Today in history – September 11

9/11 – On what will prove to be one of the most significant days in United States history, members of the Islamic terrorist organization Al Qaeda successfully attack the US on its own soil, sending shock waves throughout the world. Four teams teams of terrorists board and hijack 4 early morning cross-country flights departing from Boston and New York, with the goal of flying them into various landmark buildings in New York and Washington. Two of the planes are flown into the Twin Towers of New York City’s World Trade Center in southern Manhattan, resulting in the eventual collapse of both and killing nearly 3,000 people, including over 400 NYC firefighters, policemen, and paramedics. A third plane flies to Washington D.C, crashing into the Pentagon, killing nearly 200 passengers, civilians, and military personnel. The fourth plane fails to reach its destination when passengers, made aware of the other crashes after making calls to the ground to report their own hijacking, stage their own attack on the hijackers. Upon breaching the cockpit, the hijackers dive the plane into a field in western Pennsylvania, killing all 45 passengers.

Much of the day’s events are played out in front of a live and captivated television audience, including the second plane hitting the WTC, the collapse of both towers, and perhaps most disturbingly, the sight of desperate office workers, trapped on floors above the infernos caused by the two crashes, making the horrific choice to leap more than a thousand feet to their death rather than be incinerated in the growing flames. The traumatic events of the day immediately enter the national consciousness, to be forever known as, and immediately brought to mind by, the simple numbers, 9-11.

Within a month of the attacks, America will retaliate, with President Bush initiating Operation Enduring Freedom, a military operation aimed at destroying AQ’s terrorist network in Afghanistan and ousting AQ’s Afghani hosts, the Taliban regime. Over the ensuing years the US will capture or kill many high ranking AQ operatives, an effort that will continue even into the presidency of Bush’s successor, Barack Obama, culminating in a 2011 raid on a Pakistani housing compound resulting in the killing of AQ founder and leader, Osama Bin Laden.

Morning Report – CA City decides to go the eminent domain route 09/11/13

Vital Statistics:

Last Change Percent
S&P Futures 1681.2 -1.2 -0.07%
Eurostoxx Index 2858.5 7.1 0.25%
Oil (WTI) 107.6 0.2 0.18%
LIBOR 0.254 -0.002 -0.59%
US Dollar Index (DXY) 81.76 -0.059 -0.07%
10 Year Govt Bond Yield 2.94% -0.03%
Current Coupon Ginnie Mae TBA 103.3 1.0
Current Coupon Fannie Mae TBA 102.5 -0.2
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.58
Markets are flattish on no real news. Bonds and MBS are up small, which means that Syria wasn’t figuring in anyone’s market analysis.
Credit isn’t tight for everyone – Verizon just did a $49 billion bond offering at the 10 year + 225. Low interest rates – get ’em while they last. The issue is looking 2x oversubscrbed.
Negative equity took a dive in Q2, according to CoreLogic, with 2.5 million homes dropping below the 100% LTV mark. 7.1 million homes (or 14.5% of homes with a mortgage) still have negative equity. The average LTV of all homes with a mortgage is 62.5. They caution that the recent home price appreciation may not continue at the rapid pace we have been seeing over the past year.
Mortgage applications fell 13.5% last week, primarily due to the Labor Day holiday. Refis were down 20%, while purchases were down 2.6%.
Richmond CA has voted to go the eminent domain route. They intend to use the threat of eminent domain as a club to force lenders to sell the underlying loans at a deep discount to the city. SIFMA has already said that any locality that uses eminent domain will find loans originated in that locality to be ineligible for TBA trading, which makes them more or less unsecuritizable. The mayor is a Green Party Wall Street basher, so this could get interesting. For the hedge fund to be able to make money on this trade, they have to be able to buy the mortgages at a discount to appraised value, which will undoubtedly be a non-starter for the banks.

Politically Correct Bedtime Stories–Little Red Riding Hood

As I was unpacking, cataloging, and shelving my old friends which I hadn’t seen in two plus years, I came across a couple of little gems by James Finn Garner: Politically Correct Bedtime Stories and Once Upon a More Enlightened Time (More PCBS). I thought I’d share them with you, as some of them strike me as even funnier now than when I first bought the books back in the late 90’s.


There once was a young person named Red Riding Hood who lived with her mother on the edge of a large wood. One day her mother asked her to take a basket of fresh fruit and mineral water to her grandmother’s house—not because this was womyn’s work, mind you, but because the deed was generous and helped engender a feeling of community. Furthermore, her grandmother was not sick, but rather was in full physical and mental health and was fully capable of taking care of herself as a mature adult.

So Red Riding Hood set off with her basket through the woods. Many people believed that the forest was a foreboding and dangerous place and never set foot in it. Red Riding Hood, however, was confident enough in her own budding sexuality that such obvious Freudian imagery did not intimidate her.

On the way to Grandma’s house, Red Riding Hood was accosted by a wolf, who asked her what was in her basket. She replied, “Some healthful snacks for my grandmother, who is certainly capable of taking care of herself as a mature adult.”

The wolf said, “You know, my dear, it isn’t safe for a little girl to walk through these woods alone.”

Red Riding Hood said, “I find your sexist remark offensive in the extreme, but I will ignore it because of your traditional status as an outcast form society, the stress of which has caused you to develop your own, entirely valid, worldview. Now, if you’ll excuse me, I must be on my way.”

Red Riding Hood walked on along the main path. But, because his status outside society had freed him from slavish adherence to linear, Western-style thought, the wolf knew a quicker route to Grandma’s house. He burst into the house and ate Grandma, an entirely valid course of action for a carnivore such as himself. Then, unhampered by rigid, traditionalist notions of what was masculine or feminine, he put on Grandma’s night clothes and crawled into bed.

Red Riding Hood entered the cottage and said, “Grandma, I have brought you some fat-free, sodium-free snacks to salute you in your role of a wise and nurturing matriarch.”

From the bed, the wolf said softly, “Come closer, child, so that I might see you.”

Red Riding Hood said, “Oh, I forgot you are as optically challenged as a bat. Grandma, what big eyes you have!”

“They have seen much, and forgiven much, my dear.”

“Grandma, what a big nose you have—only relatively, of course, and certainly attractive in its own way.”

“It has smelled much, and forgiven much, my dear.”

“Grandma, what big teeth you have!”

The wolf said, “I am happy with who I am and what I am,” and leaped out of bed. He grabbed Red Riding Hood in his claws, intent on devouring her. Red Riding Hood screamed, not out of alarm at the wolf’s apparent tendency toward cross-dressing, but because of his willful invasion of her personal space.

Her screams were heard by a passing woodchopper-person (or log-fuel technician, as he preferred to be called). When he burst into the cottage he saw the melee and tried to intervene. But as he raised his ax, Red Riding Hood and the wolf both stopped.

“And just what do you think you’re doing?” asked Red Riding Hood.

The woodchopper-person blinked and tried to answer, but no words came to him.

“Bursting in here like a Neanderthal, trusting your weapon to do your thinking for you!” she exclaimed. “Sexist! Speciesist! How dare you assume that womyn and wolves can’t solve their own problems without a man’s help!”

When she heard Red Riding Hood’s impassioned speech, Grandma jumped out of the wolf’s mouth, seized the woodchopper-person’s ax, and cut his head off. After this ordeal, red Riding Hood, Grandma, and the wolf felt a certain commonality of purpose. They decided to set up an alternative house hold based on mutual respect and cooperation, and they lived together in the woods happily ever after.

Today in history – September 10

1897 – London cab driver George Smith becomes the first person to get arrested for drunk driving after slamming his taxi into a building wall. Although no scientific test exists to establish a blood alcohol level, Smith proclaims himself to be drunk, leading to his arrest. He is eventually fined 25 shillings.
drunk

1833 – President Andrew Jackson announces that he will remove all federal funds from the Second National Bank of the United States, effectively ending central banking in the US and opening an era of “free banking”. The successor to the First National Bank of the US, the Second National Bank was chartered from 1816 – 1836, and was 20% owned by the federal government, but was controversial both constitutionally and with regard to its policies, which many saw as favoring monied interests in the urban northeast. The populist Jackson was opposed to the bank’s existence, and it became a focal point of the 1832 presidential election. Upon being re-elected in 1832, Jackson vetoed congressional efforts to extend the bank’s charter beyond 1836, and eventually used executive power to withdraw federal funds and prevent the bank from taking new deposits. Although the bank continued to exist as a private corporation following the end of its charter, by 1841 it was liquidated.
jackson

1776 – Captain Nathan Hale of the Continental Army answers General Washington’s call for someone to gather intelligence behind enemy lines, becoming America’s first known spy against the British. Hale spent several weeks gathering intelligence, but is eventually detained aftyer being caught on Long Island Sound trying to get back to Colonial controlled territory. In possession of incriminating documents, British General Howe quickly orders Hale to be executed. Although there are no contemporary accounts to establish it, Hale’s legendary last words before being hanged are said to have been “I only regret that I have but one life to give for my country.”
hale

It’s over

82 wins.

I was 14 the last time the Pirates had a winning season. What’s weird about it is a bunch is I found my old Pirates hats in a box this past weekend when I was getting my glove out to have a catch with the little guy. Who is not, apparently, going to be a lefty. My dreams of raising a LOOGY* are over.

*Left-handed one out guy.

Morning Report – Increasing employment / decreasing earnings?

Vital Statistics:

Last Change Percent
S&P Futures 1680.0 10.9 0.65%
Eurostoxx Index 2843.9 45.6 1.63%
Oil (WTI) 107.4 -2.1 -1.96%
LIBOR 0.256 0.000 0.00%
US Dollar Index (DXY) 81.91 0.119 0.15%
10 Year Govt Bond Yield 2.96% 0.05%
Current Coupon Ginnie Mae TBA 103.2 -0.3
Current Coupon Fannie Mae TBA 102.6 -0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.56
Markets are higher on the possibility of a peaceful resolution to the Syrian crisis. Overnight, Syria has accepted a Russian framework of surrendering chemical weapons to international authorities. This has sent oil down and stock index futures up. Bonds and MBS are weaker
The NFIB Small Business Optimism Index came in at 94, a touch weaker than expected. Interestingly, the plans to increase employment increased 7 percentage points to a net 16%, however, earnings trends fell 13 points to -35%. So profitability is falling, but companies plan to increase headcount anyway? Surprising result. This survey also shows that while things are going well for the big cap S&P 500 names with international exposure, small businesses are still struggling.
Speaking of stock indices and struggling, the Dow Jones Industrial Average is making some changes. Out: Hewlett-Packard, Alcoa, and Bank of America. In: Goldman, Nike, Visa.
Higher interest rates are beginning to dampen people’s expectations for future home price appreciation, according to the latest Fannie Mae Housing Survey. The expected home price appreciation for the next 12 months has fallen to 3.4% in August from 3.9% in May.
The National Association of Homebuilders Improving Markets Index reached a record high in September as a total of 291 metro areas now qualify as improving markets. Here is a map of the improving areas:

Today in History – September 9

1971 – John Lennon releases “Imagine” album.

1965 – Los Angeles Dodgers pitcher Sandy Koufax pitches the eighth perfect game in major league history, leading the Dodgers to a 1-0 win over the Chicago Cubs at Dodgers Stadium in Los Angeles.  (I grew up going to Dodger games with my dad and remember seeing one of Koufax’s no-hitters but don’t remember if it was this one or not)

Sandy Koufax was a talented all-around athlete from Borough Park in Brooklyn, New York. His first love was basketball, and he attended the University of Cincinnati on a basketball scholarship. His impressive left arm, however, attracted the attention of major league ball clubs and in 1954 he was signed by the Brooklyn Dodgers. Despite his promising talent, Koufax won just 36 games to 51 losses from 1955 to 1961, and was incredibly inconsistent, blowing hitters away one game and walking in runs the next. Finally, advice from veteran catcher Norm Sherry turned Koufax around. As Koufax recounted in his autobiography, Sherry told him to “take the grunt out of the fastball.” It worked: From 1962 to 1966, Sandy Koufax executed what are arguably the five greatest seasons by a pitcher in baseball history. His new found control limited his walks from 4.8 per game to just 2.1, and he pitched no-hitters in three consecutive years–1962, 1963 and 1964.

1850 – California is admitted as the thirty-first U.S. state.  Mexico had reluctantly ceded California and much of its northern territory to the United States in the 1848 Treaty of Guadalupe Hidalgo. When the Mexican diplomats signed the treaty, they pictured California as a region of sleepy mission towns with a tiny population of about 7,300-not a devastating loss to the Mexican empire. Their regret might have been much sharper had they known that gold had been discovered at Sutter’s Mill in Coloma, California, nine days before they signed the peace treaty. Suddenly, the greatest gold rush in history was on, and “forty-niners” began flooding into California chasing after the fist-sized gold nuggets rumored to be strewn about the ground just waiting to be picked up. California’s population and wealth skyrocketed.

1776 – The Continental Congress formally declares the name of the new nation to be the “United States” of America. This replaced the term “United Colonies,” which had been in general use.

In the Congressional declaration dated September 9, 1776, the delegates wrote, “That in all continental commissions, and other instruments, where, heretofore, the words ‘United Colonies’ have been used, the stile be altered for the future to the “United States.”

A resolution by Richard Henry Lee, which had been presented to Congress on June 7 and approved on July 2, 1776, issued the resolve, “That these United Colonies are, and of right ought to be, free and independent States….” As a result, John Adams thought July 2 would be celebrated as “the most memorable epoch in the history of America.” Instead, the day has been largely forgotten in favor of July 4, when Jefferson’s edited Declaration of Independence was adopted. That document also states, “That these United Colonies are, and of Right ought to be FREE AND INDEPENDENT STATES.” However, Lee began with the line, while Jefferson saved it for the middle of his closing paragraph.

Morning Report – K-deals

Vital Statistics:

Last Change Percent
S&P Futures 1657.2 3.7 0.22%
Eurostoxx Index 2788.8 -14.6 -0.52%
Oil (WTI) 110.1 -0.4 -0.40%
LIBOR 0.256 -0.001 -0.20%
US Dollar Index (DXY) 81.99 -0.160 -0.19%
10 Year Govt Bond Yield 2.88% -0.05%
Current Coupon Ginnie Mae TBA 103 3.1
Current Coupon Fannie Mae TBA 102.8 0.3
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.6
Slow news day. Markets are higher this morning on no real news. Bonds and MBS are up.
Now that the jobs report is out of the way, the markets will fret about the upcoming FOMC meeting for the next week and a half. The consensus seems to be that the Fed will make at least a symbolic reduction in asset purchases, and it will probably be Treasuries not MBS.
Are K-deals the future of residential loan securitization? Would future securitizations involve subordinate and mezzanine tranches? Essentially, a pool of mortgages would be cut up into a senior guaranteed tranche, which would resemble what we already have now, with Ginnie or GSE MBS. There would be a two additional tranches – a subordinate tranche which would bear the first losses on the pool, and then a mezzanine tranche which would bear losses after the sub piece is wiped out.

Syria and an Open Thread

I’m no foreign policy expert and I’ve probably spent more time and effort protesting wars than really understanding the reasons justifying our involvement, or believing them.  I was just as shocked as anyone on 9/11 though and remember how revenge caused me to ignore my normal, anti-war, gut reaction that I’ve harbored since Vietnam.  I suspended my inclination to distrust our government in matters of foreign policy and kept an open mind regarding Iraq and Saddam Hussein and Bush’s case for invasion.  Colin Powel’s presentation went a long way towards keeping me, if not acquiescent, at least open-minded.

I remember going to a family gathering with a lot of conservatives in attendance and listening to them talk about a friend of a friend of a friend supposedly living in Iraq celebrating the end to Hussein’s reign and how women were going to be free and the warring religious sects were going to make peace………..or something like that.  I was pretty skeptical but kept my mouth shut, obviously hoping their enthusiasm was justified.  Not long after that we began to get wind of disturbing news regarding our justifications and our questionable treatment of prisoners.  Eventually, I joined the war protest movement locally.  I really did feel a level of betrayal that reminded me why my natural inclinations against aggressive and war-like solutions to international problems had been justified.  That’s not to say however, that we are never justified.  I couldn’t have been any happier when OBL got what he deserved.

Americans of all political stripes don’t like the idea that citizens are being killed or slaughtered by their country’s own government and so we are torn between wanting to punish someone for that and knowing that our interference may just make things worse.  Involving ourselves in another ME civil war seems like a recipe for disaster and I don’t support the strikes.  Having said that though I think we, as a country, should be looking at ways to make Assad pay for what he’s done, assuming he or his government are actually responsible.

Obama is planning to make his case this week to the American people and Congress but I’m not really impressed when I read this , he’s expecting us to believe air strikes are the only solution.  I read somewhere that the WH is responsible for releasing a tape showing the aftermath of a sarin attack,  I haven’t seen it yet but I’m sure it’s awful.

In his radio address, Obama said failing to respond to the attack would threaten U.S. national security by increasing the chance of future chemical attacks from the Syrian government, terrorist groups, or other nations. The United States said more than 1,400 people were killed, including hundreds of children.

“We are the United States of America. We cannot turn a blind eye to images like the ones we’ve seen out of Syria,” he said.

Why does our response automatically mean strikes against the Assad regime that may unleash a worse rebel faction associated with Al Qaeda or possibly even cause more harm to Syrian innocents.  It seems to me there are alternatives that we should be exploring first, assuming I’m not just being completely naive and none of these ideas will work.

1. Bring those guilty of atrocities to justice

2. Call for a United Nations embargo on arms, military supplies, and logistical support for both Damascus and opposition forces

3. The U.N. Security Council should hold an international peace conference

4. Offer aid and support to the nonviolent movements within Syria

5. Provide the humanitarian aid desperately needed by the millions of displaced people

6. Force the hand of Russia and China in the Security Council

I don’t really know how feasible all of this is but based upon the more detailed explanations of each suggestion in the piece at Common Dreams doesn’t it seem like we should at least try other options before just beating the war drums?  It seems to me there’s an awful lot at stake here, much more than our President’s reputation.  I mention that because I believe there are Democrats in the Senate and the House who are possibly supporting Obama simply because he’s their leader rather than listening to either their constituents or their conscience.

And I don’t know how many of you might have seen this piece but there’s an “unholy alliance” of sorts forming in Congress.  (semi-corked by JNC)

At a town hall meeting with tea party supporters, somebody had asked Yoho about a rumor. Was it true that he — a conservative veterinarian in his first term who loudly opposes any compromise with the White House — was working with Rep. Alan Grayson (D-Fla.), Congress’s leading liberal loudmouth?

“I wish I could tell you it wasn’t true,” Yoho recounted saying. “But it is true.” There were gasps, he said.

Yoho and Grayson are among a group of unlikely allies in Congress: liberal Democrats and libertarian Republicans, united by their opposition to a military strike against Syria.

The Democrats in the group have lost faith in war. The Republicans have lost faith (or never had it) in President Obama. In this case, — as Obama seeks approval for a limited kind of warmaking — their doubts aligned.

The result was an ad hoc coalition of Congress’s unwilling.

This group has become the core of a surprising backlash in the House. At least for now, it appears that more than half of representatives are ready to defy both a Republican speaker and a Democratic president, and vote against a military strike.

I signed their petition yesterday, for what it’s worth.

war

Today in History-September 6

1997 – At the funeral of Diana, Princess of Wales, Elton John—a man not given to understatement—gave a tear-jerking performance of “Candle in the Wind,” his 1973 Marilyn Monroe tribute rewritten in honor of the deceased princess.

It is safe to say that Westminster Abbey had never seen a performance quite like the one Elton John gave on this day in 1997. But then Westminster Abbey had never seen a royal funeral quite like Diana’s, what with her brother, Earl Spencer, openly criticizing the royal family for mistreating her while television cameras beamed a live feed to the hundreds of thousands of mourners gathered directly outside and the millions more watching on television around the world. But it was Elton John’s performance, seated alone at a grand piano, which stole the show.

1901 – President William McKinley is shaking hands at the Pan-American Exhibition in Buffalo, New York, when a 28-year-old anarchist named Leon Czolgosz approaches him and fires two shots into his chest. The president rose slightly on his toes before collapsing forward, saying “be careful how you tell my wife.”

Czolgosz moved over the president with the intent of firing a third shot, but was wrestled to the ground by McKinley’s bodyguards. McKinley, still conscious, told the guards not to hurt his assailant. Other presidential attendants rushed McKinley to the hospital where they found two bullet wounds: one bullet had superficially punctured his sternum and the other had dangerously entered his abdomen. He was rushed into surgery and seemed to be on the mend by September 12. Later that day, however, the president’s condition worsened rapidly and, on September 14, McKinley died from gangrene that had gone undetected in the internal wound. Vice President Theodore Roosevelt was immediately sworn in as president.

1781 – British Brigadier General Benedict Arnold, a former Patriot officer already infamous and much maligned for betraying the United States the previous year, adds to his notoriety by ordering his British command to burn New London, Connecticut.

The Continental Army had been using New London to store a large stash of military supplies, but only stationed Captain Adam Sharpley and a contingent of 24 Continental soldiers there to protect it. General Arnold’s British soldiers, with help from the area’s Loyalists, quickly overwhelmed Captain Sharpley and the Continentals, who had no other option but to retreat and leave New London and the military supplies unguarded.

After looting the town, Arnold ordered his British soldiers to set fire to every building, causing the equivalent of more than $500,000 in damages. Benedict Arnold was already despised throughout the colonies for his attempt to sell the Patriot fort at West Point, New York, to the British in 1780 for a bribe of £20,000. The burning of New London sealed his reputation as a public enemy and his name became a synonym in common American parlance for “traitor.”