Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1501.6 | -4.3 | -0.29% |
| Eurostoxx Index | 2615.6 | -35.6 | -1.34% |
| Oil (WTI) | 95.23 | -1.4 | -1.46% |
| LIBOR | 0.293 | -0.003 | -0.85% |
| US Dollar Index (DXY) | 79.83 | 0.341 | 0.43% |
| 10 Year Govt Bond Yield | 1.97% | -0.03% | |
| RPX Composite Real Estate Index | 193 | -0.1 |
Slow news day. Stock index futures are lower after yesterday’s strong rally. MBA mortgage applications rose 3.4% in the week ended Feb 1. The ECB meets later today. Bonds and MBS are up.
Earnings season is starting to wind down. Roughly 3/4 of all the companies in the S&P 500 have released earnings so far. 2/3 have beaten forecasts.
Pension funds and endowments are getting out of the commodities markets after returns have disappointed. When commodities started rallying about 6-7 years ago, big pension funds began buying commodities as a way to increase exposure to assets uncorrelated with stocks and bonds. The problem is that these markets are relatively tiny compared to stocks and bonds (the dollar value of the entire open interest in the March WTI crude oil contract is about the same dollar value of Exxon Mobil stock traded daily). This meant that pension funds were driving up prices of commodities as they bought them. And it wasn’t just oil – it was copper, lumber, wheat as well. Unlike traditional speculators who buy and sell, the big institutions were making a long-term investment, which is more or less unheard-of in the commodities market, at least on a large scale. Large OTC derivatives contracts allowed them to get around position limits, and those will be restricted in Dodd Frank. The punch line is that their exit will put pressure on commodity prices and keep inflation in check. It will also be a good thing for cash-strapped consumers. Where is the money going? TIPS.
The Justice Department is suing S&P over ratings for subprime mortgages. The complaint is here. The government is going to focus on conflict-of-interest issues (the issuer pays the ratings agency, not the investor) and supposedly not go after them for failing to predict the bursting of the housing bubble. Some of the damning emails are here. Sure, maybe ratings agencies may have suspected the housing bubble was bursting. Does that mean that professional investors who relied solely on S&P’s rating get a pass? A professional investor’s claim that “I bought this security because S&P said it was okay” ranks up there with “The dog ate my homework.” They do have a fiduciary duty, after all…
GOP Senators Bob Corker and David Vitter have introduced a bill to remove the dual mandate and direct the Fed to focus on inflation only. Needless to say the bill is going nowhere in the Democratically-controlled Senate, but is should hopefully spark some debate. Does the dual mandate compel the Fed to keep interest rates too low and does that fuel speculative bubbles?
Separately, Senate Republicans have sent the President a letter suggesting that there be a bipartisan board of directors to oversee the CFPB and that its budget be subject to the annual appropriation process. Actually, the 5 member board was part of the original proposal. Again, this will probably end up going nowhere.
Filed under: Morning Report |
All Things in Moderation 
NPR’s Marketplace said last night that Moody’s took a 9% hit just out of contagion from S&P. They also had a bunch of analysts saying that a lawsuit-driven bankruptcy of S&P would decrease returns to investors because of a lack of reliable rating sources. That rang a little hollow.
LikeLike
yello:
They also had a bunch of analysts saying that a lawsuit-driven bankruptcy of S&P would decrease returns to investors because of a lack of reliable rating sources.
The real trouble is that SEC regulations force banks to use S&P/Moody’s ratings with regard to assets they hold. As the WSJ says today, “…as a modest first step before suing a company for $5 billion, shouldn’t the government at least stop mandating its products?”
Speaking of which, one must wonder why Moody’s has avoided the wrath of the DOJ. Their RMBS and CDO ratings were just as wrong as S&P’s.
edit: haven’t been corked in a while, jnc
LikeLike
“Does that mean that professional investors who relied solely on S&P’s rating get a pass? A professional investor’s claim that “I bought this security because S&P said it was okay” ranks up there with “The dog ate my homework.” They do have a fiduciary duty, after all…”
Don’t forget the argument that certain government pensions and other entities are required to use Nationally Recognized Statistical Rating Organization (NRSRO) ratings for their investments.
http://online.wsj.com/article/SB10001424053111903596904576518460162935404.html?mod=WSJ_Opinion_LEADTop
LikeLike
Don’t forget the argument that certain government pensions and other entities are required to use Nationally Recognized Statistical Rating Organization (NRSRO) ratings for their investments.
I did not know that. Puts S&P’s refusal to plead guilty in a new light. I thought nolo with $100M was a serious offer to plead by S&P, but if the US demands a guilty plea this is going to trial.
LikeLike
Speaking of which, one must wonder why Moody’s has avoided the wrath of the DOJ.
Perhaps it has something to do with noted soak-the-rich advocate Warren Buffett’s large stake in it. Just spitballin’.
LikeLike
yello:
Perhaps it has something to do with noted soak-the-rich advocate Warren Buffett’s large stake in it.
Maybe. Also, recall that S&P, not Moody's, downgraded the US.
LikeLike
FYI Mark
http://en.wikipedia.org/wiki/Nationally_recognized_statistical_rating_organization
LikeLike
Scott, that’s impossible and you know it. One of the reasons Obama was elected and re-elected is because he has transformed Washington. He’s a known lightworker.
LikeLike
McWing:
He’s a known lightworker.
Oh yeah, I forgot to drink my kool-aid this morning….
LikeLike
Sigh, more out year savings BS.
http://www.washingtonpost.com/blogs/fact-checker/post/obamas-careful-claim-about-entitlement-savings/2013/02/05/0862965c-7008-11e2-ac36-3d8d9dcaa2e2_blog.html?hpid=z3
LikeLike
“He’s a known lightworker.”
The only light working is the targeting laser before the drone strike hits you.
LikeLike
Good questions for Obama that he will probably never be asked:
Yesterday, it was reported by NBC News that your Justice Department authored a memo justifying the extrajudicial “killing of American citizens if they are believed to be ‘senior operational leaders’ of al-Qaida or an associated force — even if there is no intelligence they are engaged in an active plot to attack the U.S.” NBC News further reports that one of the Americans killed was a 16-year-old boy born in Denver, Colo., whose father was Anwar al-Awlaki. It’s unclear, however, whether the boy himself was a ”senior operational leader” of al-Qaeda or an associated force.
Perhaps the assassinations were entirely justified and protected American interests.
But if you maintain that waterboarding a senior operational leader of al-Qaeda — indeed, the the confessed mastermind of the plot that killed 3,000 Americans — is “not who we are,” how do you maintain that the assassination of a 16-year-old American — unlikely a senior operational leader – is who we are?
How is waterboarding known al-Qaeda leaders who admit to plotting future catastrophic terrorist attacks on the U.S. “contrary to our ideals,” but assassinating a 16-year-old American — who may or may not have an affiliation to al-Qaeda – not contrary to those same ideals?
LikeLike
I’m shocked:
I wonder where the tipping point is that Obamacare ceases to be scored as deficit neutral.
LikeLike
Scott, the great thing is the redefinition of “imminent” after all the arguments about how Bush’s action against Iraq wasn’t justified as there was no “imminent” danger of attack.
I believe that in 2003 Saddam had been ““recently” involved in “activities” posing a threat of a violent attack and “there is no evidence suggesting that he has renounced or abandoned such activities.””
LikeLike
jnc:
I believe that in 2003 Saddam had been ““recently” involved in “activities” posing a threat of a violent attack and “there is no evidence suggesting that he has renounced or abandoned such activities.””
Good point, although to be fair perhaps a well-timed drone strike would have been preferable to an all-out invasion.
LikeLike
This is inevitable and unavoidable in a government run healthcare system.
http://www.thedailybeast.com/articles/2013/02/06/the-worst-scandal-in-british-medical-history.html
Is this still a preferable system?
LikeLike
The NHS reforms described in the article as having caused the problems remind me of the education reforms being proposed in the U.S.
LikeLike
it’s nice to be mentioned, i guess.
How does it feel to be on Huckleberry Closetcase’s Enemies List?
LikeLike
Interesting take on why the DOJ prosecution is flawed.
http://m.cnbc.com/us_news/100436608?refresh=true
LikeLike
McWing:
Good link on DOJ and S&P. Another, related, point is that there seems to be an assumption (both in the S&P case and other similar cases that rely on employee e-mails and messages) that the opinions of one employee represents firm-wide knowledge. That just isn’t necessarily the case at all. There may well have been an internal debate within the firm about the ratings, and that the side that lost the internal debate turns out to have been right afterall. One can easily imagine the losers of the debate having e-mail conversations with each other criticizing or even mocking the other side. After the fact, these e-mails appear to show, and are presented as showing, that “the firm” knew the ratings were bad, when in fact they are just one person’s judgment, and don’t necessarily show at all that the side that won the debate was acting in bad faith.
I remember during the hearings in Congress back in ’09, when Blankfein was testifying, and Carl Levin was waving about and quoting from an internal e-mail in which a Goldman employee had called a particular CDO package a “shitty deal”. (I was amused at the time thinking that this was probably the first time the word “shitty” had to be written in a congressional transcript, and Levin kept saying it over and over.) If I was Blankfein I would have just said “Yeah, he thought it was a shitty deal. But others did not. I’ll bet on more than one occasion, Senator Levin, the Senate has passed legislation that you thought was shitty legislation, but that doesn’t mean that it was passed in bad faith, does it?”
LikeLike
“The only light working is the targeting laser before the drone strike hits you.”
ha.
also, http://reason.com/blog/2013/02/06/lindsey-graham-urges-colleagues-to-suppo
it’s nice to be mentioned, i guess.
LikeLike
nova:
it’s nice to be mentioned, i guess.
Obama’s stance on drones doesn’t bother me nearly as much as his self-righteous and utterly predictable hypocrisy while campaigning in ’08.
LikeLike
that guy keeps unwrapped mints in his pockets.
LikeLike
Speaking of Enemies List, the NRA’s has finally percolated up to the attention of the Lamestream Media. Among the more absurd inclusions are:
National Association of Police Organizations
American Academy of Ambulatory Care Nursing
American Jewish Congress
National Council of Negro Women
Unitarian Universalist Association
Ben & Jerry’s Homemade, Inc.
Kansas City Chiefs
Motorcycle Cruiser Magazine
William Baldwin – Actor (but not
Alec orStephen)Chaka Khan – Singer
Richard North Patterson – Writer
Ahmet Zappa -Actor
Diva Zappa -Actor
Dweezil Zappa – Musician
Gail Zappa –
Moon Zappa -Actor
Julianne Moore – Actor
Julianne Moore – Actor (they must really hate her)
If one is known by the enemies they keep…
LikeLike
“GOP Senators Bob Corker and David Vitter have introduced a bill to remove the dual mandate and direct the Fed to focus on inflation only. “
Should this ever pass, I foresee a meltdown by Dr. Cowbell.
LikeLike
“ScottC, on February 6, 2013 at 12:00 pm said:
Good point, although to be fair perhaps a well-timed drone strike would have been preferable to an all-out invasion.”
They actually tried that with a cruise missile strike, but missed. If there was one thing Saddam knew how to do it was vary his travel schedule for personal security.
LikeLike
I wonder how long before a President uses a drone to take out the leadership of a criminal organization? Example, a Mexican drug cartel honcho near La Paz, or a FARC leader in Columbia? Will it be Mr. Nobel Peace Prize?
LikeLike
Troll:
FARC is considered a terrorist organization by the NCTC. And there was a bill in the House a couple of years ago trying to designate the Mexican drug cartels as terrorism groups.
Taking out foreign nationals engaged in criminal/terrorist activities isn’t as problematic to me as taking out a US citizen who isn’t an imminent threat without due process.
LikeLike
Mike,
I should make clear, it doesn’t bother me, it’s just interesting to see the left’s conundrum here. First, I suspect that the “kill list” policy rests on some Bush Admin’s legal reasoning used to justify waterboarding (which I’m also cool with) along with the idea that we waterboarding is an action that is beyond the pale but Assasination via drone is just good policy. It demonstrates that much of what the left complained about wrt Bush was politics not policy.
LikeLike
McWing: Just to set the record straight WRT me.
I don’t care where the “kill list” policy came from; it’s wrong, I don’t like it, and it should never have happened in the first place. Assassination via drone is assassination, and is not good policy.
Waterboarding is still torture, and never should have taken place.
You’re starting to sound like a parrot of qb.
LikeLike
Thank you, michi.
While I dismissed the original comment as cheap Obama-bashing over his hypocrisy, I do not support nor condone torture or assassination as rightful American policy regardless of the party in power.
There is a certain glee being taken in some quarters that we are continuing or expanding on actions which originated in the aftermath of the 9/11 attacks and our invasion of Iraq. I’m a little baffled by it because I’m not sure how tarring Obama as being as bad as Bush advances either cause in any way.
LikeLike
yello:
I’m a little baffled by it…
Maybe it’s a
practicalpragmatic solution. Why be hidebound by some Talmudic philosophy about right and wrong?LikeLike
Maybe it’s a practical solution. Why be hidebound by some Talmudic philosophy about right and wrong?
It’s a rather pragmatic (if you are going to mock me, at least quote me correctly) solution and fairly cost-effective, but I can argue that it is astoundingly short-sided in a number of respects without ever touching on the morality of it.
LikeLike
yello:
It’s a rather pragmatic (if you are going to mock me, at least quote me correctly) solution…
Excellent point…fixed.
but I can argue that it is astoundingly short-sided in a number of respects without ever touching on the morality of it.
Maybe, but it was the morality of it that you seemed to be objecting to, ie “rightful”.
LikeLike
Maybe, but it was the morality of it that you seemed to be objecting to, ie “rightful”.
So what is the moral justification for torture and assassination, coming from a universal non-coercion perspective?
LikeLike
yello:
So what is the moral justification for torture and assassination, coming from a universal non-coercion perspective?
Well, recall that the objectionable action is not simply coercion, but rather the initiation of coercion. Coercion can be perfectly justified as as a response to the initiation of coercion. And, of course, this includes the threat of an initiation of coercion. I don’t need to wait for the robber to actually shoot me before I am justified in defending myself with coercive measures. If he is holding a gun to my head and demanding my money, it is this threat of (an initiation of) coercion that justifies a coercive response.
But really, why would a “pragmatic” guy like you even care about what is morally right or wrong?
LikeLike
qb:
It demonstrates that much of what the left complained about wrt Bush was politics not policy.
The wonder is that anyone actually believed it back then. It was transparently political even at the time.
LikeLike
Thank you for the compliment, Michi! It’s not offer I’m compared (favorably) to a Harvard alumni, even if he is a lawyer!
LikeLike
…Harvard alumni…
Is that canonical? On the Plum Line, he is always deliberately coy about whether he went to Harvard or Yale.
LikeLike
“original comment as cheap Obama-bashing “
I put a lot of time into my Obama bashing. Cheap, it is not, in case you’re “just asking for a little honesty”.
LikeLike
I put a lot of time into my Obama bashing.
I stand corrected. And I appreciate the effort. High quality Obama bashing is tough to come by.
LikeLike
But really, why would a “pragmatic” guy like you even care about what is morally right or wrong?
Pragmatism is but one factor in my consideration of what proper actions entail. My sense of morality is not nearly as formalized as yours as it is based largely on poorly remembered Sunday School lessons but suffice it to say it is not structured around the supremacy of individual liberty as its only governing consideration. In some way it centers around the notion that we have some obligation to our fellow human beings that cannot always be arrived at through the principles of enlightened self-interest.
LikeLike
yello:
In some way it centers around the notion that we have some obligation to our fellow human beings that cannot always be arrived at through the principles of enlightened self-interest.
I actually agree that we have an obligation to our fellow human beings…namely the obligation not to deal with them through force or fraud.
LikeLike
Yello is right: I have declined to go beyond saying Harvard or Yale. Too many crackpots out there to give more information. Admitted to both, had to make the unfortunate choice.
And of course I only disclosed that to begin with because a former PL commenter started saying I didn’t know anything about law (since I was crazily saying that a private corporation can’t violate the First Amendment’s free speech clause).
Btw, Michi, could you be any more obsessed and juvenile? Why don’t you just get serious about ignoring me and not mention me, like ever again.
LikeLike
Btw, Michi, could you be any more obsessed and juvenile? Why don’t you just get serious about ignoring me and not mention me, like ever again.
Wow, qb. You came all the way over here to insult me? I don’t know what I’ve done to deserve that favor, but thanks!
LikeLike
“f enlightened self-interest.”
I’m not an Objectivist, but I’m pretty sure it’s rational self-interest.”
LikeLike
Michi:I stopped by to answer the question about me and noticed that you are still even taking swipes at me here. But of course you think everything revolves around you.
I don’t know what happened to you that results in this habitual need to insult me, nor do I care. It’s embarrassing for you, though. It should be no mystery why I gave up on the game of pretending there is reasonable discussion with you et les autres.
LikeLike
You can blame me. I was actually curious to know which school he went to.
LikeLike
Don’t blame jnc for anything. Blame me. I was just disgusted to see this apparent vendetta being acted out here.
LikeLike
Quarterback–
Since I think I’ve mentioned you once here in months and twice on PL, I’m flattered that you noticed.
LikeLike
I’m not an Objectivist, but I’m pretty sure it’s rational self-interest.”
Google leads to separate Wikipedia entries depending whether one searches for “rational self-interest” (in quotes) or “enlightened self-interest” (again, in quotes). The former leads to the article on the Objectivist concept of Rational Egoism while the article on Enlightend Self Interest identifies that as a component of Utilitarianism, a broader and older concept than Objectivism.
Please do not expect me to defend either in depth because although I have read enough Bertrand Russell to be dangerous, I am not a serious student of various philosophical schools, as if that weren’t readily apparent.
LikeLike
Yeah, sure. Just stick with your little coterie, stop disrupting the rest of us, and take your “ignore” seriously.
LikeLike
Not a fan of Utilitarianism as it always leads to tyranny. Though Mills had an interesting childhood.
LikeLike
Troll:
I suspect that the “kill list” policy rests on some Bush Admin’s legal reasoning used to justify waterboarding
I assume you’ve seen the “white paper” on the justification for the drone strike on al-Awlaki? It’s new reasoning that is broader than GWB’s, IMO.
http://openchannel.nbcnews.com/_news/2013/02/04/16843014-exclusive-justice-department-memo-reveals-legal-case-for-drone-strikes-on-americans?lite
LikeLike
Mike,
That’s even funnier!
LikeLike
George, Mike can correct me, but I believe he thinks, as I do, that the reasoning for this white paper is worse than the Yoo-Addington reasoning on enhanced interrogation.
No excuses for BHO from this corner.
And I think none from JNC, YJ, Mike, or Kelley, either.
LikeLike
That was pretty much my point earlier, Mark.
Watch your back.
LikeLike
Ouch, this is gonna leave a mark,
http://reason.com/archives/2013/02/07/you-dont-need-a-weatherman-to-know-which/1
LikeLike
Mark, no lawyer here, obviously, but that’s what I find so amusing.
LikeLike