a Presidential candidate who espouses a strategy of simply relying on Jesus to extinguish fires at offshore oil rigs and nuclear reactors – Obama will still lose. May God help us!
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Some Quick Takes On The Financial Crisis Inquiry Report
January 31st, 2011 Posted in Uncategorized
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The official Financial Crisis Inquiry Report by the Financial Crisis Inquiry Commission (FCIC) has become the subject of many turgid commentaries since its January 27 release date. The Report itself is 633 pages long. Nevertheless, if you hope to avoid all that reading by relying on reviews of the document, you could easily end up reading 633 pages of commentary about it. By that point, you might be left with enough questions or curiosity to give up and actually read the whole, damned thing. (Here it is.) If you are content with reading the 14 pages of the Commission's Conclusions, you can find those here. What follows is my favorite passage from that section:
We conclude widespread failures in financial regulation and supervision proved devastating to the stability of the nation's financial markets. The sentries were not at their posts, in no small part due to the widely accepted faith in the self-correcting nature of the markets and the ability of financial institutions to effectively police themselves. More than 30 years of deregulation and reliance on self-regulation by financial institutions, championed by former Federal Reserve chairman Alan Greenspan and others, supported by successive administrations and Congresses, and actively pushed by the powerful financial industry at every turn, had stripped away key safeguards, which could have helped avoid catastrophe. This approach had opened up gaps in oversight of critical areas with trillions of dollars at risk, such as the shadow banking system and over-the-counter derivatives markets. In addition, the government permitted financial firms to pick their preferred regulators in what became a race to the weakest supervisor.
In order to help save you some time and trouble, I will provide you with a brief roadmap to some of the commentary that is readily available:
Gretchen Morgenson of The New York Times introduced her own 1,257-word discourse in this way:
For those who might find the report's 633 pages a bit daunting for a weekend read, we offer a Cliffs Notes version.
Let's begin with the Federal Reserve, the most powerful of financial regulators. The report's most important public service comes in its recitation of how top Fed officials, both in Washington and in New York, fiddled while the financial system smoldered and then burned. It is disturbing indeed that this institution, defiantly inert and uninterested in reining in the mortgage mania, received even greater regulatory powers under the Dodd-Frank law that was supposed to reform our system.
(I find it disturbing that Ms. Morgenson is still fixated on "mortgage mania" as a cause of the crisis after having been upbraided by Barry Ritholtz – twice – for "pushing the Fannie-Freddie CRA meme".)
At her Naked Capitalism blog, Yves Smith focused more intently on what the FCIC Report didn't say, as opposed to what it actually said:
The FCIC has also been unduly close-lipped about their criminal referrals, refusing to say how many they made or giving a high-level description of the type of activities they encouraged prosecutors to investigate. By contrast, the Valukas report on the Lehman bankruptcy discussed in some detail whether it thought civil or criminal charges could be brought against Lehman CEO Richard Fuld and chief financial officers chiefs Chris O'Meara, Erin Callan and Ian I Lowitt, and accounting firm Ernst & Young. If a report prepared in a private sector action can discuss liability and name names, why is the public not entitled to at least some general disclosure on possible criminal actions coming out of a taxpayer funded effort? Or is it that the referrals were merely to burnish the image of the report, and are expected to die a speedy death?
At his Calculated Risk blog, Bill McBride corroborated one of the Report's Conclusions, by recounting his own experience. After quoting some of the language supporting the point that the crisis could have been avoided if the warning signs had not been ignored, due to the "pervasive permissiveness" at the Federal Reserve, McBride recalled a specific example:
This is absolutely correct. In 2005 I was calling regulators and I was told they were very concerned – and several people told me confidentially that the political appointees were blocking all efforts to tighten standards – and one person told me "Greenspan is throwing his body in front of all efforts to tighten standards".
The dissenting views that discount this willful lack of regulation are absurd and an embarrassment for the authors.
William Black wrote an essay criticizing the dissenters themselves – based on their experience in developing the climate of financial deregulation that facilitated the crisis:
The Commission is correct. Absent the crisis was avoidable. The scandal of the Republican commissioners' apologia for their failed anti-regulatory policies was also avoidable. The Republican Congressional leadership should have ensured that it did not appoint individuals who would be in the impossible position of judging themselves. Even if the leadership failed to do so and proposed such appointments, the appointees to the Commission should have recognized the inherent conflict of interest and displayed the integrity to decline appointment. There were many Republicans available with expertise in, for example, investigating elite white-collar criminals regardless of party affiliation. That was the most relevant expertise needed on the Commission.
At this point, the important question is whether the efforts of the Financial Crisis Inquiry Commission will result in any changes that could help us avoid another disaster. I'm not feeling too hopeful.
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Revenge Of The Blondes
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My vintage iPhone sputtered, stammered and finally stalled out as I tried to access an article about derivatives trading after clicking on the link. The process got as far as the appearance of the URL, which indicated that the source was The New York Times. I assumed that the piece had been written by Gretchen Morgenson and that I could read it once I sat down at my regular computer. Within moments, I was at The Big Picture website, where I found another link to the same article. This time it worked and I found that the piece had been written by Louise Story. "Wrong blonde", I thought to myself. It was at that point when I realized how much the world had changed from the days when "dumb blonde" jokes had been so popular. In fact, a vast amount of the skullduggery that caused and resulted from the financial crisis has been exposed and explained by women with blonde hair. After a handful of unscrupulous Wall Street bankers brought the world's financial system to the brink of collapse, an even smaller number of blonde, female sleuths set about unwinding this complex web of deceit for "the Average Joe" to understand. Here are a few of them:
Yves Smith
All right . . . It's an old picture from her days at Goldman Sachs. Cue-up Duran Duran. (It's almost as old as the photo of Ben Bernanke in my fake Chandon ad, based on their "Life needs bubbles" theme.) On most days, the first blog I access is Naked Capitalism. Its publisher and most frequent contributor is Yves Smith (a/k/a Susan Webber). At the Seeking Alpha website, a review of her recent book, ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism, began this way:
ECONNED is the most deeply researched and empirically validated account of the financial meltdown of 2008-2009 and how its unaddressed causes predict similar crises to come. As a long-time Wall Street veteran, Yves Smith, through her influential blog "Naked Capitalism" lucidly explains to her over 2500,000 unique visitors each month exactly what games market players use and how their "innovations" evolved over the years to take the rest of us to the cleaners. Smith is that unusual combination of scholar, expert, participant and teacher, who writes with a clarifying sense of moral outrage and disgust at the decline of ethics on Wall Street and financial markets.
Smith's daily list of Links at Naked Capitalism, covers a broad range of newsworthy subjects both within and beyond the financial realm. I usually find myself reading all of the articles linked on that page.
Gretchen Morgenson
Gretchen Morgenson is my favorite reporter for The New York Times. She has proven herself to be Treasury Secretary Turbo Tim Geithner's worst nightmare. Ms. Morgenson has caused Geithner so much agony, I would not be surprised to hear that he named his recent kidney stone after her. With Jo Becker, Ms. Morgenson wrote the most revealing essay on Geithner back in April of 2009. Once you've read it, you will have a better understanding of why Geithner gave away so many billions to the banksters as president of the New York Fed by way of Maiden Lane III. Morgenson subsequently wrote her own article on Maiden Lane III here.
Ms. Morgenson has many detractors. Most prominent among them was the late Tanta (a/k/a Doris Dungey) of the Calculated Risk blog, who wrote the recurring "Morgenson Watch" for that site. Yves Smith of Naked Capitalism (see above) accurately summed up the bulk of the criticism directed against Gretchen Morgenson:
Gretchen Morgenson is often a target of heated criticism on the blogosphere, which I have argued more than once is overdone. While her articles on executive compensation and securities litigation are consistently well reported, she has an appetite for the wilder side of finance, and often looks a bit out of her depth. Typically, she simply runs afoul of finance pedants, who jump on misapplication of industry jargon or minor errors when those (admittedly disconcerting) errors fail to derail the thrust of the argument.
A noted example of this was Morgenson's article of March 6 2010, in which she explained that Greece was hiding its financial obligations with "credit default swaps" rather than currency swaps. The bloggers who vigilantly watch for her to make such a mistake wouldn't let go of that one for quite a while. Nevertheless, I like her work. Nobody is perfect.
Louise Story
As I mentioned at the outset of this piece, Louise Story wrote the recent article for The New York Times, concerning anticompetitive practices in the credit derivatives clearing, trading and information services industries. Discussing that subject in a manner that can make it understandable to the "average reader" (someone with a high school education) is no easy task. Beyond that, Ms. Story was able to explain the frustrations of regulators, who had hoped that some degree of transparency could be introduced to the derivatives market as a result of the recently enacted, "Dodd-Frank" financial reform bill. It's an important article, which has drawn a good deal of well-deserved attention.
Last year, Ms. Story co-authored a New York Times article with Gretchen Morgenson, concerning collateralized debt obligations (CDOs) entitled, "Banks Bundled Bad Debt, Bet Against It and Won". As I pointed out at the time: Pay close attention to the explanation of how Tim Geithner retained a "special counselor" whose previous responsibilities included oversight of the parent company of an investment firm named Tricadia, Inc. Tricadia has the dubious honor of having helped cause the financial crisis by creating CDOs and then betting against them.
These three women, as well as a number of their non-blonde counterparts (including: Nomi Prins, Janet Tavakoli and Naomi Klein) have exposed a vast amount of the odious activities that caused the financial crisis. They have helped inform and educate the public on what the "good old boys" network of bankers, regulators and lobbyists have been doing to this country. The paradigm shift that took us beyond the sexist stereotype of the "dumb blonde" has brought our society to the point where women – often blonde ones – have intervened to alert the rest of us to the hazards caused by what Paul Farrell of MarketWatch described as "Wall Street's macho ego trip".
If you should come across someone who still tells "dumb blonde" jokes – ask that person if he (or she) has read ECONned.
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We Took The Wrong Turn
October 7th, 2010 Posted in Uncategorized
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The ugly truth has raised its head once again. We did it wrong and Australia did it right. It was just over a year ago – on September 21, 2009 – when I wrote a piece entitled, "The Broken Promise". I concluded that posting with this statement:
If only Mr. Obama had stuck with his campaign promise of "no more trickle-down economics", we wouldn't have so many people wishing they lived in Australia.
I focused that piece on a fantastic report by Australian economist Steve Keen, who explained how the "money multiplier" myth, fed to Obama by the very people who caused the financial crisis, was the wrong paradigm to be starting from in attempting to save the economy.
With the passing of time, it has become painfully obvious that President Obama took the country down the wrong path. The Australian professor (Steve Keen) was right and Team Obama was wrong. Economist Joseph Stiglitz made this observation on August 5, 2010:
Fast-forward to October 6, 2010. Michael Heath of Bloomberg BusinessWeek provided the latest chapter in the story of how America did it wrong while Australia did it right:
Australian Employers Added 49,500 Jobs in September
Meanwhile — back in the States — on October 6, ADP released its National Employment Report for September, 2010. It should come as no surprise that our fate is 180 degrees away from that of Australia: Private sector employment in the U.S. decreased by 39,000 from August to September on a seasonally adjusted basis, according to the ADP report. Beyond that, October 6 brought us a gloomy forecast from Jan Hatzius, chief U.S. economist for the ever-popular Goldman Sachs Group. Wes Goodman of Bloomberg News quoted Hatzius as predicting that the United States' economy will be "fairly bad" or "very bad" over the next six to nine months:
"We see two main scenarios," analysts led by Jan Hatzius, the New York-based chief U.S. economist at the company, wrote in an e-mail to clients. "A fairly bad one in which the economy grows at a 1 1/2 percent to 2 percent rate through the middle of next year and the unemployment rate rises moderately to 10 percent, and a very bad one in which the economy returns to an outright recession."
Aren't we lucky! How wise of President Obama to rely on Larry Summers to the exclusion of most other economists!
Charles Ferguson, director of the new documentary film, Inside Job, recently offered this analysis of the milieu that facilitated the opportunity for Larry Summers to inflict his painful legacy upon us:
Then, after the 2008 financial crisis and its consequent recession, Summers was placed in charge of coordinating U.S. economic policy, deftly marginalizing others who challenged him. Under the stewardship of Summers, Geithner, and Bernanke, the Obama administration adopted policies as favorable toward the financial sector as those of the Clinton and Bush administrations — quite a feat. Never once has Summers publicly apologized or admitted any responsibility for causing the crisis. And now Harvard is welcoming him back.
Summers is unique but not alone. By now we are all familiar with the role of lobbying and campaign contributions, and with the revolving door between industry and government. What few Americans realize is that the revolving door is now a three-way intersection. Summers' career is the result of an extraordinary and underappreciated scandal in American society: the convergence of academic economics, Wall Street, and political power.
Now, however, as the national recovery is faltering, Summers is being eased out while Harvard is welcoming him back. How will the academic world receive him? The simple answer: Better than he deserves.
Australia is looking better than ever — especially when you consider that their spring season is just beginning right now . . .
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With Markings of a Legend – Huawei P9
June 8, 2017 by SPEdit Team
Smartphones are becoming more intelligent and are fast transforming into serious imaging devices, some times even bettering compact cameras. In fact, we see lot of technological innovation in the smartphone space with every brand trying to outsmart the other. Till about a year ago, serious smartphone imaging was confined, or rather, perceived to be confined to Apple and Samsung. Now more companies are in the fray and Huawei is one company that does not seem to be in any mood to back off. The new Huawei P9 represents a bold stride in smartphone photography with a dual lens system that has been designed in partnership with the legendary Leica optics.
The P9 is carved out of aerospace-class unibody aluminium with diamond cut edges to give a design complete with visual elegance. A 2.5D glass (slightly curved edges) enhances the visual appeal. The back surface, though gives a 'hollow' feel, which takes away the toughness that the front surface communicates very well. The P9 has a 5.2-inch Full HD (1920 x 1080) display that provides high colour saturation and contrast. The highlight of the camera are the two rear camera lenses and the Leica brand name etched within a glass window. The square fingerprint sensor resides below the camera unit. The back surface has a matte texture. The USB Type-C port and the 3.5mm audio jack sit at the bottom surface along with the microphone and speaker holes. The volume rocker button and power button are on the right side.
The Huawei P9 is globally available in three variants including two Dual SIM models. However, the Indian edition is a Single SIM model with 32GB ROM and 3GB RAM, officially known as EVA-L 09. At the heart of the device is a 64-bit HiSilicon Kirin 955 Octa-core processor consisting of four 2.5 GHz Cortex A72 and four 1.8 GHz Cortex A53 cores. The P9 is based on Android 6.0 Marshmallow, customised with an EMUI 4.1 skin. The screen is capable of displaying 16.7 million colours.
The P9 uses a dual lens system for its 12 megapixel main camera. Both the lenses have similar specifications including a maximum aperture of f/2.2, but the underlying Back-side Illuminated CMOS sensors execute distinct functions. One is overlaid with RGB filters to capture all colour information from the image, while the second sensor has a monochrome filter that allows it to record detailed information regarding the amount of light falling at every point. This feeds the Image Signal Processor (ISP) with more information than in a traditional system to process the signals more efficiently. Combined with a separate Digital Signal Processor (DSP), the camera delivers better dynamic range and detail along with excellent monochrome images. A dual tone flash effectively complements the camera. The autofocus system uses a combination of Laser AF and Phase Detection AF for better accuracy and speed. The main camera offers features such as Monochrome, Beauty, Video, HDR, Beauty Video, Panorama, Night Shot, Light Painting, Time-Lapse, Slow-Motion, Watermark, Audio Note and Document Scan. In Beauty mode, you can turn on the Perfect Selfie mode for face sculpting and fine-tuning options. The camera also has a Depth-of Field mode, which lets you capture an image with shallow Depth of Field. This is helpful when shooting portraits and macro. Another important feature is the ability to refocus a captured image by touch control.
The PRO mode lets you control parameters such as Metering mode, ISO sensitivity, Shutter speed, Exposure Value (EV), Autofocus mode and White Balance. Shutter speeds range from 30 to 1/4000 sec, while sensitivity can be set from ISO 50 to 3200. Metering modes include Evaluative, Centre weighted and Spot, while focus modes available are AFContinuous, AFSingle and Manual Focus. The front camera is an 8 megapixel model with an f/2.4 lens. An interesting feature is that the phone reminds you to look into a marked area near the camera while capturing a selfie for eyecontact. Videos can be recorded up to Full HD (1080p) resolution at 60 fps.
The phone features a virtual triple antenna, which ensures maximum signal reception without worrying about your hand obstructing the antenna while attending a call. The device also features Wi-Fi 2.0, which automatically connects to the strongest available Wi-Fi network by ranking Wi-Fi hotspots automatically. An enhanced fingerprint sensor provides better security according to the company.
The Huawei P9 supports all 4G LTE, 3G and 2G bands operating in India. The device supports NFC and positioning systems such as GPS, GLONASS and BDS. As mentioned earlier, the P9 uses a USB Type C (High Speed USB) interface. The storage can be increased with a Micro SD memory card of up to 128GB capacity. It uses a 3000mAh nonremovable battery. The device measures 145 x 70.9 x 6.95 mm (H x W x D) and weighs 144g.
Filed Under: Reviews, Smartphones
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