Goldman Sachs in trouble

The New Neo Posted on by

The SEC has charged Goldman Sachs with “defrauding investors by allegedly marketing a financial product tied to subprime mortgages without telling them a big hedge fund was on the other side of the trade.”

My first question was one which appears at the end of the WSJ article:

…Bill Larkin at Cabot Money Management [says]. “The question is, has the SEC discovered what may have been a common practice across the industry? Is this the tip of the iceberg?”

Goldman Sachs stocks have gone sharply down, as might be expected. Goldman Sachs says it is innocent, as might be expected (lt also could be saying, “Some thanks we get!,” considering it was one of the biggest contributors to the Obama campaign in 2008).

Here’s the scoop on what is alleged to have happened at Goldman:

According to the SEC, Goldman structured and marketed a synthetic collateralized-debt obligation, or CDO, that hinged on the performance of subprime residential-mortgage-backed securities.

The CDO was created in early 2007 when the U.S. housing market and related securities were beginning to show signs of distress, the SEC complaint said.

“Undisclosed in the marketing materials and unbeknownst to investors, a large hedge fund, Paulson & Co. Inc., with economic interests directly adverse to investors in the [CDO], played a significant role in the portfolio selection process,” the complaint said.

The complaint said Paulson had an incentive to stuff the CDO with mortgage-backed securities that were likely to get into trouble. SEC enforcement chief Robert Khuzami alleged that Goldman misled investors by telling them that the securities “were selected by an independent, objective third party.”

A specific person with the dramatic-sounding name of Fabrice Tourre (man? woman? literary light? entertainer?) was named as “”principally responsible” for creating the CDO. Here’s some background on the 31-year old Goldman VP and Frenchman Tourre, from the HuffPo. He may not be an entertainer, but he does exhibit a certain flair:

In an email to a friend on January 23, 2007, the London-based trader called himself “The Fabulous Fab” and warned about the coming collapse in the subprime mortgage securities market, according to the SEC complaint. In the message, he also dramatically expresses his own lack of foresight about the consequences of his risky trading activity:

“More and more leverage in the system. The whole building is about to collapse anytime now… Only potential survivor, the fabulous Fab[rice Tourre]… standing in the middle of all these complex, highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!”

Monstrosities indeed. Here are two related posts of mine, in which I discussed how carried away the financial world got with complex interactions they poorly understand but used and manipulated in order to make short-term profits (see this and this).

Did Tourre really believe his own hype, that he was immune to the collapse all around him? Or did he merely think he could get away with it and get out in time? I assume we’ll hear more about this, as well as his side of the story.

We’re just simple folk at the Tea Parties

The New Neo Posted on by

Commenter “manju” wrote:

With the teaparties driving the republicans toward simple-minded libertarian sloganeering, conspriacy [sic] theories (birtherism), and even an ahistorical revival of the confederacy(McDonnell, Barbour), the top candidates become less and less electable. we may very well be looking at a reverse mcgovern scenario in ”˜12. even now, its not looking too good for the right on the presidential front, as evidenced here [and then a link to an article by Andrew Sullivan].

Manju is what’s known in the trade as a concern troll—that is, someone who comes onto a blog being very “I’m one of you, guys” (or, as in the case of manju, neutral), and then voices worry and pessimism about the effect of some phenomenon he/she is trying to discourage. Here, it’s manju versus the Tea Parties.

Commenter Steve H. came back with a good response:

“”With the teaparties driving the republicans toward simple-minded libertarian sloganeering””

As opposed to the nuanced Ivy League minded progressive sloganeering thats nearly destroyed the country?

I’ll take simple. Because truth and decency really are simple.

But I’d like to drag Winston Churchill in to back Steve H. up:

All the great things are simple, and many can be expressed in a single word: freedom, justice, honor, duty, mercy, hope.

Now, that was an eloquent man.

Jewish voters and Obama

The New Neo Posted on by

Nobody’s suing for divorce yet. But the honeymoon between Jewish voters and Obama may be over, or at least that first high flush of romance is gone.

This survey indicates that 42% of Jewish voters would vote for Obama again while 46% would “consider” voting for someone else. Although that word “consider” is a bit hard to interpret—to me, it could just mean they’d entertain the thought, if only for a brief while—it still shows a certain amount of disillusion. In addition, 50% disapprove of the way he’s handling Israel while only 39% approve, and 52% disapprove of Obama’s plan to recognize a Palestinian state within two years regardless of whether Israel agrees and only 28% approved. And so on and so forth.

The survey was conducted on April 8 and 9, among 600 “likely Jewish voters”—although I assume that ought to actually read “Jewish likely voters,” since I would guess that they were likely voters, not likely Jews. Just the nitpicky grammarian in me.

Remember Iraq?

The New Neo Posted on by

Victor Davis Hanson does. He reminds us of just how wrong “the current troika now directing U.S. foreign policy”—Obama, Biden, and Clinton—were, as well as those “no blood for oil” folks.

Of course, they bear no consequences and there is no accountability for having been so wrong. Bush paid for his earlier errors and miscalculations because he was in charge; Obama later reaped the benefits, despite his own errors, by being elected in part because he was the un-Bush.

Thoughts on tax day

The New Neo Posted on by

[NOTE: This is an edited version of an essay of mine from the past.]

Today is April 15th. This means that, along with millions of others, I’ll be making my way to the copy machine and then on to the post office so that my filled-out tax forms will have the proper postmark.

Ah, paying taxes. What fun! Along with close to 100% of Americans, I hate the process. It’s an attitude that unites us like almost nothing else.

Maybe you’re one of those early-birders. If so, my hat is off to you. I’m not ordinarily early, but this year I’m the latest I’ve ever been. Just looking at those booklets and forms gives me a headache. But now it’s done.

This time of year also reminds me of my father. He was both a lawyer and a certified public accountant, but it’s the latter profession that conjures up the April memories for me. He was not the Taxman (see video above) but the Taxmiddleman, the one who prepared tax forms—often of a very complex sort—and did it all by hand back in those pre-computer, pre-calculator days.

Every year starting around February—when my parents always went away to warmer climes for about ten days, in preparation for the long hard slog to come—until April 15th, my father would come home from work every night, eat dinner, and go immediately to a small table in our living room. There he’d set up shop until bedtime, around 11:30 or midnight, and then repeat the entire process the next day. Weekends it started earlier. No TV for him, and almost no relaxation, just this sitting in a chair, bending over papers and fiddling with small figures.

For those months, we kids were instructed to tiptoe around in the evenings and not disturb him. This was a tense time. We could see it in his exhausted face and bloodshot eyes.

And so in our house April 15 was a very happy day. That’s probably true for all the tax middlemen/women.

Krauthammer on Obama’s “fatuous” summit

The New Neo Posted on by

He does not mince words:

NOTE: here are some definitions for “fatuous:”

# asinine: devoid of intelligence
wordnetweb.princeton.edu/perl/webwn

# Stupidity, lack of intelligence, understanding, reason, wit, or sense.
en.wikipedia.org/wiki/Fatuous

# Obnoxiously stupid, vacantly silly, content in one’s foolishness
en.wiktionary.org/wiki/fatuous

# fatuously – vacuously or complacently and unconsciously foolish
wordnetweb.princeton.edu/perl/webwn

# fatuousness – absurdity: a ludicrous folly; “the crowd laughed at the absurdity of the clown’s behavior”
wordnetweb.princeton.edu/perl/webwn

# fatuousness – The characteristic of being fatuous
en.wiktionary.org/wiki/fatuousness

# fatuously – With smug stupidity or vacuous silliness; idiotically
en.wiktionary.org/wiki/fatuously

I guess America is starting to miss Bush

The New Neo Posted on by

Here are some poll results that ought to set Obama’s teeth on edge:

Americans are now pretty evenly divided about whether they would rather have Barack Obama or George W. Bush in the White House. 48% prefer Obama while 46% say they would rather have the old President back.

But never fear. Here’s the suggestion for Obama’s campaign:

Figuring out a way to make voters change their minds about the current President would be a much more effective strategy for Democrats than continuing to try to score points off the former one.

“Figuring out a way” is an interesting phrase. Why not just do things that people will like and that make sense rather than outraging them? It’s not rocket science.

But left-wing ideologues can’t do that, so “figuring out a way” to spin things is the approach. But when Americans have begun to figure you out, and don’t like what they see, it becomes more difficult (although hardly impossible) to fool them.

And remember, Bush’s numbers were with the “assistance” of a vehemently hostile press. Obama’s have been achieved with the press firmly behind him to a degree unprecedented in memory.

And in other and somewhat-related polling news, there’s this from Rasmussen:

A new Rasmussen Reports national telephone survey of likely voters finds Obama with 42% support and Paul with 41% of the vote. Eleven percent (11%) prefer some other candidate, and six percent (6%) are undecided.

That is shocking. I wonder whether people who are answering “Ron Paul” know much about him, or whether they are just at the “anyone but Obama” stage.

[ADDENDUM: Drew at Ace’s has some related observations.]

Robin of Berkeley says a funny thing happened to her on the way to the revolution

The New Neo Posted on by

Robin of Berkeley tells her change story in this superb essay. Please read the whole thing.

Robin’s tale is somewhat different from mine. For one thing, she was a leftist, and I a mere liberal (and fairly middle-of-the-road as liberals go). For another, her conversion seems to have come, like that of Saul/Paul on the road to Damascus, all at once and almost like a lightening bolt. Mine was much slower, taking place over a period of two to three post-9/11 years. And she’s managed to write about hers in one compact and graceful essay, while I’m stalled on mine after about 100,000 or so verbose words (I don’t know exactly, but who’s counting?).

It takes courage to change your mind about something so fundamental and important, and to face how wrong you have been in the past. Robin of Berkeley has found that courage, as well as the humility that goes along with it. Robin writes “astonishingly, I became a conservative.” That is really the correct word. It is astonishing to think there was something about you that was settled and would never change, and then to find yourself on the other side of the divide, never to return.

Because there’s no going back, you know; you can only go forward.

Oh, and about Obama’s nuclear summit…

The New Neo Posted on by

It should come as no surprise that:

(1) Nothing was accomplished; except that…

(2) Obama took the opportunity to snub a few allies; as well as…

(3) “[P]utting on a clinic for some of the world’s greatest dictators in how to circumvent a free press” (note that’s in quotation marks; I didn’t write it, Dana Milbank of the WaPo did).

Milibank has more—a lot more:

Reporters for foreign outlets, many operating in repressive countries, got the impression that the vaunted American freedoms are not all they’re cracked up to be.

Yasmeen Alamiri from the Saudi Press Agency got this lesson in press freedom when trying to cover Obama’s opening remarks as part of a limited press “pool”: “The foreign reporters/cameramen were escorted out in under two minutes, just as the leaders were about to begin, and Obama was going to make remarks. . . . Sorry, it is what it is.”

Alamiri’s counterparts from around the world had similar experiences. Arabic-language MBC TV’s Nadia Bilbassy had this to say of Obama’s meeting with the Jordanian king: “We were there for around 30 seconds, not enough even to notice the color of tie of both presidents. I think blue for the king.”

President Obama promised to be a uniter, not a divider. And so he has—united Republicans, Independents, and even some Democrats in fierce opposition to him. And now he’s working on unifying the world—at least, the world press:

Lalit K. Jha of the Press Trust of India, at Obama’s meeting with the Pakistani prime minister, reported, “In less than a minute, the pool was asked to leave.” The Yomiuri Shimbun correspondent found that she was “ushered out about 30 seconds” after arriving for Obama’s meeting with the Malaysian prime minister. Emel Bayrak of Turkey’s TRT-Turk went to Obama’s meeting with the president of Armenia but “we had to leave the room again after less than 40 seconds.”

“When you only see the president for 15 or 20 seconds without him asking if you have any questions, it’s very frustrating,” said Laura Haim of France’s Canal+, which persuaded the White House to include foreign outlets in the press pool. “It’s very important for this president, who wants to restore the image of the United States, to have more access.”

Obama’s official schedule for Tuesday would have pleased China’s Central Committee. Excerpts: “The President will attend the Heads of Delegation working lunch. This lunch is closed press . . . The President will meet with Prime Minster Erdogan of Turkey. This meeting is closed press. . . . The President will attend Plenary Session II of the Nuclear Security Summit. This session is closed press.”

And here’s a nice tie-in to my post of earlier today:

Reporters, even those on the White House beat for two decades, said it was the most restrictive set of meetings they had ever seen in Washington. They complained to both the administration and White House Correspondents’ Association, which will discuss the matter Thursday with White House press secretary Robert Gibbs.

I’m sure Gibbs will be every bit as responsive and courteous as usual in his reply to them. The sad thing is that most of them are still so heavily in the tank for Obama that it probably won’t matter.

And what of Milbank? His piece is certainly not the usual fawning Obama lovefest. Milbank also wrote this recent article praising Rahm Emanuel as the only person in the Obama White House trying to keep the president from being a complete failure. So it’s clear that Milbank has not drunk all the Kool Aid.

But Milbank is no conservative, either (see this, for example). In addition:

Milbank covered the 2000 US Presidential election and the 2004 US Presidential election. He also covered US President George W. Bush’s first term in office. After Bush won the 2000 election, Karl Rove asked the Washington Post not to assign Milbank to cover White House news. In 2001, a pool report penned by Milbank which covered a Bush visit to the US Capitol generated controversy within conservative circles. According to Milbank, the nickname given to him by the president is “not printable in a family publication.

But Milbank also ran afoul of the Obamaphiles quite some time ago, back in July of 2008:

Milbank was criticized for a July 30, 2008 article in which, in part by using snippets of quotations, he portrayed Barack Obama as being presumptuous. A few days later MSNBC’s Keith Olbermann stated that Milbank would not be allowed back onto his show, which Milbank had appeared on since 2004, until Milbank submitted “a correction or an explanation.” However, Milbank had apparently already left Olbermann’s show for another show on CNN. Milbank stated that he has been dissatisfied since he was criticized by Olbermann’s staff over making a positive comment about Charlie Black, a McCain senior advisor, and as a result had already been negotiating with CNN.

Apparently there was something about Obama’s manner that rubbed Milbank the wrong way right from the start. And now a great many other people in the press are agreeing. In this piece, Milbank gets to tell them “I told you so.”

But “presumptuous,” although correct, doesn’t begin to cover it as a descriptor for Obama. Arrogant and condescending, yes. But this is a man who no longer tries to hide it any more. This is the power trip of an egomaniac who knows the press has rendered itself toothless and impotent in his wake, and who assumes that its members will never strike back no matter how he treats them—or, if one or two do, he intends to hit them back twice as hard.

Lots of presidents haven’t liked the press. But usually that’s been because the press has been hostile to them. Obama reverses this—he’s hostile because the press has been so obsequious to him, and because he’s secretive, and because he has contempt for them and thinks he can quite literally get away with anything. That’s what happens when the press abdicates its responsibility to tell the truth in as objective a manner as possible. A power-mad thug gets elected, and if he acts thuggish to them, they can hardly complain.