Physicists burst bubble mystery BBC
AT&T’s Gaping Hole Exposes 114,000 iPad 3G Buyers’ Email Addresses Daily Tech
Women Prefer Men Holding State Bonds, Japan Ad Says Bloomberg (hat tip reader Buzz Potamkin)
The Reality of Life for Louisiana Fishermen Is an Unpalatable Choice New York Times
Gulf oil spill: To control message, BP buys search terms from Google Christian Science Monitor. This practice has been reported previously, but this piece explains the mechanics and implications.
BP’s financial pain is America’s pain Robert Peston. One of my sources in the Gulf states tells me that a local news station has a scuba diver go out (not far) into the slick. He found oil not just on the surface, but down to a depth of 15 feet. That may mean the environmental consequences will be more severe and lasting than Peston’s (and presumably BP’s) estimates indicate.
Hundreds Of Oil-Covered Birds Flooding Into Louisiana Wildlife Center Huffington Post. I am hearing from Alabama that the coast in in much worse shape than BP said it would be, and the oil is getting into estuaries.
Toxic assets and toxic oil James Hamilton, Econbrowser
Victory for the austerity party Eurointelligence
AIG’s problems far greater than Bush officials told public McClatchy (hat tip reader Tom F)
U.S. Faces ‘Severe’ AIG Losses, Says Panel Wall Street Journal
Derivatives: A tricky pick Financial Times. Actually about CDOs, and a very good piece.
Housing after the tax credit Bubble Meter
Why Economic Advisors Are Paid to Be Economic Advisors Robert Reich (hat tip Mark Thoma)
Common Sense Crisis Risk Management Richard Bookstaber
Antidote du jour:
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22 comments
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Oh my Dear Lord God(s), that McClatchy piece on AIG is truly puke-worthy. The scale, diversity, and depth of the crimes here confound the senses—and STILL no one has even been investigated for any of this, let along prosecuted. At least Bernie Ebbers and Ken Lay ended up with prison tickets; here, they all got paid huge bonuses by the government instead.
Let’s see: Concealed off shore losses for years before collapse, so the company was in bad health from the get go. Raided its own insurance subsidiaries (in effect) of collateral, swapped for cash, said cash used to gamble on collateralized mortgage bonds; lost the wad. Wrote boodles of CDOs on similar crap; market seizes and counterparties come calling so what happens? AIG buys the underlying securities from counterparties, some of this evidently coming after the government intervened so this amounts to ANOTHER taxpayer payout at 100 cents on the dollar of AIG counter-parties.
The reason the US government is going to pay tens of billions of dollars to keep the reeking corpse of AIG in business is not primarily because the market moved the wrong way on them, nor simply because the company’s governance was incompetent; we’re going to pay for all of this because AIG was a criminal enterprise. We are going to pay out and for the crimes of AIG: this is the new world order, citizen as whipping boy for the assininity of the oligarchy.
And HEY! I got an internet banner AD for AIG BANK selling..
.
wait for it
.
.
MORTGAGES! Juicy rate too.
WTH?
AIG was investigated by DOJ as was the major derivatives guru Cassano. The outcome was a closed case with no prosecutions:
US Justice Department ends AIG probe
By Greg Farrell in New York
Published: May 24 2010 02:58 | Last updated: May 24 2010 02:58
The US Department of Justice has closed its two-year criminal investigation of AIG after determining that there was insufficient evidence to support charges against either the insurance giant or its senior executives, according to parties in the case.
http://www.ft.com/cms/s/0/44d68046-66cc-11df-aeb1-00144feab49a.html
It is also noteworthy that DOJ had a special monitor inside AIG pursuant to a 2004 deferred prosecution agreement stemming from securities violations. His compliance monitoring was expanded when additional violations were found pursuant to a 2006 nonprosecution agreement . The monitor is said to have not had any oversight pertaining to derivatives; but neither DOJ nor the SEC have released his reports.
http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202431504805
If Mr Orange isn’t in jail yet, nothing will happen.
However, I have to admit, that even I’m impressed at the comma like stupor that the American dumbasses are displaying. Until the dumbasses start feeling some pain, they won’t wake up. Unfortunately, when they do wake up they’ll just rip-out each others throats. As somebody on another post (on this site) said: The nobility has about 20 million vassals who basically live well in exchange for manipulating and screwing the dumbasses. This is probably a workable system going-forward. I’m part of the vassal-class so don’t really care.
Re: BP’s financial Pain
I found the article’s tone a bit strange but egads the comments posted there are revolting. Appears Britain has as many self-centered idiots as we do.
The general tone seemed to be — Obama is being extremely harsh toward BP, largely because of the ‘British’ in the name. BP said they are sorry. Why is Obama so upset about a little spilled oil, and lay off my pension which has a good bit of BP in it.
First, they seem to think Obama is doing more than we think he is doing. But, second, the people who post on British blogs seem to be just as ill informed and crass as those who post on American blogs. Small world i’nit?
Thanks Yves for all the links on the BP gulf oil spill, much appreciated
jb
Derivatives: A tricky pick Financial Times. Actually about CDOs, and a very good piece
I still think Waldman’s piece
http://www.interfluidity.com/v2/784.html
does a better job of dissecting the CDO defense (in Goldmans’s case) and showing how disingenous the defense is.
I agree with a previous poster that the Brits sounded a bit um insular.
A lot of the commotion boils down to two words: “Obama’s Katrina”. He was extremely slow to react. The first visit was several days late, and the second one about 3 weeks late. That visit featured the pathetic picture of him gazing raptly at the tar ball. He still hasn’t had the families of of the deceased workers to the White House. But a week or so ago his team figured out that it’s electoral poison and we get totally synthetic “rage” and “kick ass” talk.
This is the kind of thing the US public doesn’t handle well. It’s going to go on and on for two more months, at least. People expect him to do something, and he looks helpless.
The irony is that BP’s major incentive is to stop the flow as fast as possible. And those with technical knowledge on TheOilDrum think they’ve done a competent job. On every other issue their incentive is to low-ball the situation, and they’ve been corporate weasels. Obama’s “rage” when BP wisely called off a failed effort was totally inappropriate, not to mention phony.
There are some echoes of the financial crisis here. Astronomical numbers that will never be pinned down. TBTF. Corporate sleazebags vs. unemployed peons. But the wonderful thing about banking is that it’s so abstract. Numbers and rates and contingencies and stuff. No soiled marshes and tarred birds.
Roger Bigod says: “But the wonderful thing about banking is that it’s so abstract. Numbers and rates and contingencies and stuff. No soiled marshes and tarred birds.”
Errr… for starters …
http://images.google.com/images?gbv=2&hl=en&safe=off&rls=ig&newwindow=1&q=homeless+people&sa=N&start=20&ndsp=20
Deception is the strongest political force on the planet.
Hurricane Katrina was an Act of God and the then President waited for God to fix the mess he’d made.
The Gulf oil spill is an Act of BP and the now President is waiting for BP to fix the mess it’s made.
Fixing other people’s messes just isn’t in the American psyche.
The whole AIG issue is just crazy.
Profits from the sale of derivatives
should be taxed until the AIG bailout is
paid back. If derivatives are no longer
a viable business, well, that’s too
bad. At least this will prevent the next
future disaster.
This is so simple I had to laugh as I read it. In a world run by reason this would make perfect sense.
In a world run by the smart amoral scumbags tho, they’ll tax the peasants (and tell the peasants it’s “those people” getting the money). HA!! Too funny.
Dear Naked Capitalism,
I just have a quick question for you but couldn’t find an email so had to resort to this. I am a progressive blogger. Please email me back at barbaraobrien@maacenter.org when you get a chance. Thanks.
Barbara
“This is the kind of thing the US public doesn’t handle well. It’s going to go on and on for two more months, at least. People expect him to do something, and he looks helpless. ”
The Iranian hostage crisis may be a more relevant precedent than Katrina.
Carter got a reputation for weakness as the crisis dragged on for a year with no solution. But this wasn’t the sort of thing that could be “solved” easily (especially if one of the Iranian objectives was to get Carter out of office). It was also a sort of result of long-term issues with US Middle Eastern policy that couldn’t be changed on the fly. To the extent Carter engaged with the crisis, he came out as weak because it wasn’t the sort of thing that could be resolved quickly, but if he disengaged he would be seen as aloof and uncaring.
The modern presidency may have evolved to the point where it can only tackle short term problems!
I don’t remember the source of the article, but a German animal Science specialist stated the survival rate for oil-covered sea birds is about 1%, based on North Sea experience. A combination of toxic effects and the trauma of being handled is just too much for them. These birds are better off with euthanasia, unfortunately.
I have seen similar statistics as well. In reality, all the oiled creatures are mortally dosed. Euthanasia sounds brutal to optimistic Americans, and those sensitive to wildlife, but the reality is that virtually none of the oiled creatures will survive, regardless of human intervention. Painful . . . .
It’s really funny in a black humor sort of way this idea that if they shuffle the shit at AIG around enough somehow it will all turn to gold and the taxpayer will be left holding a golden goblet instead of a shit sandwich. The McClatchy article fills out a point I have tried to make that it was not just Cassano’s AIGFP that was rotten but AIG’s regular insurance companies as well. Cooking the books has become accepted practice and that is the only way AIG comes out looking halfway solvent or the line can be sold that AIG will pay back taxpayers.
What I wonder though is that if AIG’s regular insurance companies were gambling how widespread was this in the insurance industry? How many other losses are being covered up by creative bookkeeping?
nice to see from the eurointelligence article that my euro-treasury = market mechanism for fiscal discipline idea is gaining political traction.
rasmussen must have picked it up from euro-think-tank bruegel, who lifted it almost word-for-word from my comments on various blogs over the past two years.
just a shame i will never get any credit for this brilliant idea..
“How would the companies survive if they didn’t get money from the workers?” she asked without irony.
Wondering if anyone at the NYT thought to replace “companies” with “bloated parasitical financial institutions.”
Interesting piece based on interviews despite the oddly soporific hed.
Views Show How North Korea Policy Spread Misery
http://www.nytimes.com/2010/06/10/world/asia/10koreans.html?src=me&ref=general
Which will outlast the other: NK v GS, BA, DB et al.?
Those North Koreans who have never crossed the border have no way to make sense of their tribulations. There is no Internet. Television and radio receivers are soldered to government channels. Even the party official’s wife lacks a telephone and mourns her lack of contact with the outside world. Her first question to a foreigner was “Am I pretty?”
Why does this remind me so much of my fundamentalist teabag neighbors, and Sarah Palin? They seem to live in a similar information space by choice.
“Now, if you go to the market, people will say anything,” the construction worker said. “They will say the government is a thief — even in broad daylight.”
Altogether uncanny.
Not that I don’t worry about living in a bubble myself.
On another topic, you gotta love that Bruce Sterling for just doing the blog thing, much as Yves Smith does the blog thing. By that I mean the web log thing. I’m starting to wonder if it’s more like radio and less like the flavor of the moment. Kind of thinking it works really well for some people who come up with stuff that’s well worth attention, sometimes just point to it and sometimes edit and annotate it and whatnot, and that’s unlikely to change.
Of course vulnerable infrastructure doesn’t look like a weapon. Till it is one.
http://www.wired.com/beyond_the_beyond/2010/06/richard-clarke-is-telling-the-truth-about-computer-security/
“Clarke’s book has gotten tons of play with this sort of stuff—check out, for example, the scary interview he did with Terry Gross on NPR’s Fresh Air. But little of it impresses his critics. (((There are political reasons why people never do what this guy says. It’s not him or his credibility. It’s all about the power and money and the free-market ideology.)))
On the latter I’m very impressed with the media Ian Bremmer has been getting, makes me wonder if there might be intelligent life in the US beyond The Simpsons. Check this superlative matching of Bremmer and Prestowitz, courtesy of Tom Ashbrook at WBUR.
http://www.onpointradio.org/2010/06/free-vs-state-capitalism