From the dust cover "How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe". It's a 2009 copyright which brings it right up to date. Gilliam Tett must have read Tracy Kidder somewhere along the line and her book has Kidder's closeups of the people involved. Those are fun to read. The "Small Tribe" at Morgan invented the credit default swap in the early '90s. This bit of financial magic amounts to default insurance. A credit default swap issuer gets paid a modest amount of money. In return the issuer guarantees the deal. If the borrower doesn't pay up, the issuer will make good the buyer's losses.
The first credit default swaps were issued on ultra safe packages of blue chip bonds. The banks persuaded the federal regulators to lower their reserve requirements if their loans were protected with credit default swaps. The credit default swap market took off like a rocket and the issuer's made a lot of money selling them. Late comers, stuck on stupid, began issuing credit default swap protection on shaky mortgage backed securities. The whole thing crashed in the fall of 2008 when Bear Stearns and Lehman imploded and everyone started collecting on their swaps. The issuers of the swaps didn't have the cash to pay off, and the Bush administration picked up the tab, fearing that letting AIG and the rest of them fail would touch off Great Depression II.
The author reviews some of the famous Wall St catastrophes of the past, Drexel Burnham Lambert , Long Term Capital Management, Enron and WorldCom. She gives J.P.Morgan a sympathetic treatment, they were smart enough not to get sucked into the mortgage backed security black hole.
She skims over the housing crash and the role of Fannie and Freddie in that crash. Fannie and Freddie fueled the sub prime disaster when they bought sub prime backed securities. This prompted the dumber Wall St houses to buy shakey mortgages, "securitize" them, and sell them. The resulting demand for mortgages led the mortgage companies to write mortgages on worthless property and to borrowers unable to make the payments. But not to worry, we will sell this sub prime mortgage to a bigger sucker on Wall St. When the suckers wised up and stopped buying the roof fell in.
Sunday, June 14, 2009
Friday, June 12, 2009
Did speed sensors cause Air France mystery crash?
The TV pundits are in love with the story. The "speed sensor" is the pitot tube, a simple piece of tubing that sticks out head on into the air stream. The air speed indicator works by measuring the air pressure generated from the pitot tube. Airbus had been replacing the pitot tubes on the A-330's for some reason or other. The replacement program had been running BEFORE the crash.
Worst case, the pitot tube falls off or ices up and the airspeed indication drops to zero. Planes will fly with no airspeed indicator. Leave the engines set to cruise power and keep the plane level and it will keep flying. The zero airspeed will probably confuse the autopilot enough to make it drop off line, but again, the crew can fly the plane by hand.
Dispite pitot tube excitement on the TV news, I very much doubt that the pitot tube caused the crash.
Worst case, the pitot tube falls off or ices up and the airspeed indication drops to zero. Planes will fly with no airspeed indicator. Leave the engines set to cruise power and keep the plane level and it will keep flying. The zero airspeed will probably confuse the autopilot enough to make it drop off line, but again, the crew can fly the plane by hand.
Dispite pitot tube excitement on the TV news, I very much doubt that the pitot tube caused the crash.
TV pundit talking thru his hat.
Commenting upon the CIA director's opinion that Bin Laden is still in Pakistan, the Time magazine pundit, said that Bin Laden was unable to leave Pakistan.
Scratch that pundit. All Bin Laden needs is a credit card, a passport, and a shave and he can fly anywhere in the world.
Scratch that pundit. All Bin Laden needs is a credit card, a passport, and a shave and he can fly anywhere in the world.
Thursday, June 11, 2009
Terminator Salvation
It's got action. Fist fights, gun fights, fires and explosions, airstrikes and dog fights, car chases and crashes. The action never stops. Lots of tough guys with stubble looking tough. They even resurrect Arnold for a brief fight scene. I assume that was done by computer graphics.
The movie is set in the future were the human underground is warring against the shiny red eyed terminator machines of Skynet. The humans win in the end, at least partly. The closing voice over announced that the war wasn't won yet, leaving an opening for a sequel.
If it had been on TV I would have changed the channel.
The movie is set in the future were the human underground is warring against the shiny red eyed terminator machines of Skynet. The humans win in the end, at least partly. The closing voice over announced that the war wasn't won yet, leaving an opening for a sequel.
If it had been on TV I would have changed the channel.
Tuesday, June 9, 2009
Welfare for NEMA
The National Electrical Manufacturers Association (NEMA) managed to help themselves to a slice of pork. First they created a marketing concept, "NEMA Premium" electric motors, which are supposed to be radically more efficient than "NEMA Standard" motors. Naturally NEMA Premium motors cost more than NEMA premium. Then they got a US government subsidy for the purchase of "NEMA Premium" motors as an energy saving measure.
Trouble is, electric motors are highly efficient already, and motors manufacured 50 years ago are very efficient. The "Premium" motors are not any more efficient than any well designed motor. "Premium" motors run between 77 and 89 percent efficient. In actual fact, decent electric motors have been 90 percent efficient since World War II and before.
In short, a marketing concept, the "Premium" designation, has been recognized at law, and given a federal subsidy, paid for with tax payer dollars.
Nice work if you can get it.
This global warming measure was brought to you by congressmen from districts with large electric motor companies.
Trouble is, electric motors are highly efficient already, and motors manufacured 50 years ago are very efficient. The "Premium" motors are not any more efficient than any well designed motor. "Premium" motors run between 77 and 89 percent efficient. In actual fact, decent electric motors have been 90 percent efficient since World War II and before.
In short, a marketing concept, the "Premium" designation, has been recognized at law, and given a federal subsidy, paid for with tax payer dollars.
Nice work if you can get it.
This global warming measure was brought to you by congressmen from districts with large electric motor companies.
Sunday, June 7, 2009
Hillary on the Stephanopolis Show this morning
She said the US doesn't know just what the Iranians want, and perhaps a diplomatic conference with Iran would lead to an exchange of views and we would learn what Iran wants. Right.
I got news for Hillary. You don't negotiate just for the fun of it. It's a horse trade, you give us this, we give you that, and it's gotta be a fair trade or both sides will welsh on the deal. If we don't know what the Iranians want, and how bad they want it, before sitting down with them, forget it.
Actually, we do know what the Iranians want, they want nukes, and they want them badly. With nukes they become regional hegemon, and they gain insurance against sudden regime change, the kind that happens should US tanks roll thru Tehran like they did thru Baghdad.
We are not happy with a nuclear Iran, and there is nothing the Iranians can do to make us happy, short of giving up their nuclear program, which they won't do, at least not voluntarily. Does not look like the basis of fruitful negotiations. In fact the Euro's have been having fruitless negotiations over this point for years. It has given Tehran more time to work on their nukes, but other than that, a wasted effort.
I got news for Hillary. You don't negotiate just for the fun of it. It's a horse trade, you give us this, we give you that, and it's gotta be a fair trade or both sides will welsh on the deal. If we don't know what the Iranians want, and how bad they want it, before sitting down with them, forget it.
Actually, we do know what the Iranians want, they want nukes, and they want them badly. With nukes they become regional hegemon, and they gain insurance against sudden regime change, the kind that happens should US tanks roll thru Tehran like they did thru Baghdad.
We are not happy with a nuclear Iran, and there is nothing the Iranians can do to make us happy, short of giving up their nuclear program, which they won't do, at least not voluntarily. Does not look like the basis of fruitful negotiations. In fact the Euro's have been having fruitless negotiations over this point for years. It has given Tehran more time to work on their nukes, but other than that, a wasted effort.
Why Window Envelopes?
Every single bill comes with a return envelope, a window return envelope. Which means I gotta take a just a little bit of extra care to get the return slip right way round and in front of the check. Not the end of the world I suppose.
On the other hand, window envelopes ought to cost more than plain ones, if only a fraction of a cent. The only bennie to the billing company is the ability to change the address of the payment center without having to dump stocks of old pre printed envelopes. But how often does the phone company, the bank, or the electric company move a billing center?
On the other hand, window envelopes ought to cost more than plain ones, if only a fraction of a cent. The only bennie to the billing company is the ability to change the address of the payment center without having to dump stocks of old pre printed envelopes. But how often does the phone company, the bank, or the electric company move a billing center?
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