Posts from — October 2008

Robert Peston, BBC business editor, weighs in on How to solve the crisis.

I like the way he thinks, probably because we think a lot alike. For example, he wrote:

Probably only governments, through the deployment of taxpayers’ money, can solve a financial crisis that was created in large part by the foolish financial risks taken by bankers and financiers whose common sense was wiped out by greed.

And I wrote: “Greed subordinates common sense, and consequences are for “little people”.”

The short version of his main proposal is to do what Warren Buffett did and exchange public funds for preferred stock, the same thing I’ve been saying for a week, but he has a very interesting secondary proposal on retirement funds.

While most people in the UK have pension coverage through their jobs, many lower paid workers don’t, and don’t have the resources to do much for themselves. Peston wants to create a retirement system for those workers and use a government loan to get in on the investment opportunities that are currently available. It is an interesting proposal.

To Lab Kat and Rook.

As well as Denis Diderot, Chester A. Arthur, Robert Goddard, Larry Fine, Ray Kroc, Flann O’Brien, Václav Havel, Teresa Heinz Kerry, Steve Miller, Bob Geldof, and Kate Winslet, among many others.

The Pensacola Beach Blogger covers Warren Buffett’s views of the situation.

Jim DeRosa looks at FDR’s solutions to the Great Depression.

DCap looks at the central issue to a lot of the turmoil, marked to market pricing. The WSJ had a primer on Federal Accounting Standard [FAS] 157 when it came out.

Anglachel highlights three articles in a New York Times series showing how we got here.

The bottom line is that when FAS 157 was enacted people had to start displaying some truth about their assets, and investors quickly realized that “things had been embellished”. They were embellished because no one was enforcing the rules that were in place, and others were attempting to eliminate all of the rules that were left.

Wall Street was put under rules as a result of the Great Depression because left on their own they were crooks. They are still crooks and should never be trusted. Greed subordinates common sense, and consequences are for “little people”.

Just in time to keep the Baptists off my Mother’s lawn tomorrow, the pump is in and working.  I replaced the breaker on the circuit with a GFCI – type.  Not cheap, but cheaper that using separate GFCI sockets in all of the external outlets.  I also installed an extra ground to the outside breaker box I used to replace the switch on the pump.

I overdid it, but it would have been a shame if one of those Baptists was electrocuted by a lawn sprinkler after parking illegally.

So the worms in Congress caved in [again] and are depositing $ 700 gigabucks in Paulson’s account so he can hand out gifts to the financial system.  Being a bit old-fashioned I’m under the belief that the “toys” should be for “good little girls and boys”, but only the “naughty” group are getting presents.

Since the beginning of this “bailout”, I’ve been under the opinion that “bailing” is doomed to failure unless you haul the vessel into drydock and fix the leaks.  Sooner or later the pumps will fail.

The people in the government who are going to be handing out this money, are the same people who failed to notice how bad things were until they were on the verge of collapse.  Wall Street and Washington have been dismissing as alarmist those who have been warning about these problems for over three years.

We are told that Bernacki is right man to lead the Fed because he is an “expert” on the Great Depression.  If he’s an “expert” why didn’t he notice that we were on the verge of the Greater Depression?  If he is such an “expert” why hasn’t he suggested any of the programs that actually helped overcome the Depression, like the HOLC?

The way I see it, the people who failed to properly manage huge sums of money are being given huge sums of money to fix the mess caused by their greed and incompetence.  This is the sort of conduct that got Louis XVI in a lot of trouble and ended in the Reign of Terror.

If you would like to get an enjoyable introduction to banking and markets, you could do worse than Terry Pratchett’s Making Money.

He does have a habit of spotting trends and writing books about them. Of course, this is fantasy and has nothing to do with the real world, or what happens when people discover that their bank is broke.

In the CBC wrap-up it would appear that Green Party Leader Elizabeth May and NDP Leader Jack Layton did rather well, while Bloc Québécois Leader Gilles Duceppe and Conservative Leader Stephen Harper remained neutral, and Liberal Leader Stéphane Dion had a bad night. Duceppe felt that Dion had a pretty good night in Wednesday’s French debate, but really wasn’t effective in last night’s English debate.

Obviously the debate centered on the failings of the Conservative government as envisioned by the other parties, but there were also criticisms of Dion for not calling for a no confidence vote on several occasions.

There was also a joint press conference in the US by the Vice Presidential candidates, but why bother. The format makes these things meaningless.

The Ig Nobel prizes have been awarded. Go to CNN for the explanations, because the Annals of Improbable Research, which awards them, is hammered with traffic.

A contender in the future has to be this piece of British research: Sick leave ‘link to early death’. According to the BBC story they have discovered: people who get sick die before people who don’t.  [I blame it on the break down in extended families – normally your grandmother would explain this to you, usually after the death of a pet.]

Waiting For A Table

Where’s dinner?

[Editor: This is KT-2, a juvenile. She isn’t senior enough to rush the food bowls, and has lost the immunity given to kittens. Like most teens she lays around and sulks a lot.

Friday Ark

The proper pump should last a lifetime or die after five years.  If it only lasts 35 years it is a total PITA to deal with.  After 35 years you have to cut pipes because all of the connections have corroded to the point where putting a wrench to work either results in nothing, or the parts crumble as soon as you use the 6-foot “helper” on the handle of the wrench.  [Note that the connections were heated, had penetrating oil used, and received hammer whacks for a day before it became obvious that a reciprocating saw was the answer.]

So then you start to install the new pump, which is not cast iron but a “composite” [plastic, the sucker is plastic, but cast iron is special order and twice as much money.]

OK, you unpack it and put it place and get ready to attach it to the pipe going to the 2-inch well pipe and you discover that in violation of all of the rules on pump design, the inlet and outlet are both 1½-inch.  It has been gospel forever that the inlet is bigger than the outlet, but they have decided to change the rules.  So, back to the store for a reducer.

The main piping is done, but now I have to put the electrical together.  Always a thrill.

Just because the casing on the motor had rusted away causing the shaft to bind after it wore down the bearing is a pretty sad excuse for that pump to fail.

Hank’s New Ride

It’s ready to roll out of the garage as soon as the House falls into line.

None of them can actually tell you what it will do, but they approved it to show that they were doing something.

I’ll post the vote when it appears on the official site.

Update: CNN reports 74 -25 were the numbers, but they haven’t posted the actual roll call.

Here’s the official vote. I note that the inclusion of the tax break on wooden arrows wasn’t enough to convince Ron Wyden (D-OR), one of the sponsors of that particular tax break in an earlier bill, to vote for the bill, but his Republican counterpart, Gordon Smith did vote for it.

Update: I’m adding the names of those who voted NO below the fold, because it is an unusual collection of Senators, a number of whom who were targeted specifically with some of the additional provisions.

[Read more →]

Time looks at the reaction to the House bill in Why Main Street Is Mad: Scenes from a Financial Crisis. The article includes remarks from Jay Inslee, the only Washington State Democrat to vote against the bailout in the House:

The correspondence from his constituents fell into three camps, Inslee says. The first group thinks any bailout is an outrage at a time when CEOs have been getting such huge bonuses. These people, says Inslee, “are so outraged, they don’t get past that.” The second group comprises people who recognize the need to intervene to avert further financial calamity “but are absolutely outraged that we’d do something that is so inequitable to Main Street.” This group, he says, is considerably larger than the first and wants a more balanced bill. Finally, Inslee says, there is a third group that “is in favor of doing anything because the situation is so dire. And his name is Bob.” Inslee isn’t being facetious: it is a group of one, a constituent named Bob, who avidly promotes the view.

All 451 pages of the Senate bill [PDF] would seem to be the House bill with tax breaks, so the government will be even less able to pay off its huge deficits. There is still no input sought from economists. The Senate is sugar-coating the bill with tax cuts to suck in more Republicans in the House.

This isn’t policy, it’s politics.  It’s still a bailout, not a “rescue”, and it only helps Wall Street.

From the Okaloosa County elections office:

BOOK CLOSING
Books close on October 6, 2008 for the November 4, 2008 General Election. Be sure all new registrations and party changes are submitted to our office or mandated sites by close of business.

There’s less than a week left to register in Florida to vote in the November election. At this point you really need to register or make changes to your registration at your county’s Supervisor of Elections office, so if there are any questions or problems they can be dealt with immediately.

VoteSmart Florida has information on the Florida ballot initiatives. There are three fewer than I wrote about in June. The Florida Supreme Court threw out:

5. Another attempt to shift costs from property taxes to sales taxes, this time aimed at schools.
7. Gets rid of the ban to giving tax money to churches.
9. Tells schools how to operate while providing a backdoor for vouchers by overriding a court decision.

There is still a lot of dross left. My rule on these things is that if the purpose isn’t absolutely clearly something you agree with, proposed by a group you trust, vote NO. There has been a lot of mischief done with deceptive ballot initiatives.