Monday, July 20, 2015

Summer's Light GSE Fare and Other Things





They’ve been  back in for a week or so--after July 4th break-- and soon they will be out, again for their summer recess, lasting from August through the beginning of September. Nice job!!

Scrutinizing the Iran pact will dominate Congress’s time in the House and Senate and soon we will hear both parties fill the airways with shouts and claims of “sellout” and “weakling”—and that’s before the growing, presidential candidates disgorge all of their bile and limited insight.

Just where is Sarah Palin when we need her?

Of course, there will be no time for additional serious congressional inquiries into the GSEs or related matters, although when David Fiderer’s book comes out, finally, they might have plenty of questions about Hank Paulson’s and Tim Geithner’s activities..


Iran Deal: Have Empty or Half Full?


Time magazine, the Washington Post, and New York Times endorsements, not withstanding, I can’t shake the feeling that President Obama, John Kerry, and the US came up short in the Iran deal. That’s mainly because I don’t trust the Iranians and believe that its leaders will say and do anything to get the sanctions removed. Displaying a shrewd market bizarre bartering mentality, they seem to have succeeded. It may take Iran a few years to produce it, but they will get their bomb (if they don’t already have 9/10 of it stored underground somewhere).


I don’t believe that any deal--which doesn’t allow unannounced UN visits to any and all Iranian sites dealing with the possible creation of nuclear weapon components or processes--hardly was the “best possible deal” we could get. 

So what if that requirement screams, “Iran, we don’t trust you.” We don’t.

The US never seems to learn that  these nations don’t share our values, democratic institutions, or principles.  So, whether it’s Russian adventurism in the Ukraine, Syrian “red lines,” negotiating with Iran on nuclear matters, or calling out Chinese hackers, who have stolen sensitive federal security and personal information, we seldom turn the screws enough and end up getting just that—screwed. 

Of course for this Administration, politically, it will be on someone else’s watch; just as a resolution of the GSE mess will be. But from now until the Iran deal blows up or gets congressional approval, President Obama can spout all of the legacy stuff he wants with only the “usual suspects” objecting. 

And the President thanking the Russians? It reminds of when I win at the casino. I am ebullient and after tipping the dealer generously, I’ll share a little of my winnings with generally the four or five other players at the table.

It’s a gesture and means little, since most are strangers and they didn’t lose, I just beat the house and won.

Obama’s happy, so he’s throwing around praise, willy nilly, whether it is deserved or not. The Russians are not our friends.

I would hope the Congress stalls the deal, raises one or more desirable changes which the Iranians have to swallow. We’ll see how badly that country wants the economic relief being proffered. 

If Iran is not into nuclear weapon making,  those treaty changes shouldn’t slow things down too much.


Trump Keeps Getting Better and Better

The “Donald” is exceeding even my destructive hopes as he runs like a wild bull through the GOP’s china shop, breaking political dishes slashing reputations, shining bright lights on his political skills, and roiling events. (I won’t mention spats causing his corporate conglomerate business and revenue.) 

The party elders—whomever they are (Reince Priebus. et al?)—are not going to lose their Republican Party pre-convention to Donald Trump, even though they may skunk him and lose the 2016 election. 

But Trump fast is becoming the best free political show in town. The “long knives” will come out for him soon, joining the internecine “shivs” already there.


Josh Rosner on the 7-18-Larry Kudlow radio show. (Link to show’s audio is below.) 

Sigh, Rosner’s remarks didn’t “wow” me, quite the opposite. I thought he missed several opportunities to nail the bad guys. He could have, but he didn’t or chose to not do so. 

Where he was most helpful was telling Kudlow that this Administration and GOP interests in Washington have been racing to embrace a new mortgage finance system which would be controlled by the very large financial institutions, whose aberrant actions hardly deserve being rewarded in that manner. Plus, they were those responsible for 2008 losses far more than F&F. 

That reality, I believe, is the single greatest vulnerability for possible F&F replacements. The TBTF guys will own it and , because—without a major F&F like structural substitute inside the process—the 15 and 30 year fixed rate loans are history or will be priced beyond the ability of most people to afford.


Rooting for Judge Margaret Sweeney and whomever is hearing the Lambeth appeal!


Here is a comment, found on the Tim Howard 717’s blog, in which poster “JMurrayx” lauds Judge Margaret Sweeney’s recent actions and said why. (OK, I applaud the move, but I’m still waiting for her first substantive plaintiffs’ call.)


1.   jmurrayx said:

The mere fact that Judge Sweeney has granted the legal teams in the other lawsuits access to Fairholme’s protected information and depositions, albeit under seal, means that she sees enough damning merit in the information to justify spreading the wildfire to the other lawsuits, a clear indication that the game is finally over for the Gov’t.

No self-respecting judge would let this happen if she didn’t see the writing on the wall (I am really holding back when I say this).

It kind of like knowingly letting the Trojan Horse enter the city of Troy!


What Others Are Saying


Trey Garrison questions sweep.



Borowitz in the New Yorker—Palin 


Thanks to old pals Wayne and Mary Sommerfeld for 55 years of friendship, education, and more, including this contemporary Abbott and Costello adaptation, explaining today’s “unemployment.”


COSTELLO :  I want to talk about the unemployment rate in America  .

ABBOTT: Good Subject.  Terrible Times.  It’s 5.6%.

COSTELLO:  That many people are out of work?

ABBOTT: No, that’s 23%. 

COSTELLO: You just said 5.6%.

ABBOTT:  5.6% Unemployed.

COSTELLO:  Right 5.6% out of work.

ABBOTT: No, that’s 23%.

COSTELLO: Okay, so it’s  23% unemployed.

ABBOTT: No, that’s 5.6%.

COSTELLOWAIT A MINUTE. Is it 5.6% or 23%?

ABBOTT: 5.6% are unemployed.  23% are out of work.

COSTELLO: If you are out of work you are unemployed.

ABBOTTNo, Congress said you can’t count the “Out of Work” as the unemployed.  You have to look for work to be unemployed.


ABBOTT: No, you miss his point.

COSTELLO:  What point?

ABBOTTSomeone who doesn’t look for work can’t be counted with those who look for work. It wouldn’t be fair.

COSTELLO: To whom?

ABBOTT: The unemployed. 

COSTELLO: But ALL of them are out of work. 

ABBOTT: No, the unemployed are actively looking for work. Those who are out of work gave up looking and if you give up, you are no longer in the ranks of the unemployed.

COSTELLO: So if you’re off the unemployment roles that would count as less unemployment?

ABBOTT: Unemployment would go down. Absolutely!

COSTELLO: The unemployment just goes down because you don’t look for work?

ABBOTT: Absolutely it goes  down. That’s how it gets to 5.6%. Otherwise it would be 23%.


COSTELLO : Wait, I got a question for you. That means there are two ways to bring down the unemployment number? 

ABBOTT: Two ways is correct.

COSTELLO: Unemployment can go down if someone gets a job?

ABBOTT: Correct.

COSTELLO: And unemployment can also go down if you stop looking for a job?

ABBOTT: Bingo. 

COSTELLO: So there are two ways to bring unemployment down, and the easier of the two is to have people stop looking for work.

ABBOTT: Now you’re thinking like an Economist.

COSTELLO:  I don’t even know what the hell I just said! 

ABBOTT: Now you’re thinking like a Politician. 



Former Fed “Macher” Explains Greek Bailout 

My old Fed colleague, Ed Ettin, explained to me how the new Greek bailout will work. Think, carefully, when reading this folks.


It is a slow day in a little Greek Village. The rain is beating down and the streets are deserted.  Times are tough, everybody is in debt, and everybody lives on credit. 
On this particular day a rich German tourist is driving through the village, stops at the local hotel and lays a €100 note on the desk, telling the hotel owner he wants to inspect the rooms upstairs in order to pick one to spend the night. 
The owner gives him some keys and, as soon as the visitor has walked upstairs, the hotelier grabs the €100 note and runs next door to pay his debt to the butcher. 
The butcher takes the €100 note and runs down the street to repay his debt to the pig farmer. 
The pig farmer takes the €100 note and heads off to pay his bill at the supplier of feed and fuel. 
The guy at the Farmers' Co-op takes the €100 note and runs to pay his drink bill at the taverna. 
The pub owner slips the money along to the local prostitute drinking at the bar, who has also been facing hard times and has been providing him with "services" on credit. 
The hooker then rushes to the hotel and pays off her room bill to the hotel owner with the €100 note. 
The hotel proprietor then places the €100 note back on the counter so the rich traveler will not suspect anything. 
At that moment the traveler comes down the stairs, picks up the €100 note, states that the rooms are not satisfactory, pockets the money, and leaves town. 
No one produced anything…… one earned anything.
However, the whole village is now out of debt and looking to the future with a lot more optimism.
And that, my friends, is how the bailout package works.





Maloni, 7-27-2015








Anonymous said...

Seems like Kerry or obama are doing their best to imitate and flatter the memory of Nevil Chamberlain. I'd rather them stuff a scud up their back sides.

Things are going to get very interesting leading up to the elections.

Bill Maloni said...

I will not strongly disagree with the suggestion of weakness, maybe not "Chamberlainesque" but still too willing for the deal.

We'll see the public's reception before 2016, as the Congress has to deal with this baby in the next 60 days.

Despite the institutional hurdle in both houses, I think you will see a demand in both parties for changes, which I would welcome.

G. Buckman said...

Bill, thanks again for your weekly efforts! Any ETA for the "Hammer" e-book drop?

Bill Maloni said...

Thanks for asking, GB--

At the very end, when I thought he was publishing, the "artist" in him decided he needed to do a heavy edit, rewrite, although not deviating from his core thesis that Paulson and Geithner--intentionally or otherwise--carried out the same plan.

Talent takes time.

So, other than I know it concerns him to have it waiting, I can't give you a better estimate. I have stopped asking him about schedules and am just trying to be as supportive as I can. (I do know, he also has major older family issues, which he manages.)

In the meantime, I also asked Frank Raines to flesh out his "mutual insurance company" idea that made it into Bethany McLean's NYT op ed.

G. Buckman said...

Thanks Bill. Hopefully David's e-book can be molded into a sledgehammer. I hope things for his family improve/work out.

I'll be interested to hear Mr. Raines' comments when he replies, if you care to share that is.

Thanks again.

Bill Maloni said...

I urged him to shape a plan and make it public.

Useless, just showing up in my blog as a "Raines says.....!"