Re: Like that Amazon package that arrives two weeks late...
 

You've got a good start going, but 1953 Iran needs to be on the list. Kermit Roosevelt actually paid both sides to get into a massive fight that left 300 dead in order to create a crisis and overthrow Mosadegh.

It's sort of like twitter battles between the Russian MAGA accounts and the Russian Bernie accounts, but with bodies.

10 Risks for 2020
 

https://www.eurasiagroup.net/issues/Top-Risks-2020

Ian Bremmer is a bit like Fareed Zakaria, in that he's not usually saying anything terribly revelatory. But his selection of risks, organization of points, and economy of words makes his stuff a compelling read. I can't really disagree with or add to any of this.

Particularly insightful is the observation that populism is not peaking globally, but still in a building phase. Bremmer sees no 2020 risk of it impacting policy, but sees future risk as it continues to grow. I'd have liked to see him predict what it mutates into as it rambles forward. The fascinating thing about populism through history is it almost always fails because the component parts of it - differing groups with similar grievances but too diverse to fuse into a coalition - fail to transform into a serious political movement with concise policy demands. But that assessment/prediction is based on pre-Internet history. Domestically, the overlap between the Trump, Sanders, and Warren voters suggests an environment in which the right messaging, shrewd use of connective technology, and a candidate not as polarizing as any of them could bring a majority of voters in those camps into one tent. That'd be an actually formidable third party. But what would it look like?

Re: Like that Amazon package that arrives two weeks late...
 

There are some advantages to the shift to cyber warfare. For one, the CIA can create bots at 1/1000th the price of hiring local thugs.

More generally, why has there been no discussion of our role in creating the Iranian Revolution? Or the mess in Iraq?

If people are to understand the chain of events that caused Iran and Iraq to become the problem states they are today, we have to start with the dimwitted Brits' carving of boundaries. I believe it was Churchill who assessed Iraq as an ungovernable area of warring tribes long before its arbitrary boundaries were cut. That was the start of the shit show.

Few Americans would care to hear about how we installed the Shah, or understand that this stooge we installed over a democratically elected leader was a repressive incompetent who ruined the country's economy. And it's notable this favoring of a monarch would put them in a camp with Revolutionary Tories, no? Best to have a crown. The people can't think for themselves. But fuck all of that naysaying. Better to dust off the "Nuke Iran" stickers from '79.

That's not to say Trump was wrong. If Iran's leaders have to be checked, then check them. And few things send a message to the fundamentalist vermin who repress both the population and the valid, elected leaders of that country like killing a man who was basically their Secretary of State. And if Iraq's sovereignty must be breached to stanch Iran's influence, then do that too. Just be aware, you're possibly angering a population of Iranians who'd rather be your friends.

And as a disclaimer at the bottom of every story about Iran and Iraq, a recognition that this is a "We broke it, so we now own it" situation should be included. Khomeini didn't appear out of nowhere. He emerged from a nation we repressed. Iraq's Shi'a majority hasn't fallen in with the Iranians for no good reason. That accrues from our backing Hussein and the Ba'athists who persecuted the population of the country.

If we must act in our naked self interest, let's at least be honest about it.

Re: Like that Amazon package that arrives two weeks late...
 

It is amazing how well the memory of the Mossadegh coup and the installation of the Shah as our proxy has remained alive and at the front of peoples' minds, not just in Iran but the whole Middle East. It is referred to constantly. I think the last beg seismic event in the US that is comparable is probably the Civil War.

Re: Objectively intelligent.
 

Yes, the failure in your analysis is in appreciating that banks are different from other businesses.

And, in fact, the fact that they paid all that money back with interest at least somewhat undermines the argument that they were all failed businesses. Turns out those assets weren't all completely worthless after all.

But they were eaten by their betters. There's no more Wachovia, Washington Mutual and a bunch of others. Much more so than other industries, failed banks get literally taken over by other banks that aren't failing.

Re: Like that Amazon package that arrives two weeks late...
 

Not sure why you're absolving the French of responsibility, but yes, the current issues in the regime date to the decline of the Ottomans.

They weren't dim-witted, though. They were drawing lines to suit their interests, not the interests of locals. That's how imperialism works.

Re: Like that Amazon package that arrives two weeks late...
 

The Ottomans were no piece of cake, either, but arguments and territory and populations exchanges between Turks, Arabs, and Persians (with a few Greeks, Balkans, and assorted others thrown in) went on for 1000 years before France and England showed up and joined the party.

There is some degree to which western imperialism wasn't all that different from preceding forms. The Brits are much less special than they think they are.

Re: Like that Amazon package that arrives two weeks late...
 

If you want to talk about the big picture, there is a longstanding rivalry in the Persian Gulf between Sunni Saudi Arabia and Shi'a Iran, and we side with the Saudis.

Re: Objectively intelligent.
 

1. Banks are not different than other businesses. We protected GM and AIG for the same reason we did banks. TBTF.

2. The assets only recovered value because we propped them up with accommodating monetary policy and direct purchases of MBS.

3. Businesses can have all the assets in the world, but if they can’t liquidate them to cover operations and no one will lend to them, They Go Under. Bear Stearns and Lehman were also holding assets which eventually recovered value later (somewhat). But they got caught in a cash crunch.

If you can’t fund operations and the market deems you untrustworthy and thinks it’s preferable to watch you die, you are failed. Those are failed banks. Almost all of them. They exist by grace of the taxpayer. They are, in the deepest Trump accent, truly (unlike most of his targets for the insult), Losers.

Wachovia, WAMU, Bear, and Lehman are at least honorable losers. They went down. Goldman begged Uncle Henry for an 80 cents on the dollar payout using AIG as the stealth delivery method. That’s crony capitalism at its worst. I’d have done the same, as would you, but I’d like think we’d both admit to our skullduggery. Not Goldman. They’re entitled and unashamed, the ultimate “welfare mothers” of Wall Street.

Re: Like that Amazon package that arrives two weeks late...
 

They were a more nuanced, dressed up, and detached form of ruthlessness than prior imperialists. The Nazis are credited with mechanizing evil to banality, and the Brits were certainly not on par, but the cruelty they dished out under the guise of civilizing others is on the same continuum.

Re: Objectively intelligent.
 

Dude. I agree with you on the politics of this, but banks are quite different from other businesses, for important reasons. No one makes a run on a bookstore. And when a bookstore fails, it doesn't jeopardize a lot of other businesses. We have a regulatory apparatus designed to avoid repeating mistakes of the Great Depression. It was tested in 2007-08 and it basically worked. When Lehman and others failed, it was managed. Things could have been a lot worse.

Re: Objectively intelligent.
 

No, we didn't. Where we protected AIG (and it wasn't everywhere) it was because (1) it was involved in lines of businesses like the banks, and (2) it was financially intertwined with the banks (i.e., it had written "insurance" on the questionable assets on the banks' books). We bailed out the banks and AIG so that we could maintain functioning financial and payment systems and avoid a depression.

We bailed out GM and Chrysler (don't recall whether Ford got help) because of the direct loss of jobs in the auto industry associated with their failure. That would have been bad, but that's not the stuff of total economic collapse.

This is one of the crazy/stupid things you say a lot. The assets recovered their value because the underlying mortgages performed better than people feared during the bank run height of the crisis. There's nothing to recover if people aren't paying their mortgages.

Yes, accommodating monetary policy helps people keep paying their mortgage in a number of different ways, but that doesn't seem to fit with your implied conspiracy.

That gets the banks/investors paid, but it does nothing for the performance of the MBS going forward.

Re: Objectively intelligent.
 

Interesting news about Bolton, but there's an error in the paragraph below:

The last three express words should be "expressing concern."

But seriously, this.

Re: Objectively intelligent.
 

I'd have to pay to read it.

Re: Objectively intelligent.
 

The gist is, focus on the GOP Senators who face a serious challenge this fall, and what they are saying (or not saying):

Re: Objectively intelligent.
 

I'm well versed in the Cassano debacle.

Paying Goldman and the rest of the banks out of AIG at 25 cents on the dollar would have been more than adequate. Goldman itself claimed at first that it would have been just fine if AIG had gone under and paid out nothing. https://www.cbsnews.com/news/new-doc...-aig-collapse/

Of course, as the article notes, Goldman soon changed that tune.

The assets held value because we came in and saved the market in securities backed by them. I believe the Fed was making the market in MBS.

The underlying residential mortgages continued to perform like shit for a long period of time.

It bought time for the economy to recover a bit so some of the mortgages underlying the MBS could start performing again. If the Fed had not bought all those securities, the market for them would have frozen. As it should have. Which is why I call all of the people who bet on that market remaining robust "losers." They were. They are. They are failed business people.

And no, it's no defense that they were victims of a financial crisis. Charles Prince at Citi explained exactly what these people were doing: "When the music's playing, you've got to dance." They were knowingly taking risks in a market that even people like Bill Gross said as early as 2007 looked like a fraud, a house of cards.

All of these failed business people knew or should have known housing was going down. People had been chattering about it for three years prior to Bear Stearns' issues. Fuck... I represented subprime credit card and auto lenders in 2000-2003 and recall thinking "subprime mortgage" sounded like "lead zeppelin."

But hey... I'll be gone, you'll be gone. I know one mortgage broker who made so much in the housing bubble that he retired at 35. So maybe "loser" doesn't fit. Maybe "knowing participant in massive suspension of disbelief/fraud" is a better descriptive. Either way, these people should all have lost their jobs. But 9 out of 10 of them didn't. We bailed them out, they stayed in place, and they've enjoyed a grand run up in the stock market ever since.

Re: Objectively intelligent.
 

You're mixing two issues. Banks are unique in terms of risk. But in terms of judging how banks are run, you judge them just like any other business. If a bank is well run, it is a success. If it is poorly run and requires a bailout, it has been run to some extent by losers, fools, incompetents. It is a failed business.

But you are correct that there is a justified "heads I win, tails you lose" element to banking. The Feds (or state if so chartered) will have to run in and save any bank going under. So unlike the guy who owns a business and can't make payroll, a bank will never crash and burn. At worst, it'll be forced to sell itself to some other bank or in an extreme situation it will be run off through a receivership. The same applies to insurers.

Adder was arguing that the banks in 2008 weren't failed businesses. That they were holding assets which actually had value. He's wrong. If the assets had value, the banks could have received loans in exchange for collateral positions, or even received unsecured loans based on balance sheet strength. But we know that wasn't true. We know that the banks in 2008 were loaded up with overvalued securities and collateral. They suffered a cash crunch. Just like a business that has tons of receivables which become delinquent, cash flow to these banks was outstripped by their obligations. And in that moment where a business doesn't have enough cash to keep going, that business has failed.

Re: Objectively intelligent.
 

Ford did not.

One of the requirements to get the money was for the two companies to close out tons of dealers. They had too much inventory sitting on too many lots. And they did close them, which was painful and lots of lawsuits.

But lately I've seen them opening new ones. Like there was a half life on the commitment to close them?

Re: Objectively intelligent.
 

You're confusing at-the-time market value (yes, the Fed was making the market) and fundamental performance. The bonds that were valueless, but for the Fed's action, wound up performing to some degree. They paid out some portion of interest and principle, such that, in hind-sight, they were not valueless.

That the Fed bought them changed nothing (well, at least not directly) about the bonds' ability to perform.

Yeah, you can use a lack of precision to pretend you aren't following along, but I don't believe you. Defaults were higher than anticipated. That was a real problem for the lower tranches of structured products, but we're still talking percentage points off the whole.

I guess I don't think anyone thinks/thought the Fed's acquisition of distressed assets had meaningful macroeconomic effects. But if by "bought time" you mean kept the banks from failing and making things much, much worse, sure.

What's "should?" You see some sort of moral value in market failure? Because, again, the market value of the bonds did not match the underlying fundamentals. That's not a "should" outcome. That's a market failure, making government intervention appropriate (and, in this case, ultimately successful).

Re: Objectively intelligent.
 

What is a bank run, even??

Re: Objectively intelligent.
 

Members Only. Like your jacket.

Re: Objectively intelligent.
 

If a bank is poorly run and requires a bailout, it has been run poorly and it is a failed business. BUT: If a bank is not poorly run and is caught up in a banking run and requires a bailout, that does not mean it has been run poorly and is a failed business. It means there has been a banking run.

Some of the banks had good assets but could not get loans because there was a liquidity crisis. Or the shadow banks, if you will, since much of what had happened in the preceding years was that banks figured out how to take exposure in ways that evaded the regulatory regime. Here is how Wikipedia explains a liquidity crisis:

You are right that part of the problem was that some of the bank's assets were overvalued. If that were the only problem, all of this would be much simpler. But banks are not bookstores.

Re: Objectively intelligent.
 

Pelosi should hold on to the articles of impeachment and let Schiff subpoena Bolton, Mulvaney and the others. Since the Senate isn't going to hear witnesses, the House should give it a shot.

Re: Objectively intelligent.
 

None of the banks - particularly the investment banks - were adequately prepared for the risk of a housing bubble bursting. And they all knew it was a bubble. They believed, quite wrongly, that they could flip the loans rather than keep them in portfolio, and blend the garbage loans with good loans in securities, to pass off risk. They knew that even a small uptick in delinquencies would set off a disastrous chain reaction.

And they knew the fundamentals behind the loans were lousy. A majority of the bubble was people replacing jobs they could no longer find or hold with income from flipping. People were sucking equity out of homes to survive. It was a fucking joke even the least astute watcher of r/e and economics could plainly see. Built to collapse.

And yet almost all of the big banks played along with the charade: Housing will never go down.

So yeah, I have sympathy for those who faced a run for no fault of their own. But in 2008, those banks were about 10% of banks. And 0% of investment banks.

Oh, and the shmucks who bought that credit default coverage from Cassano? They deserve to eat it the most. They all knew he was writing that which he couldn't possibly cover. Reporting on the crisis included multiple interviews with people who wondered how he could write so much.

The banks were so leveraged, and skepticism about the stability of the residential r/e market so high below the surface (despite the financial media's attempt to paint a rosy picture), a small loss was a big loss. I think it was a mere 3% increase in defaults on loans one tier above subprime that started the whole mess.

The banks knew they'd created a bubble and it'd burst, badly. Among the things that happens when bubbles burst? Bank runs. They should have planned for that given the size and fragility of the bubble they'd been knowingly creating.

Re: Objectively intelligent.
 

Before you were saying, banks aren't different. Now you're saying, if you can't stand the heat, get out of the kitchen. Look, no particular sympathy for bankers here, and I think finance often acts as a parasite on the country's economy instead of an enabler of it, but I would rather live in a country that has a functioning banking sector than one that doesn't.

Re: Objectively intelligent.
 

To which they would (and did) respond: if that's true, why were the lowest tranches most likely to still be on the banks' books?

Sure, agency problems with the people doing the deals getting their's regardless of what happens down the road were a factor. But far from the only factor. "They all knew" is revisionist bullshit. People actually are dumb.

A lot of it was to make synthetic CDOs, no? Oh, yeah, right, the fact that there were lots of buyers for ever more complex crap also belies the "everybody knew" story you're selling.

Actual fashion post
 

Re: Actual fashion post
 

In other news, I am returning to the work force at the firm for which I worked before AIG. If you need coverage counsel, yo.

Re: Objectively intelligent.
 

Banks are a business. The rules of business are that if one finds himself in a position where he is doing something risky, the market turns on him and he finds himself unable to sustain operations as a result, he has failed. That rule applies to every business, including regulated businesses like banking and insurance.

You have made two points in reply:

1. Well run banks that collapse as a result of bank runs are not failures.

I am sympathetic to this. I would not call those banks true "failures," but I am also sympathetic to the argument that he who doesn't reserve adequately to survive a temporary bank run has failed to properly run his business and is a failure. I can see both sides of this argument.

2. Banks are different, and we shore them up rather than allow them to collapse for good reason, and I'm glad of that.

I agree that banks are different creatures, and I am also glad that we avoid their failure as we do. But this doesn't address my point. My simple point is that a bank that requires the Fed to rush in and save it because it has taken risks it knew were questionable and which could place it in jeopardy is a failed business. The people who made the decisions that caused it to fail are failures.

And one may not argue that because the bank was rescued, and sustains operations today, it was/is not a failure. That which must be bailed out is that which has failed to survive on its own.

Again, I have some sympathy for the banks that were well run and got caught up in a liquidity crunch or bank run. It may be argued that is a failure of the market. But again, he who fails to plan for a failure of the market has failed to plan for something, hasn't he? So even these people, while largely victims, are a bit liable.

The one argument I will never listen to, and no sensible person should ever listen to, is the suggestion these banks that needed bailouts were not failures of a sort, but entirely victims of a malfunctioning market. Here's why: They Created That Market. They abused it, they let it become a monstrous bubble, and they had all the warning in the world that it was going to crash. I support bailing them out, but if they want a revisionist history to support the justifications for their obscene and undeserved pay packages since the collapse (while the little banks have had to suffer), fuck them. They get to have it said to them wherever they are, whatever they're doing:

You're a fucking loser, and you only exist in the comfortable state you do because you'd the luck of working in an industry where we couldn't let your dumb ass go down the drain. You are not a capitalist, but a corporate socialist. You're the very worst of everything shitty in this country. And no... I'm not giving you that three foot putt. Play it. You probably fucking cheated the whole way around the course so far.

Re: Objectively intelligent.
 

The shit tranche was always smallest. The risk there could be offset by the fees charged for servicing/packaging.

The lower tiers of the middle, which I believe caused the biggest problem, were actually shit tranches repackaged as middle tranches. So when the banks have cried, "We kept all the really bad risk," it's because they designed the tranches to minimize the shit risk and funnel the best of the shit risk into the middle tranche.

I can't prove this, but I'd guess this was because nobody wanted to buy the shit, and the banks could appear to have some skin in the game if they held onto a thin slice of it while repackaging the majority of it as middle tier risk. '
- - -
"They all knew" is not revisionist horseshit. Everybody knew. Everybody in the country knew the housing market was a bubble. The economy was anemic. The job market sucked, and it was still recovering from the dot com bust fallout. Sure, people could keep making house payments as long as they kept refinancing and prices kept rising insanely. But what happened when the market plateaued? What happened when suddenly all the people who didn't have jobs other than flipping houses had to pay their mortgages from source other than refinancing?

Uh oh.

I bought a house in a fancy suburb in 2004. I recall the frenzy of sales and refis in the neighborhood, and being a fucking skeptic about everything, and representing a subprime lender, I started doing some reading about market fundamentals. It fucking scared me silly, so I bought conservatively and made a few bucks when I sold a few years later.

I am no fucking genius. If this shit was apparent to me, it was apparent to everybody. And it was certainly apparent to the shmucks in underwriting and sales at those banks. Bill Gross spotted it in 2005!

Nobody wanted to listen. They didn't want to hear about How It Will End because that was a sad story. Like Chuck Prince said, "when the music plays, you have to dance."
- - -
Regarding buyers of complex crap, that's just downstream replication of the same shit that took place in the creation and packaging of the mortgages. Think of the run up to 2008 fractally. The homebuyer either took on stupid risk or lied, or was bullshitted, the mortgage broker/originator did the same, the people securitizing the stuff did the same, and then the people selling complex products based on it did the same. The transactions all share the same common features. Everybody knew or should have known they were participants in a giant bubble, based significantly on fraud and bullshit. Those who timed it and got out made fortunes. Those who didn't? Well...

The only people you can call entirely criminal in the whole thing are the rating agencies. How those degenerates got a pass I still cannot understand.

Re: Objectively intelligent.
 

If this was true, there would have been no market for all the mortgaged backed products the banks were turning out. There was a huge market for them. You're confusing what you believed, confirmed in hindsight, with what everyone believed.

All your neighbors knew...

Re: Actual fashion post
 

I just settled my little Las Vegas matter, alas.

Re: Objectively intelligent.
 

If the government makes policy by deciding whether it is sympathetic to banks, a lot of ordinary people who didn't do anything wrong are going to get fucked. During a crisis, the better thing to do is keep banks alive somehow, to save their customers. But you also want to take it out of the owners, so that they pay the price. In 2007-08, the government did a pretty good job of protecting the customers, so at least we had that.

Re: Objectively intelligent.
 

It was musical chairs. "This is going to scorch a lot of folks... but not me." Or, "This is going to scorch a lot of folks, but I'll have made so much money in the interim, I'll be alright if it scorches me."

One thing I don't think anyone at a bank in 2007 thought was:

"This is going to scorch a lot of folks, but when it does, the govt will bail people like me out and I'll wind up only losing a year or two of big bonuses, and I'll make multiples of that loss in the stock market from a crazy run-up fueled by liquidity and MBS purchases the Fed uses to cure the problem I was involved in creating. I can't lose!"

But they do now.

Re: Actual fashion post
 

In related news, a 35 year old friend is looking for work. His experience is rather thin- I think he flew a military helicopter for a short while, likely not near combat. Otherwise, he basically travelled the World smiling and waving at people that seem to think his grandmom is somehow above everyone else, since a long time ago her ancestors killed a bunch of people and took over. The friend's wife has worked, so if you give him a chance she might be able to give him advice on how to handle work situations and challenges.

Re: Objectively intelligent.
 

You misunderstood me. I want to take it out exclusively on management.

Re: Actual fashion post
 

It sounds like he has the right skill set to be an investment banker.

Re: Objectively intelligent.
 

Elie Mystal and Above the Law for the win - https://reason.com/2020/01/08/above-...hobic-insults/

Re: Actual fashion post
 

it's his grandmom I meant, his mom is dead. He was basically following his dad's career path, but dad is horribly frustrated with hitting a ceiling.

Re: Objectively intelligent.
 

You all can't see the pictures, but from the Iraqi guy's FB

Millions of Iraqis protested today in all cities that have presence of Iranian backed militias, they came out to tell Iraq and the world that their government does not represent them, the Prime Minister who resigned a month ago should not be revoking any treaties (like the security treaty with the US).
They carried pictures of their secular candidate and they will continue their revolution.
If you are not Iraqi, what you need to know is:

- They dont want foreign intervention and regime change, they want to fix the constitution and have a presidential system where the gov isn’t divided between Sunni, Shiite and Kurd.
- No presence to any armed militia except for the Iraqi military and other law enforcement but no civilian militias.
- Check and balances in the government branches so politicians can’t steals millions and millions of dollars without even do their jobs.
- Keep religion and politics separate.

These are the main goals of the revolution but there are few more.

Whoever cited a blog to say it is only a few crackpots protesting in Iraq.... well maybe you're right, but maybe you are wrong?