Wednesday, September 30, 2009
“Music has to be recognized as an element of socialization,” [Jose Abreu, who organized "The System" in which Dudamel learned music] says in Arvelo’s documentary, “as an agent of social development in the highest sense, because it transmits the highest social values, such as solidarity, harmony, mutual compassion, and it has the ability to unite an entire community and express sublime feelings"....
Or, as an 11-year-old violinist in Arvelo’s documentary puts it: “I imagine that God must be like music because something so beautiful can only be the work of God.”
* The Federal Accounting Standards Board changed the accounting rules in April 2009, so the banks could wait until the assets appreciated in value (read: until the real estate market improved) and therefore take less of a write-down against the losses.
BOTTOM LINE: The "toxic assets" are still on the banks' books.
"Liquidations" of delinquent loans are taking much longer than usual.The banks are taking longer to foreclose and holding foreclosed properties to avoid putting pressure on prices (and thus triggering writedowns). Mortgage mods are delaying foreclosures. Many houses are early in the foreclosure process.
We have wrapped many of Amherst's charts into the presentation below. Here is the firm's bottom line:
We are concerned that, in light of this housing overhang, the stabilization we have seen in home prices the last few months is temporary....
During the boom, sales of existing homes soared to 7 million a year. Now they're back to a more normal 5 million.
At the current rate of sales, it would take 8.5 months to clear all the inventory on the market. This is still high. Normally "inventory-months" averages about 6.
If Amherst Securities is right, meanwhile, there are another 7 million houses of "shadow inventory" that will hit the market in the next couple of years. It would take 16 months to sell this inventory.
Friday, September 25, 2009
U.S. Petroleum Consumption (2009)
19.5 million barrels per day
7.1 billion barrels per year
"The Westwood company revealed in July that it had found the equivalent of 150 million to 250 million barrels of oil and natural gas in an undisclosed part of Kern County using techniques that the oil company's executives would rather not talk about. It was California's biggest find in 35 years."
* Even if the company can bring above ground the total of 150-250 million barrels of oil (assuming the find is mostly oil) it is still an insignificant amount--15 to 25 days worth of oil, or 2 to 3.5% of our country's yearly consumption of oil.
* We still need to import 9.7 million barrels per day or 3.5 billion barrels per year.
Yes, we import half of our oil. And here are the top 15 countries exporting oil to the U.S.
#4 Saudi Arabia
#13 United Kingdom
Lehnert, 58, was commander of Joint Task Force 160 when it was assigned to build prison cells in 2001 at the U.S. Navy base in Cuba to hold designated "enemy combatants" from Afghanistan and elsewhere.
He said he was given little guidance from the Pentagon, but he did have his staff read the Geneva Convention, the international agreement governing treatment of prisoners.
"I wanted to run it close to Geneva Convention rules," Lehnert said. "Our job was to take them out of the fight, and once we had done that, I felt we had a moral responsibility to take care of them."
However, another task force was put in charge of interrogating detainees, and there were disagreements over their treatment, Lehnert said.
"I think it is extraordinarily important how we treat prisoners," he said. "Obviously, there were other views."
"I came to the conclusion very soon that this probably wasn't the right way to go," said Lehnert, who served just 100 days at the base.
"Probably before I left Guantanamo, I was of the opinion it needed to go away as soon as possible," he said.
The general said he didn't feel the U.S. would get much useful information by using the techniques.
"I think we lost the moral high ground," he said.
President Barack Obama has ordered the prison to close by January 2010, but it's unclear where about 200 remaining prisoners would go.
Derivatives are "financial weapons of mass destruction."
Derivatives, traded in an unregulated $600 trillion market, were partly blamed for the financial crisis that ignited a year ago. The value of derivatives hinges on an underlying investment or commodity -- such as currency rates, oil futures or interest rates. The derivative is designed to reduce the risk of loss from the underlying asset. Derivatives trading is dominated by about 20 big banks worldwide....
Credit default swaps, a form of insurance against loan defaults, account for an estimated $60 trillion of the over-the-counter derivatives market. The collapse of the swaps brought the downfall of Wall Street banking house Lehman Brothers Holdings Inc. about a year ago and nearly toppled American International Group Inc., prompting the government to support the insurance conglomerate with more than $180 billion in aid....
Congress is weighing legislation to impose broad new oversight on derivatives. The Obama administration's proposal, part of its plan for overhauling U.S. financial rules, would subject the banks that trade derivatives to requirements for holding capital reserves against risk and other rules. A new network of clearinghouses would be established to provide transparency for derivatives trades.
US banks made $5.2B trading [financial weapons of
mass destruction] derivatives in 2Q
By Marcy Gordon, AP Business Writer
On Friday September 25, 2009, 12:48 pm EDT
Wednesday, September 23, 2009
* If Qaddafi didn't speak with so much hyperbole on almost every other topic of discussion he might have more credibility decrying wars.
I would rather see diplomacy than war. But I want to see an honest, rational debate based on fact & evidence (Fande). Qaddafi offers the same, old, tired dogma (assertion without proof) and demagoguery (appeals to emotional biases) that have dominated geo-politics for far too long. With his form of language we get more confusion than clarity.
"An hour into his address, Colonel Qaddafi began calling for investigations into each of the major wars since the United Nations was founded: the Korean War, the war over the Suez Canal, the Vietnam War and the United States’ two wars in Iraq, which he called 'the mother of all evils.' "
Cande from Qaddafi...
EXCERPTS via the NY Times:
“We are not committed to obeying or adhering to resolutions by the Security Council in its composition right now,” he said, adding that the Security Council should be renamed the “Terror Council.”
Ali Abdussalam Treki, the Libyan diplomat who now holds the rotating presidency of the Security Council, introduced him as the “leader of the revolution, president of the African Union, King of Kings of Africa.”
At times, Colonel Qaddafi veered into conspiracy, saying, for example, that the H1N1 influenza virus, also called swine flu, might be a military or corporate weapon that got out of a lab, and he intimated that an Israeli hand was behind the assassination of President John F. Kennedy.
The Israeli-Palestinian conflict, he said, should be solved by the creation of a single state, which Mr. Qaddafi called Israteen, but Mr. Qaddafi stressed it was wrong to infer that Arabs hate the Jews. “You are the ones who burned them, not us. You expelled them,” he said, referring apparently to European nations.
Tuesday, September 22, 2009
* Yes, the more electricity you use the more you get charged.
Prices as of September, 22 2009...
Total Energy Rates ($ per kWh, or kilowatt hour)
Tier 1 = 12 cents per kWh
Tier 2 = 13 cents per kWh
(101% - 130% of Baseline)
Tier 3 = 26 cents per kWh
(131% - 200% of Baseline)
Tier 4 = 38 cents per kWh
(201% - 300% of Baseline)
Tier 5 = 44 cents per kWh
(Over 300% of Baseline)
Statue of Liberty National Monument
"The New Colossus"
Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
"Keep ancient lands, your storied pomp!" cries she
With silent lips. "Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!"
A poem by Emma Lazarus is graven on a tablet
within the pedestal on which the statue stands.
At the time of writing, the Iraq War costs us approximately $700 billion…which also happens to be the same price-tag Paulson put on the first bailout for his banker buddies.
‘Cause none of those greenbacks made it to the people on Main Street when the subprime jack-in-the-box sprung up on Wall Street. Those MFs had pension plans, 401ks and home values all rolled into one ball of wax, and then they bet it all on “subprime” lendees’ abilities to pay back the loans on houses they couldn’t afford.
There was also the surprise of the mortgage with the escalating interest rate that could double and even triple in value. Meaning, a 4% interest rate could become 8%, and then 12%...and that’s when the “subprime” lendees threw the keys in their mailboxes, and abandoned the homes they couldn’t afford. Banks and lending offices were taking anybody who walked through the door, literally. No proof of job, no nothing. Just sign here and off you go to your patio in the back of your new 4-bedroom house, which may in the future lose 30% of its value when the Real Estate Boom goes…Bust!
The Dow lost over half its value, from a high of roughly 14,000 in October 2007 to roughly 6,600 in March 2009. Venerable financial firms crumbled like shale being drilled for oil.
“Down goes Lehman Brothers!” (You gotta do it in Howard Cossel’s voice for the full effect. It’s more fun that way.)
“Down goes Bear Stearns…oh, oh no!...Mer-awl L’nch is-on-the…ropes. But seemingly like a Deus-ex-Machina from the heavens, Bank of Am…eric-ah…steps in to claim the wayward bank.”
I mean, we saw the biggest bank failure in United States history (WaMu) and the biggest corporate collapse (AIG). General Motors also waved the white flag when they saw all the kingdom’s drivers not being able to afford the $3-4 a gallon gas the oil companies were ransoming. We people sure as hell weren’t going to buy an SUV that got 13 miles to the gallon. So Detroit (Ford and Chrysler, too) took a handout, from us taxpayers who couldn’t afford to drive their inefficient cars anymore.
The credit markets seized up, nobody was lending. Nobody. Nobody but the Federal Reserve…lending our tax dollars to the banks who put us in this mess. It ain’t right what happened, but I sure don’t want to see the whole thing come tumbling down. Prop up the banks until they can walk on their own, but once they can they should be lending the money back to the people who bailed the banks out in the first place.
Bush did more damage than hurricane Katrina. Worse yet, he didn’t clean up his own mess. He left it all for Barack Obama to sort out.
And that’s where we begin our story…
Monday, September 21, 2009
Please take a peek when you get a break in your day. For those of you lacking a natural affinity for accounting rules (I’m right there with you), I’d suggest you get some chocolate or coffee, or a stimulant of your choice, before reading this.
Get jacked up on something and tear through this because it is very important to understand…they flipped the board and changed the rules of the game.
Here are viewpoints from the New York Times and the Wharton School of Business from the University of Pennsylvania…
The change seems likely to allow banks to report higher profits by assuming that the securities are worth more than anyone is now willing to pay for them. But critics objected that the change could further damage the credibility of financial institutions by enabling them to avoid recognizing losses from bad loans they have made.
Critics also said that since the rules were changed under heavy political pressure, the move compromised the independence of the organization that did it, the Financial Accounting Standards Board.
During the financial crisis, the market prices of many securities, particularly those backed by subprime home mortgages, have plunged to fractions of their original prices. That has forced banks to report hundreds of billions of dollars in losses over the last year, because some of those securities must be reported at market value each three months, with the bank showing a profit or loss based on the change.
But not everyone agrees that mark-to-market rules have been as damaging as the banks claim.
“I’ve never bought the idea that market-value accounting caused this crisis,” says Wharton accounting professor Brian J. Bushee. Changing accounting rules to accommodate the banks would be like changing the scoring system for tennis, he suggests. “It wouldn’t make you a better tennis player. Changing how we keep score — what these assets are worth — won’t change the problem…. In a sense, that’s what [the banks] are asking investors to do — to say, ‘Let’s use these four-year-old values, not what things are currently worth’”….
Bankers bitterly complained that the current market prices were the result of distressed sales and that they should be allowed to ignore those prices and value the securities instead at their value in a normal market. At first FASB, pronounced FAS-bee, resisted making changes, but that changed within a few days of a Congressional hearing at which legislators from both parties demanded the board act.
If the FASB, which sets accounting rules in collaboration with the Securities and Exchange Commission, approves the rule change tomorrow [which they did], banks would be free to carry troubled assets on their books at higher prices, avoiding requirements to shore up balance sheets with new capital they cannot get now.
But potential buyers of toxic assets will make their own valuation assessments regardless of what the accounting rules allow the banks to claim, says Wharton finance professor Itay Goldstein. “After all, if assets are not marked down, investors would still fear that they are worth less” than they once were.
Mark-to-market defenders say that using market prices is the best way to derive honest values. Allowing banks too much latitude would paper over the problem, making banks look healthier than they are, they say. “It’s an issue because … the year before the crisis was the first in which firms were required to follow a new set of fair-value measurement tools,” according to Wharton accounting professor Catherine M. Schrand….
On the other hand, if the government’s toxic-asset purchase program does generate significant trading, the whole issue of how to value the assets remaining on banks’ books will become moot, since there will then be enough fresh data to justify mark-to-market accounting, says Wharton finance professor Franklin Allen.
Many experts acknowledge that the skimpy trading in toxic assets creates difficulties. “If there is no trading then you can’t really mark to market,” argues Wharton finance professor Jeremy J. Siegel. “I think there’s been trading that is at too low a price…. I wouldn’t mind suspending mark-to-market for those assets right now.”
But Susan M. Wachter, professor of real estate at Wharton, thinks that for the financial and economic crises to begin to ease, the “murky” condition of banks must be clarified. That cannot be done with accounting changes that simply make the assets look more valuable, she says, arguing that the banks must instead be encouraged to get rid of those holdings. “In order for capital to come to banks, they must disgorge their non-performing assets. That mark-to-market component is necessary.”
Banks’ in-house systems cannot give accurate valuations because too many factors are unknown, such as whether the economy will deteriorate further and whether there will be additional government stimulus spending, according to Wachter.For the banks, a chief benefit of flexible accounting is that it will make them less likely to run afoul of capital-reserve requirements, since their balance sheets will look stronger.Siegel notes that if capital requirements are the issue, regulators could help the banks by easing those instead of changing accounting rules. Wharton finance professor Marshall E. Blume, agrees. “The regulators are in a difficult position, because these companies clearly are not as viable as they were. Having said that, you don’t change the accounting to make it look like they are viable.”
Wachter insists that capital requirements should be based on market-to-market rules, because investors who could pump capital into the banks will be reluctant to do so if they think accounting tricks make banks look healthier than they are. Easing the mark-to-market requirement, she says, “is a road to a long and sustained recession.”
“This has been circulating Wall Street trading desks via UBS’ Art Cashin: On both 9/11/01 and 9/11/09, the Dow industrials were at 9605 (it was the close of the 9/10 in 2001, since markets never opened on 9/11 2001).”
“Median household fell to $50,303 last year, from $52,163 in 2007. In 1998, median income was $51,295. All these numbers are adjusted for inflation.”
Dear Christopher Martin and Mario Parker,
Your misrepresentation occurs because you do not clarify “from remote areas,” meaning that the wind or solar requires transmission lines. Caveat: not all solar systems require transmission lines.
Most solar-electric systems are localized, meaning each home or business powers itself with rooftop panels that feed into the individual building’s meter. Therefore there is no transmission line needed.
On the other hand, solar-thermal electric systems, usually installed in the desert, do need transmission lines. Large-scale solar-electric systems in “remote areas” would also need transmission lines.
All of these statements from your reported story misrepresent the reality of solar electricity:
–”A new solar-power facility costs three times as much as a coal-fired plant of the same size, the Energy Department estimates.”
* A solar-electric system on an individual home or office saves money, especially if leasing the solar system. Grid electricity prices continue to rise, but using a solar-electric system effectively puts a cap on the cost of running one’s home or business. You should have also mentioned that there is an environmental cost to burning coal–rising sea levels, flooding coastal areas, etc.
–”Regulators don’t know when additional wind and solar power would disrupt service.”
* A solar-electric system on an individual home or office does not disrupt electric service to the respective home or office. In California, the meter swings both ways: excess solar electricity spins the meter backward to build up credits on the customer’s account; the credits can be used later as debits. A solar-electric system on an individual home or office does not disrupt electric service to the grid either.
–”The North American Electric Reliability Corp., a nonprofit group based in Princeton, New Jersey that oversees power systems serving 334 million people, said in an April report that grid monitoring must be improved to add wind and solar power without harming reliability.”
* A solar-electric system on an individual home or office does not harm reliability of electric service.
Once again, for accuracy’s sake, all of these statements need clarification that the solar or wind power is coming “from remote areas,” and therefore would require transmission lines.
Your story is about “Transmission lines,” however you do not make that explicit. Your headline especially confuses the issue of solar electricity’s very reliable and economical potential to produce CO2-free power (without any hazardous byproduct, like the kind left behind by nuclear energy).
Nowhere in your reporting do you two denote that there is an economical solar-electric solution that does not require transmission lines. That is a very important distinction for those of us who already use solar electricity and are saving money by doing so.
Thank you very much for your attention to detail and your efforts to get accurate information to the public. The Press performs an essential function in our democratic society; it’s not mentioned in the First Amendment to our Constitution for nothing. Now please take more care from here on out, and exercise your awesome power to report facts and evidence to the public with more diligence and clarity.
Your Fellow American,
* Grants do not have to be paid back, and therefore do not increase the debt of the student like a loan would do.
Putting the government in charge of all federal loans would save taxpayers an estimated $87 billion, according to the Congressional Budget Office. The CBO says the figure could be much lower, $47 billion, when administrative costs and market conditions are considered.
The money would boost Pell Grants for needy students, increasing the maximum grant by $1,400 to $6,900 over the next decade. It also would pay for a new college completion fund, community college reforms and more college aid for veterans.
“No student in this great country of ours should have to mortgage their future to pursue their dreams,” said the bill’s sponsor, California Democratic Rep. George Miller, chairman of the House Education and Labor Committee.
Yet the money also would be spent on things that don’t help pay for college, such as construction at K-12 schools and new preschool programs.
And while the measure would increase Pell Grants, it would do nothing to curb college costs, which rise much faster than Pell Grants do.
As consumers, college students probably wouldn’t notice much difference in their loans, which they would get through their schools. Broadly speaking, the bill doesn’t do much to make loans cheaper or help pay them off.
It does keep interest rates for need-based federal loans from jumping from 3.4 percent currently to 6.8 percent as scheduled in 2012. Rates for most other loans would remain at 6.8 percent.
Still, the bill’s changes to federal college aid programs would be the most sweeping since their creation in the 1960s and would fulfill a campaign promise by President Barack Obama.
The measure would end the subsidized loan program under which private lenders made $56 billion in government-backed loans to more than 6 million students last year, compared with $14 billion in direct loans from the government.
The bill would also shorten the labyrinthine college aid form, which Obama proposed to eliminate altogether when he ran for president.
“To accuse him of being a socialist is really immature. First of all, who said being a socialist is evil?,” said the man who made the image of Obama-as-Joker.
Seeing what happened in D.C. reminds me of the “fallacies of logic” I learned along the way. #1 The ad hominem attack, like a school yard name-calling incident: “He wears purple shorts, he doesn’t know anything.” In much the same way, a caricature of President Obama as Joker-portrayed-by-Heath-Ledger does not depict the actual man in the White House. There is no logical argument in it; it is Demagoguery.