Zero Reserves

Seems our intrepid Congressmen were sneaking in a law that allows banks to hold zero reserves - that is right, zero reserves - starting in 2011; and now they've used the bailout bill that failed to move up the date to October 1, 2008.

All as per this dkos diary.

Pakistan always good for a laugh!

V. sent me this NDTV news-item

Fatwa against Zardari for 'flirting' with Palin
NDTV Correspondent
Monday, September 29, 2008, (Islamabad)
Pakistan President Asif Ali Zardari seems to be heading towards fresh trouble as the prayer leader of the Lal Masjid in the heart of Islamabad has issued a fatwa against him.

Maulana Abdul Ghafar, the prayer leader, seems to be irked by Zardari's "you're gorgeous" compliment to US vice-presidential candidate Sarah Palin during a meeting.

When Zardari was asked to keep shaking hands with Palin for the cameras, he said, "If he's (the aide) insisting, I might hug you."

He said the act was un-Islamic and unbecoming of a head of state of a Muslim country.

Maulana also said that Zardari shamed the entire Pakistani by publicly making indecent gestures towards Palin in Washington last Thursday.

There is also a story there of how Shaukat Aziz unsuccessfully tried to seduce Condoleeza Rice. She failed to succumb to his fabled (mythical?) two-minutes spiel.

Refute Taibbi if you can!

Matt Taibbi writes about the Sarah Palin nomination:

Here's the thing about Americans. You can send their kids off by the thousands to get their balls blown off in foreign lands for no reason at all, saddle them with billions in debt year after congressional year while they spend their winters cheerfully watching game shows and football, pull the rug out from under their mortgages, and leave them living off their credit cards and their Wal-Mart salaries while you move their jobs to China and Bangalore.

And none of it matters, so long as you remember a few months before Election Day to offer them a two-bit caricature culled from some cutting-room-floor episode of Roseanne as part of your presidential ticket. And if she's a good enough likeness of a loudmouthed middle-American archetype, as Sarah Palin is, John Q. Public will drop his giant-size bag of Doritos in gratitude, wipe the Sizzlin' Picante dust from his lips and rush to the booth to vote for her. Not because it makes sense, or because it has a chance of improving his life or anyone else's, but simply because it appeals to the low-humming narcissism that substitutes for his personality, because the image on TV reminds him of the mean, brainless slob he sees in the mirror every morning.

The Ape in Each of Us

From TPM

And here's another note from TPM Reader TB. I guess I'm really not sure quite how to characterize it ...

I think people really are missing the point about McCain's failure to look at Obama. McCain was afraid of Obama. It was really clear--look at how much McCain blinked in the first half hour. I study monkey behavior--low ranking monkeys don't look at high ranking monkeys. In a physical, instinctive sense, Obama owned McCain tonight and I think the instant polling reflects that.

So McCain may have given away his status as a low-ranking monkey. I'd never even considered monkey rank.

Functional illiteracy

The nature of the Republican candidate for President is amply displayed by the following facts:

1. The US financial markets are in their biggest crisis since the great depression.
2. The Treasury Secretary Paulson issued a bailout plan on September 19, a three page document, that was widely available on the Internet and in newspapers, and the subject of intense debate since.
3. McCain had not read the plan as of September 23, four days later.

Bisphenol-A

Bisphenol-A (BPA) is used in the manufacture of some plastics which are used for food containers. Recently some researchers found indications that BPA is bad for health, even though the Food and Drug Administration considers BPA to be safe.

Here's the WaPo on how to avoid BPA.

Rubbermaid has a nice page on which of their products do or do not contain BPA.

Best Comment Ever

On the Not Even Wrong blog , the leading contenders for the best comment ever are this

Obviously this is the effect of the anthropic principle! In all the universes that the LHC were functioning and crossed it’s beams, black holes were created which swallowed the earth. Since we are all alive and see the LHC malfunctioning, this is evidence that miniature black holes can be created at LHC. This is really the first experimental data the LHC have produced. It’s amazing how much new good science this anthropic prinicple makes possible!

and this

Enough, this has ceased to be an intelligent discussion of anything.

.

I think it is the latter, by a nose.

Dire Straits

billmon on dailykos has some grim reflections:

The US economy is by nature bubble prone, but there are many ways for the monetary powers-that-be to cushion the blow when bubbles burst and inflate new ones to take their place (as the Greenspan Fed proved several times over). Too much political capital has been invested in the model (i.e. asset price inflation as the engine of growth in an increasingly distorted economy) for it to be otherwise.

That being the case, it was probably inevitable that the bubbles would continue to grow in size and destructive force until they finally outstripped even the US government's ability to manage them without triggering a run on the biggest bank of all -- itself.

Read the whole thing.

Size?

Is bigger better?

Life at 85mm

Actually, some of these pics have been cropped a bit.  Taken while learning what the world looks like through a 85mm lens (on full frame).

Garden Wild

Artist (cropped)


Bucking horse sculpture


President Garfield


Garfield's hat


Young photographer (cropped)( taking photograph of President Garfield)


Stairs


Where did Summer go? (cropped)

SEC asleep at the wheel

Then again, maybe the S.E.C. is trying to cover up its own culpability in this crisis. Four years ago, the agency pushed through a rule that allowed the big investment banks to take on a great deal more debt. As a result, debt ratios rose from about 12 to 1 to more like 30 to 1. Guess what Lehman’s debt ratio was when it went bust? Yep: 30 to 1.
- Joe Nocera, NYT

Palin Plummets Precipitously

Within one week, Sarah Palin went from 52% approve, 35% disapprove to 42% approve, 46% disapprove, i.e., +17 net to -4 net, a 21 point drop.

A Mystery to Me

Via CIP, this link: How Wall Street Lied to Its Computers, and from there this excerpt:

“New products, by definition, carry more risk,” she said. The models should penalize investments that are complex, hard to understand and infrequently traded, she said. They didn’t.

“One of the things that has caused great pain is complex products,” Ms. Rahl said.

That made me think back to some of the great trading debacles of the last century, such as the collapse of Askin Capital Management, a hedge fund that fell apart because of complex mortgage security investments gone bad. Wasn’t the moral of those stories that you shouldn’t put your money (or your client’s money) in something you didn’t understand? Furthermore, even if you are convinced you do understand it, you’re not going to be able to sell it when you need the money if no one else does.

This is an unheeded moral from last century's failures.

But just how does the "free market" come up with untradeable products?

Why Lehman Brothers died

From the Freakonomics blog on the NYT

The two-sentence story is that as an investment bank, Lehman could at any time rapidly invest in a pile of crap, and so lenders would only extend it short-term credit. Therefore any impediment to Lehman's constant rolling over of debt would kill it. Extensive quote below, emphasis added.

Lehman’s demise came when it could not even keep borrowing. Lehman was rolling over at least $100 billion a month to finance its investments in real estate, bonds, stocks, and financial assets. When it is hard for lenders to monitor their investments and borrowers can rapidly change the risk on their balance sheets, lenders opt for short-term lending. Compared to legal or other channels, their threat to refuse to roll over funding is the most effective option to keep the borrower in line.

This was especially relevant for Lehman, because as an investment bank, it could transform its risk characteristics very easily by using derivatives and by churning its trading portfolio. So for Lehman (and all investment banks), the short-term financing is not an accident; it is inevitable.

Why did the financing dry up? For months, short-sellers were convinced that Lehman’s real-estate losses were bigger than it had acknowledged. As more bad news about the real estate market emerged, including the losses at Freddie Mac and Fannie Mae, this view spread.

Lehman’s costs of borrowing rose and its share price fell. With an impending downgrade to its credit rating looming, legal restrictions were going to prevent certain firms from continuing to lend to Lehman. Other counterparties that might have been able to lend, even if Lehman’s credit rating was impaired, simply decided that the chance of default in the near future was too high, partly because they feared that future credit conditions would get even tighter and force Lehman and others to default at that time.

Gramm-Leach-Bliley

The Gramm-Leach-Bliley Act of 1999 undid the Glass-Steagall Act of 1933, that had regulated the financial services industry since the great depression..  This deregulation is said to have contributed greatly to the current meltdown on Wall Street.

Turning to the New York Times, Nov 5, 1999,:

Supporters of the legislation said that

....historians and economists have concluded that the Glass-Steagall Act was not the correct response to the banking crisis because it was the failure of the Federal Reserve in carrying out monetary policy, not speculation in the stock market, that caused the collapse of 11,000 banks. If anything, the supporters said, the new law will give financial companies the ability to diversify and therefore reduce their risks. The new law, they said, will also give regulators new tools to supervise shaky institutions.

See, now the Federal Reserve only has to bail out a few mega-corporations, not 11,000 piddly little banks. Taxpayers now own the largest insurance company in the land. As CIP put it: "It's got to be ironic that the US takes it's most dramatic step toward socialism under the most right wing President since Hoover (or maybe ever)."

The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''

The Republican Plan to Dominate The Twenty-First Century seems to be coming to an ignominious end. They should have called it "The Plan For the New American Decade".

''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''

How can you be so wrong, Senator Dorgan? We crumbled in 2008, not 2010.

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''

Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''

Worry-wart! The following retort set Senator Wellstone straight!

''The concerns that we will have a meltdown like 1929 are dramatically overblown,'' said Senator Bob Kerrey, Democrat of Nebraska.

Governor Pfaughlin

 America can be proud of its Governor of Alaska, for standing up for her principles.  Her state has an epidemic of sexual crimes, and she wants victims to pay for their own rape forensic kits, because those kits include emergency contraception; and in her belief, that is tantamount to abortion.  I say a proud nation should keep her as a one-term (hopefully impeached mid-term) governor of its remotest state.  At least quarantine the mainland.

PS: also read this.

Fibber McCain

Count the many lies.

A story from Frum

David Frum, National Review:

A president does not need to know everything. In fact, it's certainly impossible for him (or her) to know everything that he might possibly need to know. That's what the White House staff - and beyond them the whole vast apparatus of the US government - is for. Collectively, the US government knows a lot. And all of that knowledge is at the service and disposal of the president. All the president has to do is - is ask.

But that's not as easy as it sounds.

Somebody who knew President Bush well once remarked to me. "You'll notice he never asks questions."

"Why not?" I said.

"Because he doesn't know what it's okay for him not to know."

Kicking down the ladder you climbed up

Digby points out:

Sarah Palin was a high school basketball star back in the 1980s and when asked about the gender issues in this campaign by Charlie Gibson, she said this:

PALIN: I'm lucky to have been brought up in a family where gender has never been an issue. I'm a product of Title 9, also, where we had equality in schools that was just being ushered in with sports and with equal opportunity for education, all of my life.

I'm part of that generation, where that question is kind of irrelevant, because it's accepted.

How nice for her. Many women (and men) had to fight right wing conservatives like her tooth and nail to achieve that acceptance. If it hadn't been for them she never would have had all those opportunities and she wouldn't now be in a position to tell other women that they shouldn't have them. Like so many conservatives before her, she is more than willing to accept the freedoms and rights that liberals fight for and then turn around and deny them to others.

Still, she does seem to admit that women were allowed equal educational opportunities through governmental action so maybe she could have a chat with her running mate who has a zero rating with the American Association of University Women.

Stealing the Election

Just listening to the substitute host, Lee Rayburn, on the Thom Hartmann show:

"Misleading" absentee ballot applications are being mailed out by the McCain campaign to registered Democratic voters in purple states. The return addresses are inaccurate, as well as other information. "Misleading, lying" mailers are going out in Florida and other purple states. It's a caging tactic.

Calls are coming in verifying that this is happening in small towns, as well as larger ones.

dkos diary

Financial Collapse

The lede to a New York Times story is:

Lehman’s fortunes dwindled further on Wednesday as the firm, staggered by the biggest loss in its 158-year history, fought to regain confidence among investors.

The firm survived the Great Depression! Why is it failing now? The narrative I know says that an enormous amount of worthless paper was pumped into the financial system; the corruption occurred because everyone made the "reasonable" assumption that house prices would go on increasing indefinitely. All that worthless stuff is mixed in with everything else through the obfuscation of complex derivative securities that are impossible to value with any reasonable degree of precision now. There is a crisis of confidence now, the money has stopped flowing freely, and Lehman is hit by that.

Of course, any insistence in the past that there be some rules around such "assets" that cannot be priced easily was dismissed as unwarranted interference in the free market.** Well, the free market is now exacting its toll. No matter how imprudent mortage-backed securities in this inflated housing market might be in the long or even medium term, competition dictates that these firms trade in such in the short term because there was money to be made. The only way to keep everyone from walking off the competitive cliff together is by external imposition of rules. But that flies in the face of the prevailing ideology. And so a 158-year old institution is on death watch.

** The social benefit of these derivative securities is supposed to be that they increase liquidity - they make tradable things that previously were difficult to trade; and that they help mitigate risk. Looks like that in this crisis, neither is true any more. Lehman's stuff could be gold-plated but the problem is that no one can reliably know what is in "the big shitpile" (a term I learned from Eschaton). They are no longer liquid and they've put the nation's world's financial system at risk.

Manufacturing the McCain Bounce?

If you've been following the polls, after the Republican Convention, McCain seems to have caught up with or overtaken Obama. Apparently this post-convention bounce is not real. How do you create it?

How you do it is to change the composition of your sample. The sample is supposed to represent how the population itself splits (the Democrats have a national 11 million advantage). We are told changes in party affiliation happen very slowly. But the pollsters are moving numbers around.

Emory University political scientist Alan Abramowitz is highly skeptical of the new Gallup, USA Today and CBS polls. About the latter, which showed a statistically insignificant two point lead for McCain, Abramowitz said: "One reason for the dramatic difference between the two recent CBS polls is that the two samples differed fairly dramatically in terms of partisan composition. The first sample was 35.2% Democratic, 26.2 percent Republicans, and 38.6 percent independent. The second sample was 34.9% Democratic, 31.1% Republican, and 34.0% independent. That's a change from a 9 point Democratic advantage to a 3.8 point Democratic advantage. That alone would probably explain about half of the difference in candidate preferences between the two [CBS] polls."

http://www.dailykos.com/story/2008/9/9/18192/04144/290/592615

Garden Pic

Political Conventions' Neilsen Ratings

Digby is puzzled by the Neilsen ratings for the convention speeches by Obama and McCain.

Neilsen numbers can be found here: McCain, Obama

My comments (a version of these also posted on Digby's blog):

From the link provided, Neilsen says, McCain's speech:

All Households (rating) 24.6
Number of Households = 28,298,000
Persons 2+ (rating) 13.4
Number of people = 38,933,000

Continuing there to find Obama's numbers:
All Households (rating) 24.5
Number of Households = 27,716,000
Persons 2+ (rating) 13.4
Number of people = 38,379,000

First, the difference in the first number (all households rating) is in the third decimal place (24.6 versus 24.5). Since a sample of 1000 typically has an error of 3%, to trust the third decimal place (1 part in a thousand, or 30 times smaller error) the sample has to be 30*30 = 900 times larger. i.e., the Neilsen sample cannot be that accurate unless the sample size is around **one million**.

Since I doubt Neilsen has a sample size that large, the correct answer is that the audience sizes are a statistical dead heat.

Please note the second number, the 2+ persons rating is identical - 13.4 - but the number of people is different. So, in the 2+ people households, if McCain reached more people in the identical number of households, it must mean that the McCain-watching households are slightly larger. So more kids watched McCain Big deal.

The correct answer again is really that it is a statistical dead-heat.

PPS: deleted part of the post. The persons/Neilsen rating point is not consistent between Obama and McCain; e.g., McCain's persons/hispanic rating point is 4% higher than Obama's and Obama's persons/white rating point is 1% higher than McCain's. But add the individual numbers and they don't match the totals, so Neilsen is applying some kind of a correction factor.

G.S.O.D.

(Adapted from the Blue Screen Of Death).

When McCain spoke at the Republican National Convention he had as a backdrop a picture of a building no one could recognize. Intrepid readers of blogs later identified the building as Walter Reed Middle School in North Hollywood, California.

What does that building have to do with anything? The McCain campaign is mum.

However, again, intrepid readers of blogs have come up with the likely explanation. They probably wanted as backdrop the veterans' hospital, Walter Reed. You can see the pics here, and scratch your head at the likely colossal goof-up of this Presidential campaign. Probably beats Bush & Co in incompetence.

Zooms versus Primes

I believe Mike Johnston:

Learning How to Visualize
The only reason not to shoot with a zoom lens is this: a zoom lens has no point of view. A fixed-focal length (a.k.a. "prime") lens imposes its point of view on you, and, consequently, you can learn to impose its point of view on the world. If you routinely photograph with a fixed-focal-length lens, sooner or later you will not need to look through your camera to know what the lens will see—your eyes will know, your mind will know. You won't even need to have your camera with you to organize pictures out of the visual chaos of the world. Your eyes and your brain will be able to visualize without aid from the viewfinder. A zoom is a crutch to aid visualization, but, ironically, it is an impediment to learning how to visualize. If one wants to learn how a camera sees, the best and easiest way is to deal with a lens you can learn, instead of a lens that's a chameleon.