Yearly Archives: 2013

David Dayen: FHFA Will Secure Up to $28 Billion From Banks in Its MBS Lawsuit

An analysis at Bloomberg Law puts some numbers down that I hadn’t seen all in one place previously. The headline effort is to pin down what other banks being sued by the FHFA over mortgage-backed securities passed to Fannie and Freddie with poor underwriting will have to pay, given the standard set by the JPMorgan Chase settlement for $4 billion. The report, by Nela Richardson, actually botches that job by adding the $1.1 billion that FHFA simultaneously received from JPMorgan through reps and warranties on raw mortgages, and doing the calculations based on a $5.1 billion award. Only the $4 billion has anything to do with the lawsuit, which was about $33 billion in Fannie and Freddie purchases of MBS. In other words, FHFA netted about 12 cents on the dollar from JPMorgan. Redoing Richardson’s work, you can calculate how much that means other banks would be expected to pay FHFA in any settlement if they paid 12 cents on the dollar:

Egypt Marches to a Saudi Drummer

Yves here. This may seem a bit wide of our usual finance and economics beat, but the Middle East continues to be a potential flashpoint, as well as the most visible sphere of jockeying for geopolitical influence.

This piece caught my attention because it gives a plausible and in-depth assessment of Saudi policy in the Middle East, now that it is in the process of divorcing itself from the US. In particular, it also in passing addresses a question that flummoxed Moon of Alabama: why did the Saudis reject what would normally be a prized seat on the UN Security Council?

Wolf Richter: The Day The Bubble Became Official, And Everyone Was Happy (Except Twitter Casualties)

A new era has dawned: there is now a consensus that this is a stock market bubble. We’re back where we were during the last bubble, or the one before it, though the jury is still out if this is February 2000 or October 1999 or sometime in 2007.

Healthcare.gov Enrollments to Date a Pathetic < 50,000

No wonder the Administration has been tap dancing about results of the Obamacare launch.

Links 11/11/13

The ObamaCare Rollout, Organizational Dysfunction, and Public Relations in the Administration

By Lambert Strether of Corrente.

Administration officials and defenders often claim that demand and volume overloaded the Federal exchange when it was rolled out. This claim is, in fact, not true, and I’d like to see what that lie tells us about organizational behavior inside the administration, and how it will react to future ObamaCare problems — which will be numerous.

First, some examples of the false claim, both from the administration and its defenders:

Surely the Lotus F1 Team Isn’t Just Slinking Quietly Away From Its Embarrassing Team Partner, AGT?

Lotus F1 quietly drop AGT from their Official Team Partner list just after Naked Capitalism tells the world that AGT’s a scam.

Adam Hochschild: Veterans Day, 95 Years On: The Enduring Folly of the Battle of the Somme

In a country that uses every possible occasion to celebrate its “warriors,” many have forgotten that today’s holiday originally marked a peace agreement. Veterans Day in the United States originally was called Armistice Day and commemorated the ceasefire which, at 11 a.m. on November 11, 1918, ended the First World War.

Up to that point, it had been the most destructive war in history, with a total civilian and military death toll of roughly 20 million. Millions more had been wounded, many of them missing arms, legs, eyes, genitals; and because of an Allied naval blockade of the Central Powers, millions more were near starvation: the average German civilian lost 20% of his or her body weight during the war.

Richard Alford: On Grading the Bernanke Fed

We are certain to hear more and more appraisals of Bernake’s tenure as Fed chairman as he approaches the end of his term. But will they use good benchmarks? We suggest measuring his performance against his claims for the Fed’s objectives and what he said the central bank could accomplish. Not surprisingly, we find that he came up short.

Links 11/10/13

The TPP, if Passed, Spells the End of Popular Sovereignty for The United States

By Lambert Strether of Corrente.

You’ve heard of popular sovereignty, right? It’s embodied in the Preamble of the United States Constitution.[1] I’ll quote it for the sheer majesty of the language, archaic though it may seem in these “innovative” days:

Shadow Banking and the Global Financial Ecosystem

Modern banks operate in a complex global financial ecosystem. This column argues that proper regulation requires an updating of our ideas about how they operate. Modern banks finance bond portfolios with uninsured money market instruments, and thus link cash portfolio managers and risk portfolio managers. Gone are the days when banks linked ultimate borrowers with ultimate savers via loans and deposits. The Flow of Funds should be updated to reflect the new realities.

Links 11/9/13

Yanis Varoufakis: Ponzi Austerity – A Definition and an Example

For a while now I have been arguing that Europe’s policies for reducing the public debts of fiscally stressed member-states can be described as a Ponzi austerity scheme. In this post I attempt precisely to define ‘Ponzi austerity’.

Is Google Assisting the NSA in Developing Psychological Profiles of Web Users?

Google sure looks like it wants to profile you psychologically.