February 9, 2012 archive

Feb 09

The Mortgage Settlement: Leaves Out Millions of Homeowners, Banks Walk Away Happy

Cross posted from The Stars Hollow Gazette

The biggest banks involved in mortgage fraud have agreed to a $26 billion settlement along with 49 states attorneys general. Oklahoma is the only hold out because the state’s Attorney General, Scott Pruitt, did not believe that the banks should face any penalty. The agreement will “help borrowers owing more than their houses are worth, with roughly one million expected to have their mortgage debt reduced by lenders or able to refinance their homes at lower rates. Another 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 will receive checks for about $2,000. The aid is to be distributed over three years.”

Yves Smith at naked capitalism notes that while the final terms of the agreement have not been released but some of the details have been leaked:

   1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

   Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

      “It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

   The Times is also subdued:

       Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

   2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

   3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

   4. The five big players in the settlement have already set aside reserves sufficient for this deal.

Yves goes on to enumerate the top 12 reasons why this settlement really stinks. These are her top 5:

1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

She goes on to explain how there are no constraints on servicers cheating to reduce their losses and will face no consequences when caught as in the past. With the law suits against Countrywide somehow “folded into the deal”, Bank of America, who is by far the worst offender in the chain of title disaster, gets a “special gift”: “that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced”. As David Dayen at FDL News Desk explains:

As far as the release goes, AG offices that signed onto the lawsuit claimed it was narrowly crafted to only affected foreclosure fraud, robo-signing and servicing (which I don’t feel is all that narrow, but I’m trying to just-the-facts this – ed). The lawsuit that New York AG Eric Schneiderman filed last Friday, suing MERS and three banks for their use of MERS, was preserved fully. There was a last-minute request by the banks to dissolve that lawsuit, but it was not successful. In addition, Schneiderman reserves the right to sue other servicers for their use of MERS along the same lines as the current lawsuit. [..]

Other lawsuits, like Delaware AG Beau Biden’s lawsuit against MERS, Missouri AG Chris Koster’s criminal indictments against DocX, and Nevada AG Catherine Cortez Masto’s suit against LPS and its employees would be able to go forward as well because the banks are not a party to them. However, it’s unclear whether any of those AGs will be able to work their way up the chain to indict bank officers for the same conduct; the likely answer, I assume, would be no. In California, Kamala Harris preserved the right for state officials and large pension funds to sue under the state’s False Claims Act over mortgage backed securities that later fell in value.

The status of Massachusetts AG Martha Coakley’s suit against five banks for foreclosure fraud is unknown. In all likelihood, the Nevada/Arizona suit against Bank of America for failing to follow their responsibilities in the Countrywide settlement will be folded into the deal.

In that settlement, BofA promised to deliver $8.5 billion in relief for Countrywide borrowers who fell victim to deceptive practices in the mortgage process. In reality, only $236 million was ever spent. Weak settlement terms allowed BofA to take credit merely for offering loan modifications to borrowers. And the Nevada suit alleged that BofA immediately started abusing borrowers who tried to get relief under the deal. But that suit is now gone.

As to the role of new Federal task force, if it were to be taken seriously this settlement should have not been completes until the task force’s investigation was finished. A good investigation takes charges that are easy to prove to help get the more evidence for the more difficult ones. By letting the banks walk. As Yves sees it, and she is correct, the investigations in Nevada and Missouri led to criminal charges and arrests that might have led to deals to catch the criminals “higher up the food chain.” There is plenty of evidence of bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges that has been ignored that could have led to a bigger settlement and prosecutions. By cutting a deal on robosigning the deeper chain of title problem has now been covered up making it even more difficult to address the on going fraud at high levels, the banks themselves.

So the bottom line is the banks have three years to hand out $5 billion in cash to about one million homeowners that will amount to about $2000 each for the loss of their homes through fraud. They will suffer no other consequences and there will be no further means to prosecute them, even if there is clear evidence of complicity in fraud related to robosigning. There is still the issue of 10 million underwater homeowners with $700 billion in negative equity that will continue to drag on the housing market and the economy for years to come. It would seem the Obama administration has once again screwed the vast majority of Americans to protect the Banks and Wall St. and his supporters are cheering this as another reason to reelect him. I see no reason for the Republicans to worry about another four years of Obama.

Up Date: If you’re one of the victims of the banking ghouls, you might not want to visit the new website for “The National Mortgage Settlement” The picture alone might make you want to do something you’d regret. The site details the agreement. David Dayen gives a brief synopsis of some of the gorier detail:

$750 million in a payment to the federal government;

$4.5 billion in direct payments to the states, of which $1.5 billion will go to those $2,000 checks to borrowers, and $2.75 billion to state foreclosure prevention services like legal aid, mandatory mediation and other programs. So the hard money comes to $5.25 billion.

$20 billion in “direct consumer relief”;

$3 billion to help current underwater borrowers refinance, and $17 billion in “credits” for principal reductions. HUD estimates that the dollar value of this will come to $32.3 billion in the end, as we’ve discussed. HUD Secretary Donovan has alternately said that a “substantial” amount of this money will come from MBS investor loans, and also that the large majority would come out of bank-owned loans. Also second liens have to be reduced along with firsts at least pari passu (on equal terms).

In addition, officials are touting the nationwide servicing standards that will be ushered in with this deal. Left out of this is the fact that the CFPB now has control over the servicing market, and can regulate national standards all by themselves.

The site mentions what the settlement doesn’t cover:

Release any criminal liability or grant any criminal immunity.

Release any private claims by individuals or any class action claims.

Release claims related to the securitization of mortgage backed securities that were at the heart of the financial crisis.

Release claims against Mortgage Electronic Registration Systems or MERSCORP.

Release any claims by a state that chooses not to sign the settlement.

End state attorneys general investigations of Wall Street related to financial fraud or the financial crisis.

We still don’t have any specific answers to the letter that Nevada AG Masto sent to the settlement negotiators. What Davyen finds really annoying is that the specific details haven’t been released to the  public who really deserves to know how badly they are being screwed.

I may have a separate article later as more specifics trickle down

Feb 09

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Feb 09

Obama Nominates Republican Banker to the FDIC

Cross posted from The Stars Hollow Gazette

President Barack Obama has announced the appointment of Jeremiah Norton, a JP Morgan Chase & Co. executive, to the five-member board of the Federal Deposit Insurance Corp. once again putting an insider in  a position to protect the banks at the expense of tax payers. The announcement was made late Friday in the usual news dump but this is not new except that Norton is now the “official” nominee.

Jeremiah O. Norton, 34, who is an executive director in the bank’s JPMorgan Securities unit, previously served as a policy adviser in the U.S. Treasury Department during the administration of President George W. Bush. Before that, he was an aide to a Republican congressman, Edward Royce of California.

Norton joins two Democrats and a fellow Republican whose confirmations to FDIC leadership posts have been delayed by Senate Republicans who have complained that Obama used a recess appointment to install Richard Cordray, a former Ohio attorney general, as director of the Consumer Financial Protection Bureau without formal Senate approval. Cordray, in his role as consumer bureau director, also has a seat on the five-member FDIC board.

His name was mentioned back in late December in an article from the American Banker. In an article by bmaz at emptywheel

Oh, and in case you had any question on what side of the 1%/99% divide Barack Obama and his Administration are on, yet another answer was given today with the announcement of their proposed selection for the critical “independent” seat on the Federal Deposit Insurance Corporation (FDIC):

   The Obama administration is considering nominating Jeremiah Norton, an executive director for JPMorgan Chase’s investment bank, to sit on the FDIC’s board of directors.

Who is Jeremiah Norton? Well, as this quote states, he executive director of the investment banking shop and one of Obama’s buddy, Jamie Dimon’s, right hand men. Oh, and before that, Norton was former Goldman Sachs honcho Henry Paulson’s right hand man in the Bush Treasury Department and assisted Paulson in getting Goldman Sachs a backdoor bailout through AIG.

Norton was one of the chief architects of TARP who helped convince Paulson that the banks were “Too Big To Fail” and “helped craft the takeover of Fannie and Freddie” and he isn’t without opposition form the right:

Norton himself had initial doubts about the plan. “This is crazy,” he reportedly said at the time. But ultimately he and Jester sold Paulson on TARP, (Andrew Ross) Sorkin explains. “Based on the work of Jester, Norton, and assistant secretary for financial institutions David] Nason, [Paulson] wanted to forge ahead and invest $250 billion of the TARP funds into the banking system,” Sorkin wrote. Norton contributed similarly to the government takeover of Fannie and Freddie. “It was a difficult decision, the secretary didn’t want to be here, to go into the firms,” Norton [told C-SPAN in 2008. But, he concluded, “this action was necessary to prevent systemic risk that would harm the broader economy.”

Norton still might encounter some objections from the right, as both TARP and the government conservatorship of Fannie and Freddie have come under growing fire from the tea party wing of the GOP. What’s more, the Congressional Budget Office recently raised the cost of TARP in 2012, and the government control of Fannie and Freddie has extended well beyond the 15-month “timeout” that Norton, Paulson and others had originally envisioned.

This is the second time that the White House has taken the Senate GOP leadership’s advice on FDIC leadership, having already followed Senate Minority Leader Mitch McConnell’s (R-KY) recommendation to pick Thomas Hoenig for another key FDIC post whose nomination brings ant- TBTF positions to the table:

Hoenig is a vocal critic of large banks, technically known as “systemically important financial institutions,” or SIFI, under the recent Dodd-Frank regulatory reform of the financial system. Of course, they’re more popularly known as the “too big to fail” banks that are a focus of the Occupy Wall Street protests.

Under Dodd-Frank, the FDIC will be responsible for unwinding failing big banks.

In a June speech, Hoenig — who headed the Federal Reserve Bank of Kansas City — called those institutions “fundamentally inconsistent with capitalism.”

“They are inherently destabilizing to global markets and detrimental to world growth,” he said. “So long as the concept of a SIFI exists, and there are institutions so powerful and considered so important that they require special support and different rules, the future of capitalism is at risk and our market economy is in peril.” [..]

Hoenig’s criticism of Fed policy made him a favorite among Congressional Republicans. Last fall, as Republicans prepared to assume control of the House after their midterm win, Hoenig was invited to speak to Republican members of Congress behind closed doors.

He also testified earlier this year before the House subcommittee on monetary policy chaired by Ron Paul, a noted Fed critic and presidential candidate, who would like to abolish the central bank altogether.

Republicans’ previous praise for Hoenig may make it difficult for them to block his confirmation, even if they oppose his views on the Volcker rule and bank regulation, said Boston University law professor Cornelius Hurley, a former counsel to the Fed Board of Governors.

“A brilliant political step, Hoenig’s nomination puts Senate Republicans in a very difficult spot in voting on his vice-chairmanship,” said Hurley. “His experience and point of view on systemic risk may foretell a pivot away from the failing policies of (Treasury Secretary)Timothy Geithner and (and former Obama adviser) Larry Summers toward more meaningful structural reform of our financial system.”

Obama keeps trying to make “deals with the devil” that will only continue toprotect the banks and harm the economy.  

Feb 09

Spelunking

Crossposted from The Stars Hollow Gazette

You’ll have to forgive me if I’m not over excited by Matt Taibbi’s latest which I think entirely misses the point.

After all, this is a man who celebrated Schniederman’s appointment as a  victory instead of just another sell out which we are seeing right now in Obama’s cave on birth control is the only mode this administration knows.

Sophisticated snark?  Never bought that for an instant Matt.

He does make several points that I’ll repeat to save you the agony of plowing through the source

Goldman’s numbers, to me, offer a hilarious counterpoint to Sherman’s piece. The bank’s earnings in total for last year were $4.4 billion, down some 65% off of last year’s numbers. Its revenues for the year were down 26%. Despite these bummerific numbers, Goldman reduced bonuses and compensation by only 21%, down to $12.2 billion, certainly a number to weep over. If the era of outsized bonuses is over, how come the biggest banks aren’t even cutting them to match revenues, much less profits? One could even interpret Goldman’s numbers as a major increase in the size of the bonus pool, relative to earnings.

But what about other banks? Well, Citigroup also saw a drop in revenues for the year (although its net income actually went up, from $10.6 billion to $11.3 billion). But what was most concerning was the bank’s crappy fourth quarter, when it suffered an 11% drop in earnings.



(N)ow Wall Street is being threatened with a return to those “quaint” days of loaning money and supervising bond issues and such.



Look, the financial services industry should be boring. It should be quaint. Let’s take the municipal debt business. For ages, it was a simple, dull, low-margin sort of industry, in which banks arranged municipal bond issues and made small but dependable profits as cities and towns financed improvements and construction projects.

That system worked seamlessly for decades, until people like Sherman’s interview subjects suddenly decided to make the business exciting. You know what happens when you make municipal debt exciting? Jefferson County Alabama happens. Or, on a macro level, Greece happens.

When making a few points on mere bond issues stops being enough, and you have to cook up crazy swap schemes and indices to bet against those schemes, ingenious scams allowing politicians to borrow billions of dollars that they will never in a million years be able to pay back, you might end up getting a few parks, schools, and subways in New York.

But what you get everywhere else is a giant clusterfuck that costs the rest of us years and even more billions of tax dollars to remedy.

This is what the protests are all about – it’s anger that Wall Street has been profiting from an imaginary economy that leaves bankers overpaid, but creates damage everywhere else. Sherman doesn’t get this.

Matt doesn’t seem to get it either.

Why are we supporting Republican policies again?  You’ll have to speak a little louder, I’m a mite deaf in that ear.

Feb 09

Cartnoon

The Sour Puss

Feb 09

On This Day In History February 9

Cross posted from The Stars Hollow Gazette

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

February 9 is the 40th day of the year in the Gregorian calendar. There are 325 days remaining until the end of the year (326 in leap years).

On this day in 1950, Joseph Raymond McCarthy, a relatively obscure Republican senator from Wisconsin, accuses State Department of being infiltrated by communists. McCarthy announces during a speech in Wheeling, West Virginia, that he has in his hand a list of 205 communists who have infiltrated the U.S. State Department. The unsubstantiated declaration, which was little more than a publicity stunt, suddenly thrust Senator McCarthy into the national spotlight.

Asked to reveal the names on the list, the reckless and opportunistic senator named officials he determined guilty by association, such as Owen Lattimore, an expert on Chinese culture and affairs who had advised the State Department. McCarthy described Lattimore as the “top Russian spy” in America.

These and other equally shocking accusations prompted the Senate to form a special committee, headed by Senator Millard Tydings of Maryland, to investigate the matter. The committee found little to substantiate McCarthy’s charges, but McCarthy nevertheless touched a nerve in the American public, and during the next two years he made increasingly sensational charges, even attacking President Harry S. Truman’s respected former secretary of state, George C. Marshall.

Wheeling speech

McCarthy experienced a meteoric rise in national profile on February 9, 1950, when he gave a Lincoln Day speech to the Republican Women’s Club of Wheeling, West Virginia. His words in the speech are a matter of some debate, as no audio recording was saved. However, it is generally agreed that he produced a piece of paper that he claimed contained a list of known Communists working for the State Department. McCarthy is usually quoted to have said: “The State Department is infested with communists. I have here in my hand a list of 205-a list of names that were made known to the Secretary of State as being members of the Communist Party and who nevertheless are still working and shaping policy in the State Department.”

There is some dispute about whether or not McCarthy actually gave the number of people on the list as being “205” or “57”. In a later telegram to President Truman, and when entering the speech into the Congressional Record, he used the number 57. The origin of the number 205 can be traced: In later debates on the Senate floor, McCarthy referred to a 1946 letter that then-Secretary of State James Byrnes sent to Congressman Adolph J. Sabath. In that letter, Byrnes said State Department security investigations had resulted in “recommendation against permanent employment” for 284 persons, and that 79 of these had been removed from their jobs; this left 205 still on the State Department’s payroll. In fact, by the time of McCarthy’s speech only about 65 of the employees mentioned in the Byrnes letter were still with the State Department, and all of these had undergone further security checks.

At the time of McCarthy’s speech, communism was a growing concern in the United States. This concern was exacerbated by the actions of the Soviet Union in Eastern Europe, the fall of China to the communists, the Soviets’ development of the atomic bomb the year before, and by the contemporary controversy surrounding Alger Hiss and the confession of Soviet spy Klaus Fuchs. With this background and due to the sensational nature of McCarthy’s charge against the State Department, the Wheeling speech soon attracted a flood of press interest in McCarthy.

Feb 09

Haircuts

Crossposted from The Stars Hollow Gazette

6 pm tomorrow.

Oh, so not the haircut you thought I was talking about.

How about this-

Banks Paying Homeowners to Avoid Foreclosures

By Prashant Gopal, Bloomberg News

Feb 7, 2012 12:00 AM ET

As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.

“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”



Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case.

Because that’s where the money is-

Greece, Troika Work on Final Rescue Draft

By Marcus Bensasson, Maria Petrakis and Natalie Weeks, Bloomberg News

Feb 7, 2012 9:45 AM ET

Adding to pressure on Papademos and political leaders jostling ahead of the elections, the biggest public-sector and private-sector union groups, ADEDY and GSEE, held a 24-hour general strike today, shutting down government services, courts, schools and ferry services. Dockworkers and bank employees also walked off the job while a walkout by culture ministry workers forced the closure of museums and other tourist attractions.

“What is taking place isn’t a negotiation,” GSEE president Yannis Panagopoulos said in an e-mailed statement. “It’s raw, cynical blackmail against a whole people.”



The troika argues that lower wage costs is among reforms necessary to boost competitiveness in the country. Those opposed say the cuts would deepen the country’s recession, now in its fifth year.

Antonis Samaras, the head of the second-biggest party, New Democracy, has indicated he will oppose measures that will deepen the country’s downturn.

Guarantees from Greek political leaders such as Samaras, who leads in opinion polls, are key to securing the funds from the EU and IMF. International lenders want assurances that whoever wins the next election will stick to pledges made now to receive financing.

The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange that will slice 100 billion euros off 200 billion euros of privately-held Greek debt and loans that will probably exceed the 130 billion euros now on the table. A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due.

Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds in the exchange, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet.

The End of Wall Street As They Knew It

By Gabriel Sherman, New York Magazine

Published Feb 5, 2012

To understand how radically Wall Street is changing, you have to first understand how modern Wall Street made its money. In the quaint old days, Wall Street tended to earn its profits rather boringly by loaning money, advising mergers, and supervising bond issues and IPOs. The leveraging of the American economy-and the supercharging of the financial industry-began in earnest in the early eighties. And banks have profited from a successive series of financial bubbles, each bigger and more violent than the one preceding it. “Wall Street did a really good job convincing people it was really complicated and they were the only ones who could do it and it justified paying them millions of dollars,” a former Lehman trader explained. Credit was the engine that powered the explosion in bank profits. From junk bonds in the eighties to the emerging-markets crisis in the nineties to the subprime mania of the aughts, Wall Street developed new ways to produce, package, and sell debt to willing investors. The alphabet soup of complex vehicles that defined the 2008 crash-CLO, CDO, CDS-had all been developed to sell more credit. “If you look at the past 25 years, the world economy was going through a process of leveraging,” a senior Citigroup executive said. “Debt has grown faster than economic growth. The banking industry was at the epicenter of facilitating the growth of credit creation. It drove every business.”



After the big investment banks went public, the sense of restraint that sometimes could hold back private partnerships from taking on too much risk-it was their own money-was removed. Bank earnings and ever-rising asset values allowed them to borrow ever-larger amounts of money, which in turn juiced ever-greater profits. Banks, which had previously made their money advising corporations and underwriting securities, essentially became giant hedge funds (in 2007, Morgan Stanley held $1.05 trillion in assets supported by just $30 billion in equity). The triumph of the Wall Street system was the exploitation of the real-estate boom: Real estate enabled the biggest credit bubble ever conceived-and a bust of similar magnitude, which some shrewd traders also took advantage of. “The mortgage mess is the biggest financial mess we’ll see in our lifetime,” Jamie Dimon told me.

And without real estate to fuel growth, many on Wall Street know it’ll be a long time before there is ever a profit center like it again. “The number of houses being sold is 25 percent of what it was,” a former Lehman trader says. “You don’t have the mortgages behind it. Essentially the pump has stopped working. All the IPOs, the mergers-everything is slowing down. And the number of new homes will never jump back to what it was. If you look at history, the past 50 years have been incredible. Never has there been a period of time of so little disease and so few wars and such growth of such absurd wealth.”



(R)ecently, hedge funds have fared just as poorly as the banks. The bad economy plays a role in this, of course. But just as important is the fact the hedge-fund industry is almost as overbuilt as the housing and credit markets that drove its profits. In 1990, there were 610 hedge funds in the world. In 2000, there were 3,873; in 2011, there were 9,553, according to a report by Hedge Fund Research. All these funds are chasing fewer surefire trades. “When markets are panicked and there’s global risk fear, the markets move in the same direction,” one analyst at a Manhattan hedge fund says. “It’s just a lot harder to make money.” The easy, obvious plays are oversubscribed, which shrinks margins.



“We used to rely on the public making dumb investing decisions,” one well-known Manhattan hedge-fund manager told me. “but with the advent of the public leaving the market, it’s just hedge funds trading against hedge funds. At the end of the day, it’s a zero-sum game.” Based on these numbers-too many funds with fewer dollars chasing too few trades-many have predicted a hedge-fund shakeout, and it seems to have started. Over 1,000 funds have closed in the past year and a half.



On Wall Street, the misery index is as high as it’s been since brokers were on window ledges back in 1929. But sentiments like that, accompanied by a full orchestra of the world’s tiniest violins, are only part of the conversation in Wall Street offices and trading desks. Along with the complaint is something that might be called soul-searching-which is, in itself, a surprising development. Since the crash, and especially since the occupation of Zuccotti Park last September (which does appear to have rattled a lot of nerves), there has been a growing recognition on Wall Street that the system that had provided those million-dollar bonuses was built on a highly unstable foundation. Disagreeable as it may be, goes this thinking, bankers have to go back to first principles, assess their value in the economy, and take their part in its rebuilding. No one on Wall Street liked to be scapegoated either by the Obama administration or by the Occupiers. But many acknowledge that the bubbleĀ­-bust-bubble seesaw of the past decades isn’t the natural order of capitalism-and that the compensation arrangements just may have been a bit out of whack. “There’s no other industry where you could get paid so much for doing so little,” a former Lehman trader said. Paul Volcker, whose eponymous rule is at the core of the changes, echoes an idea that more bankers than you’d think would agree with. “Finance became a self-justification,” he told me recently. “They made a lot of money trading with each other with doubtful public benefit.”

Pobrecitos.  Que lastima.

Feb 09

Muse in the Morning

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Muse in the Morning


Lace

Feb 09

Late Night Karaoke

Feb 09

The bees are dropping like flies

The bees come up from the apple orchard next door to die on our porch, as if they were simply exhausted from being whisked around from farm to farm as slaves to our surplus feeding habits.  Animals without choice sometimes simply choose to die.  I’d bet bees have “feelings” somewhere inside their little buzzing mammillary bodies.  Maybe they just can’t hack it anymore.

My understanding is that they’re eusocial, but vote individually on where to feed based on who makes the best sexy waggle dance symbolizing food direction and quality, and have bee quorums concerning when and where to move the hive.  Elections have consequences, as they say, so they are rather “picky” in their own little individual and species-specific manners.

We humans feel a need to enslave everything, from ourselves to mackerel to feed the formerly-wild salmon now bred in large ocean nets to friggin’ anti-biotic-resistant bacterial plasmids to run off our hot RNA strands for in situ sense and non-sense, and other sexy gene-jock what-not.  Yes, we purposely create anti-biotic resistant bacteria as slaves.  Please don’t forget to flame the lip of that beaker when you’re finished with that batch!  Thanks!  Wouldn’t want those little E. coli republicans to escape just any non-containment facility.

Feb 09

My Little Town 20120208: The Railroad Tracks

Those of you that read this regular series know that I am from Hackett, Arkansas, just a mile or so from the Oklahoma border, and just about 10 miles south of the Arkansas River.  It was a rural sort of place that did not particularly appreciate education, and just zoom onto my previous posts to understand a bit about it.

I was not sure that I would be able to post tonight because I crashed my system doing something stupid night before last, but I finally got it going again.  I had to take the radical step of completely wiping my hard drive, reloading Windows, and then restoring all of the files that I had archived onto a USB hard drive.  I NEVER will make the mistake of trying to tweak my OS again!  I really like that external hard drive and will make backups of my critical files monthly.  I think that I will take it to my neighbors’ house when not using it in case of fire or somesuch.

In any event, I am here and tonight we shall discuss the railroad tracks that ran just south of my house.  It was operated by Midland Valley Lines, out of Muskogee, Oklahoma.  Mostly the branch by my house hauled coal, because Hackett coal was in high demand for making coke for the steel mills when I was a lad.

Feb 09

Half Time?

Calling the real Clint.  Well beyond halftime, how about we are down by 27 with 10 seconds to go.  Had an excellent conversation with a follow white haired guy like me about how far gone this country is.  Then we discussed preppers and bug out options.

Cop chases self.

http://www.telegraph.co.uk/new…