Friday, December 30, 2011

Quality Collateral is King

From another in a series of incisive meditations upon the continuing global banking crisis from Jeffrey Snider, here:

The collateral problem is not going away no matter how authorities on either side of the Atlantic try to dress up fake guarantees. The system of wholesale lending through repo is terminally broken, since both quality reputations as well as quality collateral are in short supply. In other words, the inside participants of the global banking scheme know all too well that the system pyramided far too much paper on top of far too little actual cash flow. Liquidity is not the real problem since all the worthless collateral still stuck inside the system is likely worthless because the mathematical predictions of 2005 and 2009 proved utterly inept. Those accounting notions of equity during the credit bubbles were just as phantom as the valuations of the assets that were created from it. This coming year will be just a dance or game of musical chairs to determine who gets stuck with the bill. ...

As the progression of crisis has moved from paper asset to paper asset, from banks to countries and back to banks again, the trajectory is entirely clear. Some form of actual, exogenous restraint on credit creation will be imposed, either by someone currently in power that finally "gets it", or by a free market shaking free from the shackles of the over-enlarged financial economy and its hell-bent attempts toward unlimited money. Collateral is king in this banking world, and the rapid decay of "quality" is a testament to the intentional imbalance of finance over economy, to the hubris of modern economics and monetary "science". Unfortunately for the dreamers of true money elasticity, and too late for the rest of us, this was never supposed to happen.

Radiation 3km WSW From Fukushima the Day After Christmas 65.10 Microsieverts Per Hour

That's still over 90 times what an American can expect on average from all sources, including natural environmental, medical and transportation-related exposures. Just from normal environmental conditions the level is nearly 600 times normal for Japan at the location measured.












Standard and Poor's 500 Index Treads Water For The Last Year

So all gains were dividend related, which ended the year at 2 percent, a hell of a lot better than cash.





Thursday, December 29, 2011

Real House Prices Are Back To Q1 1999 Levels

So calculatedriskblog here"In real terms, all appreciation in the '00s is gone." 


Obama is the King of Unemployment

Initial claims for unemployment have been at or above 400,000 for 90 percent of Obama's presidency. By contrast, George W. Bush spent 25 percent of his time in office with unemployment that bad. Change . . . you asked for it.


Wednesday, December 28, 2011

Ronald Reagan Was No Conservative: He's Responsible For The Healthcare Mess

Treatment regardless of ability to pay is all his fault, along with a number of other things:

The Emergency Medical Treatment and Active Labor Act (EMTALA) is a U.S. Act of Congress passed in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act (COBRA). It requires hospitals to provide care to anyone needing emergency healthcare treatment regardless of citizenship, legal status or ability to pay. There are no reimbursement provisions. Participating hospitals may only transfer or discharge patients needing emergency treatment under their own informed consent, after stabilization, or when their condition requires transfer to a hospital better equipped to administer the treatment.

EMTALA applies to "participating hospitals." The statute defines "participating hospitals" as those that accept payment from the Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) under the Medicare program. However, in practical terms, EMTALA applies to virtually all hospitals in the U.S., with the exception of the Shriners Hospitals for Children, Indian Health Service hospitals, and Veterans Affairs hospitals. The combined payments of Medicare and Medicaid, $602 billion in 2004, or roughly 44% of all medical expenditures in the U.S., make not participating in EMTALA impractical for nearly all hospitals. EMTALA's provisions apply to all patients, and not just to Medicare patients.

Romney, Gingrich and Obama: Three Do-Gooders Shoving "Morality" Down Your Throat

Here's Romney recently: "[I]t is fundamentally a conservative principle to insist that people take personal responsibility as opposed to turning to government for giving out free care.”

Here's Gingrich in 2006: The Romney plan attempts to bring everyone into the system. The individual mandate requires those who earn enough to afford insurance to purchase coverage . . .. We agree strongly with this principle . . ..

Yankees everywhere agree: "Doin' right ain't got no end."


Big Brother Bait

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Pablo Triana Says "Value at Risk" Model Permitted Leverage Up to 1000 to 1

Pablo Triana dates the adoption of the Value at Risk model, internationally, right at the onset of American irrational exuberance after 1994:

Before VaR, which was enshrined into law by international banking regulators around 1996 and finally adopted by the SEC in 2004, the capital charges on toxic trading stuff would have been way less economical for traders, effectively making it unaffordable for banks to bet the entire farm on such dangerous punts. Without VaR, monstrous leverage on balance sheets inundated with high-stakes punts would not have been possible. Many job losses would have been avoided.

Actual capital ratios were so infinitesimal because the model allows debt to take the place of equity.

More here.


Tuesday, December 27, 2011

What I See When I Look At Mitt Romney

Tom Dewey
Mitt

Newt Gingrich Has Believed in Healthcare Mandate and Subsidies Since 2006

These guys Gingrich and Romney and Obama are all about federal interference and compulsion in healthcare, a private matter between an individual and a doctor.

From Newt Notes, April 2006, here:

We agree entirely with Governor Romney and Massachusetts legislators that our goal should be 100% insurance coverage for all Americans. Individuals without coverage often do not receive quality medical attention on par with those who do have insurance. We also believe strongly that personal responsibility is vital to creating a 21st Century Intelligent Health System. Individuals who can afford to purchase health insurance and simply choose not to place an unnecessary burden on a system that is on the verge of collapse; these free-riders undermine the entire health system by placing the onus of responsibility on taxpayers.

The Romney plan attempts to bring everyone into the system. The individual mandate requires those who earn enough to afford insurance to purchase coverage, and subsidies will be made available to those individuals who cannot afford insurance on their own. We agree strongly with this principle, but the details are crucial when it comes to the structure of this plan. ...

While in theory the plan should be affordable if the whole state contributes to the cost, the reality is that Massachusetts has an exhaustive list of health coverage regulations prohibiting insurers from offering more basic, pared-down policies with higher deductibles. (This is yet another reminder that America must establish a cross-state insurance market that gives individuals the freedom to shop for insurance plans in states other than their own.)

In our estimation, Massachusetts residents earning little more than $30,000 a year are in jeopardy of being priced out of the system. In the event that this occurs, Governor Romney will be in grave danger of repeating the mistakes of his predecessor, Mike Dukakis, whose 1988 health plan was hailed as a save-all but eventually collapsed when poorly-devised payment structures created a malaise of unfulfilled promises. We propose that a more realistic approach might be to limit the mandate to those individuals earning upwards of $54,000 per year. ...

I hope that Massachusetts’ initiative to provide affordable, quality health insurance for all continues to ignite even more debate around the subject of how to best address our nation’s uninsured crisis and the critical problems within the health system at large.

The Origin of the Adage "The President Proposes, but Congress Disposes"

The origin of the adage "The president proposes but the Congress disposes" appears to be a variation on Thomas von Kempen's Imitation of Christ, Book I, ch. 19, circa 1418:

Homo proponit, sed Deus disponit.

"Man proposes, but God disposes."

Congressmen Get Richer, You Get Poorer

Just in time to echo my recent ranting about our rich, corrupt and unrepresentative Congress and why we therefore need a bigger one, Peter Whoriskey for The Washington Post here chimes in with this tidbit which shows just how unrepresentative our representatives have become:

Between 1984 and 2009, the median net worth of a member of the House more than doubled, according to the analysis of financial disclosures, from $280,000 to $725,000 in inflation-adjusted 2009 dollars, excluding home ­equity.

Over the same period, the wealth of an American family has declined slightly, with the comparable median figure sliding from $20,600 to $20,500, according to the Panel Study of Income Dynamics from the University of Michigan.

The importance of an individual member of Congress works according to the law of supply and demand: When the supply of Congressmen declines, their individual value increases dramatically. The supply of Congressmen is fixed by law, but their value now increases year by year because the number of people they represent continues to grow.

The US House acted in the 1920s to increase their own value in this way by stopping the House from growing in size proportionally with population. We never should have let them get away with it. Is it any wonder that their wealth has increased so dramatically since then? We have the finest Congress money can buy, and getting finer by the day.

It's rigged. It's a racket. And it's not working for the people anymore. It's working for itself.

We could stop this almost overnight if we simply increased the supply of representatives, just like we do with money. To make debts worth less, we print extra dollars with which to pay them off. We should do the same thing with Congressmen. To make them worth less, increase their supply. The cost of corrupting a much bigger Congress would therefore skyrocket, and the ability of the people to reign it in would improve commensurately.

Consider that in our country less than half the population is registered to vote, 146 million people in 2008. Of that, 131 million actually voted. This means the individual member of Congress on average has a voting constituency of 301,000.

But if we had the 10,267 representatives demanded by Article 1, Section 1 of the Constitution, the size of a representative's average voting constituency would plummet to . . . 12,760.

Tick-off just one mega-church, a few VFW posts, a local manufacturer or the PTA, and out he goes. Just 6,400 people could make your Congressman a loser, or a winner, and on a regular basis.

Sounds pretty representative to me, and a lot cheaper.

Why Do We March? Why Do We Protest? Why Do We Hate Congress?

Surely the answer is because we believe that our government does not represent us.

And it doesn't. In fact, the current Speaker of the House doesn't even believe that it should, and never has believed it. He went on the record early in the current legislative session saying that the president should set the Congress' agenda, as here:

“While our new majority will serve as your voice in the people’s House, we must remember it is the president who sets the agenda for our government.”

Rep. Boehner is seriously mistaken if he thinks the Tea Party would agree with that. It's the president's agenda which created the Tea Party, and the Tea Party doesn't like the president's agenda one bit.

Whether from the right with the Tea Party or the left with Occupy Wall Street, there is massive discontent in the American people with government.

That is why Gallup can report in December here that Congress has the lowest approval rating ever, since the polling organization began tracking the issue in 1974:

From a broad, long-term perspective, Congress has never been popular. The average annual congressional job approval rating since 1974 is 34%. Still, this year's 17% annual average is by one point the lowest yearly average Gallup has recorded.

The actual number approving of Congress has also reached a record low: 11 percent.

Instead of trying to make the Congress we have more responsive to us, why don't we just get a new one, a bigger and a better one than the one we've got?

Say, with tail fins.

Your congressman and my congressman now represent on average 707,999 people other than you or me. Which is to say, each and every voice he or she hears is next to meaningless. Once elected, your congressman treats you more like a serf than an equal because he doesn't need you to get re-elected. He needs money to do that, big money for television and other forms of advertising to get his name out there. He needs movers and shakers, not you.

If your congressman represented only 30,000 people instead of 708,000, however, do you think that he would need less money to get elected, work harder for your vote, and have an incentive to vote in Congress the way you want him to instead of the way he does? I do. And so did the authors of the constitution.

Since 1929 America has not had a Congress of the size required under Article 1, Section 1. The Congress voted to fix the size by law at the 435 level, by-passing the constitutional requirement to expand the size of the House as population grows. The consequences for the American people have been negative ever since.

This was a neat little trick designed for the benefit of only one group, the Congress. As a consequence money, influence and power have been concentrated in their few hands instead of distributed and divided broadly in order to contain it as the founders intended.

It is no wonder that Congress has become the rich, corrupt, arrogant and vile body it is today.

The best way to repair this situation, however, is not to "throw all the bums out," or work to hand control to a different political party than the one that has it now, or throw out the electoral college, or amend the constitution in some way.

No, the best way is simply to follow it. What we need to do is dilute the power the Congress presently has as the constitution requires: with a population of 308 million Americans, we should have 10,267 members in the US House, not 435.

If you want to give business as usual the boot, just hand Nancy Pelosi or John Boehner the task of trying to herd 10,000 cats for a vote on the debt ceiling, or the Patriot Act, or any other measure.

Just the thought of it should appall them.

And make no mistake about it: this sounds like a revolutionary act, but it's anything but. The real revolution occurred when Congress voted to usurp your right to the founders' vision of adequate representation.

To restore matters to the status quo ante is only counter-revolutionary.

Monday, December 26, 2011

Saturday, December 24, 2011

Two Headlines Which Say It All: Obama Wins, You Lose

At RealClearPolitics.com:



No Bank Failures on the Friday Before Christmas

George Bailey, eat your heart out.

There were two failures a week and a day ago, which appear to be the last we're going to have in 2011.

#91 was Premier Community Bank of the Emerald Coast, Crestview, Florida, costing the FDIC $31.2 million.

#92 was Western National Bank, Phoenix, Arizona, costing the FDIC $37.6 million.

An unofficial list of problem banks here stands at 973 institutions with just under $398 billion in assets, not very different from last year at this time when it was 919 banks and $408 billion in assets.

Extend and pretend continues, which allows banks slowly to heal. But modern banking is rotten to the core nonetheless, just like everything else, in my humble opinion.

Friday, December 23, 2011

In Order For Third Parties To Rise, They Have To Have Representation

Third party candidacies for president fail in this country, as do those for representative or senator, because the two parties have a lock on the political process. The lock concentrates power and money in their hands, to the exclusion of the other interests which no longer have representation.

How did the two parties lock it?

Or to put it another way, how did Americans lose representation to the Republicans and Democrats?

The Republicans deliberately ignored the constitution's re-apportionment requirements after the 1920 Census, some say out of fear of competition from representatives of the massive number of then-new immigrants, and eventually prevailed in fixing representation at the arbitrary number of 435 in the US House through legislative fiat. There's absolutely nothing sacred about the number 435. It's just a number we reached when population required that number of congressmen after the 1910 Census.

Normally, the constitution's requirements have to be overcome by amendment, not legislation. But that's what we have, legislative fiat, because both parties found it in their best interests to concentrate power in themselves. The last thing they wanted to do was diffuse power to additional new players as the constitution requires. Since the constitution doesn't specify the upper limit of representation, only the minimum number and minimum proportion (Article 1, Section 1), a problem of first importance in the founding era but never resolved, they got away with it. But they shouldn't have. We're all the poorer for it.

Republicans in particular wear its stain. Today its Tea Party claims to wear the badge of constitutional originalism, but that badge is covering a huge blot of hypocrisy.

If Americans actually had the government the constitution requires but the Republicans of the '20s prevented, we'd have a US House today with 10,000 representatives, not 435.

There would most likely be a number of odd duck political parties represented in that sea of representation, like Greens, Communists, Fascists, Socialists and Constitutionalists. And probably a Gay Party from Saugaytuck, Michigan. But there might also be a rather substantial number of Conservatives and Independents. Considering that "conservative" is today's most identifiable political self-description, you can bet Republican golfers everywhere certainly don't want the competition.

But consider, for example, New York State. It has a Conservative Party, whose most famous public face is perhaps the radio host Sean Hannity. Another famous conservative from New York was the brother of William F. Buckley, Jr. US Senator Bernie Sanders of Vermont is a Socialist, from a state with next to no gun laws! Why not have more of their ilk as the people desire in the US House? Lots more.

Once there, the give and take of politics on a grander scale would most probably change the dynamics of the current politics of not-a-dime's-worth-of-difference between Republicans and Democrats. New actors would arise and give voice to ideas which in the past have had to settle for one congressman's endorsement here, or one there, only to be squelched by the Republicrat party apparatchiks.

More importantly, Republicans and Democrats would have to make alliances and share power in exchange for support. This would increase representation of ideas which today see the light of day in legislation only infrequently. And more importantly still, candidates for national office would have to forge alliances with such representatives too, which means third party candidates for president would actually begin to have some credibility with legislative support, without which a tax reformer like a Herman Cain, Ron Paul or Steve Forbes goes nowhere.

Think about it America!

Stop settling for representation without representation!

"One Representative For Every Thirty Thousand!"

Your Fascist Police State At Work: More Than 9,300 Unannounced Checkpoints Run in 2011

So says the story here.

And the LA Times here:

TSA teams are increasingly conducting searches and screenings at train stations, subways, ferry terminals and other mass transit locations around the country.

"We are not the Airport Security Administration," said Ray Dineen, the air marshal in charge of the TSA office in Charlotte. "We take that transportation part seriously." ...

In Tennessee in October, a viper team used radiation monitors and explosive-trace detectors to help state police inspect trucks at highway weigh stations throughout the state. Last month in Orlando, Fla., a team set up metal detectors at a Greyhound bus station and tested passengers' bags for explosive residue.

In the Carolinas this year, TSA teams have checked people at the gangplanks of cruise ships, the entrance to NASCAR races, and at ferry terminals taking tourists to the Outer Banks.


The instruments of fascism are slowly being introduced, and the American people accept it like sheep.

They deserve everything they're going to get.

George Orwell on the Meaninglessness of the Term 'Fascism'

"It would seem that, as used, the word 'Fascism' is almost entirely meaningless. In conversation, of course, it is used even more wildly than in print. I have heard it applied to farmers, shopkeepers, Social Credit, corporal punishment, fox-hunting, bull-fighting, the 1922 Committee, the 1941 Committee, Kipling, Gandhi, Chiang Kai-Shek, homosexuality, Priestley's broadcasts, youth hostels, astrology, women, dogs and I don't know what else."

The source of this statement attributed to Orwell is given as "Tribune, 1944" here. I haven't found a credible alternative citation proving Orwell wrote it.

In a leftist age, the promiscuous use of the term would be understandable.