The Black Swan arrived in the form of the "subprime mortgage crisis," so named because a species of massive, gigantic, unprecendented fraud, based on the housing industry, became Wall Street's standard operating procedure. The big investment banks (Merrill Lynch, Bear Stearns, Lehman Brothers, Goldman Sachs, Deutsche Bank, numerous others) became the huge vacuum cleaners for every piece of marketable mortgage debt which New Century and a hundred other loan originators (now almost all defunct) could scrounge up from America's vast crapscape of modular ticky-tack, particularly in California, Arizona, Nevada and Florida. And when the mortgage companies could not produce the raw material fast enough (the subprime and Alt-A loans), a number of the banks, such as Bear Stearns and Merrill, went directly into the mortgage business themselves so they could produce their own fraud-fodder. Ah, what days those were! They could take hundreds of loans, such as the five that one Vegas stripper took out in order to buy five houses in one week, moosh them altogether into tranches, perform some alchemy, take them over to Standard & Poor or Moody's, and voila!, Grade Triple A "investments" which could be sold to insurance companies, pension funds, hedge funds and credit unions, all around the world, generating enormous commissions and fees.
March 27, 2010
March 26, 2010
It's great to use those timeless phrases from the Watergate era. Where would be without them? Without the whole "-gate" industry, for one thing. The barren imaginations of regular journalists just keep recycling that "gate" ending in less and less euphonious ways. Irangate, WMD-gate, Wide Stance-gate. But "what did he know, and when did he know it?", "cancer growing on the..." whatever, "twisting slowly in the wind," and Nixon's decision, instead of telling the truth, to engage in a "modified limited hang-out" gave birth to a classic, still used today, like all these slogans from the Golden Age of American scandal.
March 24, 2010
Presidents Obama and Medvedev, of the United States and Russia, respectively(note to Tea Baggers: only the second is an actual former Commie), expect to sign a new strategic arms treaty in Prague next month, a pact replacing the expired START treaty of 1991. Essentially, the new deal will reduce each side's deployed nuclear missiles to 1,600 from the present level of 2,200, and halve the number of strategic bombers each side has loaded and ready to go (down to about 800 each).
March 23, 2010
This post is inspired by the already burgeoning cottage industry of gaming the new health care bill. I've been a lawyer for over three decades, and one thing I've learned is that one of the reasons that lawyers become legislators is that they can't hack the legal field because (a) they can't think clearly and (b) they don't like hard work. I have deduced this hard-won lesson from reading thousands of legislative enactments under conditions where I positively must make sense of what has been written by some blowhard in the state house or in Congress (or more likely, by the lobbyist who wrote it for said blowhard).
SEC. 111. PROHIBITING PREEXISTING CONDITION EXCLUSIONS.
March 22, 2010
In the gestural world of American politics, symbols are now everything. Why were the Democrats mostly for health care reform? Because they had made it their signature issue and needed to prevail in order to show that "big things were still possible." And why did the Republicans oppose HCR so vehemently (and unanimously)? Because the Democrats wanted it.