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August 12, 2007

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Yes, plus Cheney and who know how many other of his underling staffers were given carte blanc to look at any on-going cases at DOJ in May of 2006 just after the WH denied security clearances to OPR.

"Gaming" is too mild a word in this case.

OT, and repeating a comment I made several posts down (must read ahead, must use preview.)

A couple of days ago, EW wrote about the subprime mess. There is an explanation of sorts in today's NYT, by the excellent Floyd Norris and Eric Dash. Link.

At the heart of the contagion problem is the combination of complexity and leverage. The securities that financed the rapid expansion of mortgage lending were hard to understand, and some of those who owned them had borrowed so much that even a small drop in value put pressure on them to raise cash.

“You find surprising linkages that you never would have expected,” said Richard Bookstaber, a former hedge fund manager and author of a new book, “A Demon of Our Own Design: Markets, Hedge Funds and the Perils of Financial Innovation.”

“What matters is who owns what, who is under pressure to sell, and what else do they own,” he said. People with mortgage securities found they could not sell them, and so they sold other things. “If you can’t sell what you want to sell,” he said, “you sell what you can sell.”

This idea is amplified in the article, and repeated in another by the very excellent Gretchen Morgenson. (could be in Times Select).

In a research report from Lehman Brothers last week, Matthew S. Rothman described the phenomenon. Fund managers experiencing losses in their fixed-income portfolios who were unable to sell their positions then tried to unwind the trades they could sell — that is, stocks. They cashed in the shares they had purchased and bought back the ones they had sold short.

The big problem is repeated in both articles. All markets are intertwined in a tight bundle, and no one can see what will happen when one piece fails, no one can see the interactions which will cause havoc in apparently unrelated types of securities.

This explanation makes sense to me. It suggests that the problems are endemic to the entire financial system, but more like a surface infection that will be cleaned out when the losses are taken. It is tempting to think that the losses will fall on the grotesquely wealthy, but regrettably that is not so. A large number of pension funds have money at stake in these ventures as well. I would not be surprised to learn that TIAA-CREF, CalPERS and other pension funds, the Yale, Texas and Harvard endowments, and many other groups on which a lot of us depend, are losers. Hopefully these investments are a small part of the total funds, and this won't turn out to be an Orange County debacle.

In the end, of course, we can hope that when the infection dies out, our investments in fundamentally sound stocks and bonds will not, in the long run, be damaged. In the short haul, there is a fair amount of misery.

Enough economics. Stop me before this bout of keyboarditis does me in.

"I'm working on a massive post on how the Administration has gamed the system to sustain their wireless wiretapping program"

wonderful... because try as i might, i can't understand it. looking forward to your analysis.

ew,

It is much worse than the Administration just trying to game the system to achieve their policy goals. The gaming of the system is the policy goal. They have no real interest in tracking down terrorists (just ask yourself where is Osama bin Laden). This is all about arrogating power for the executive branch. These people have no ideology except power.

wo - agreed. but what ideology do you ascribe to the democrats in congress?

"what ideology do you ascribe to the democrats in congress?"

"I've got mine, screw you."

Marcy, over on FDL, there's a comment in an article by Christy about the "you work for us tour" -- a constituent citing a remark Rep. Charlie Wilson made in a letter justifying his vote for FISA:

The version left on the table was unsatisfactory, but it was better than leaving the American people unprotected for the next few months.

"Unprotected"?? To quote EDP [or whoever], "what sort of fuckery is this?"

Is THIS what the Dems were told in those caucuses before the vote? I'd sure like to hear some more about this.

For some reason over the last few days, I have been trying to put a finger on what makes me so angry these days. Most people who know me see me as very easy going, and for the most part I am.

I think, though, that I have begun to arrive at an answer that deals partly with this topic, some of the comments above, and life as we know it today. It is this: the persons and institutions we have all been taught to believe in are using that power of belief to manipulate us all for their own selfish reasons.

Ockham mentioned Osama Bin Laden. What if 9/11 had not happened? What would Bush/Cheney have used to manipulate us all then? Bush sounds like a broken record with his constant harping on "the terrorists." Trotting out the "terrorists" whenever it is convenient has had the effect of the boy who cried wolf -- no one seems to believe it much any longer, except for the Democrats who are afraid of being blamed just if, by coincidence, Osama should rear his ugly head again.

This business of gaming the system to their advantage and refusing to be accountable or follow the law -- what example is that setting for generations to follow? Republicans used to be the "law and order" group. Now, the laws apply only if it is not one of Bush's groupies.

The Dems, I think, are just as bad. To keep falling for the same old tricks is insanity. Maybe it is just what is easiest for them to do -- roll over and be stupid, just like Senator Leahy is doing. I was really keen on him -- that maybe, just maybe, here was someone with the cojones to do what was right. He went on vacation just like everyone else, but not before he sent just one more letter asking the Repubs to do as he asked.

Regardless, I am tired of people and institutions playing with MY emotions for their gain. That really makes me angry. As I am seeing it, there is no elected official who is really looking out for the public good any longer. They are all part of the crowd that Semanticleo described above: "I've got mine -- screw you!"

I have started a couple of letters to the chairpersons of both the Republican and Democratic parties in my county, and both are very pointed. In them, I am asking just why I should bother to support either party or any of their candidates, when none of them are doing a thing for our country.

I would love to see a good strong viable third party candidate get into the presidential race.

The rigging of the game with OPR is indicative of what they have tried to do in other aspects, such as putting their pods (from Invasion of the Body Snatchers) in the Supreme Court, federal appeals courts, and, especially, as U.S. attorneys. Add to this the Vichy Democrats in Congress, and they have effectively cornered all branches of government. Drink up.

Sojourner - Heh, the Republicans have never been the law and order party, they just disingenuously claimed to be. As to Osama, well I dunno, but my guess is they would have invented a bogey man if one had not have popped up. Your question begets the further question of is this why they backed off bin Laden when they had him cornered - he was worth far more to them alive?

"....is this why they backed off bin Laden when they had him cornered - he was worth far more to them alive?"

Bingo!

The problem with the Dems in Congress is that, against all odds, they seem to believe that the Administration negotiates in good faith. It is difficult for folks to believe that people they know and have worked with for years have become (some knowingly and others unknowingly) tools of an unremitting evil.

BMAZ, I suspect you are correct, just as Martiki said -- "Bingo!"

I just have to think that Bushco would have really had to stretch things that much further to invade Iraq, but Osama was just very accommodating in his actions and timing.

Well, as always, a Bush has made a mutually beneficial windfall deal with a Saudi. We talk about how this has worked as a windfall for Bush/Cheney, it has that been that and more for bin Laden. Everything he could have asked for, and more. Unbelievable.

Sojourner, I think you are right to think that institutions have been corrupted, but I think that different institutions are corrupted for different reasons. In the mid-70's when I started practicing law, the American Bar Association was an important institution in legal circles. It provided pro bono lawyers to work on important problems, and to present the public interest side of issues. Over the next 10 years, I watched those people leave to be replaced by people who used the reputation of the ABA to push their client's interests. I could give several examples, but none is more egregious than the role played by the ABA in the gutting of securities regulation I watched during the Reagan administration. The results of this are the failure of the SEC even to consider regulation of the derivatives that are the cause of the intertwining of markets I discussed in my grievously off-topic comment above.

This change is now easily seen in the overt political activity of the Federalist Society.

The notion of public service, even of professionalism is dead, killed by greed, not by love of power. It is as if the boomer generation internalized the control features of money, recognizing that if they served money they would make money.

Masaccio, the legal system is exactly one of the institutions I was thinking about when I wrote a little earlier. It is funny that you mentioned the gutting of securities regulation, because I think that is also what is going on with some of the financial markets. Politicians seem to think they have a 'better' idea, and it invariably ruins it for everyone.

I was in a used bookstore this afternoon, and ran across a textbook on constitutional law. It is well-worn, though fairly recent (2000). Obviously, someone used it a lot. I am not an attorney, although I once had aspirations to become one. Anyway, for $2, I figured it would give me a good reference to try to follow some of the arguments I see posted in various places. It also has some pretty good background on the SCOTUS.

Thanks for your thoughts...

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