Links 4/20/10

How long is the Icelandic volcanic ash going to last (and other questions)? Glidemet

Anger erupts for a volcanic exile Gideon Rachman, Financial Times

“I Feel, Therefore I Am” h+ (hat tip reader David C)

Cassandra, the Ignored Prophet of Doom, Is a Woman for Our Times Adam Cohen, New York Times (hat tip reader Don B)

Too Soon To Cry “Victory” On Latvia? A Fistful of Euros (hat tip reader Charles)

In the wake of SEC/Goldman, the must-read Appendix Rolfe Winkler. Thank you Rolfe!

The SEC, Disclosure, and the Goldman Complaint Conglomerate

Fuld defends Lehman’s use of ‘Repo 105’ Financial Times. Fuld is nothing if not consistently deluded.

Fabrice Tourre as Scooter Libby Joe Costello

BofA-Merrill Tops Credit Suisse List of ‘CDO Litigation Risk’ Bloomberg

Goldman SEC Litigation: The End of OTC?; Alan Boyce on the Duration of Fed Open Market Operations Chris Whalen. Today’s must read. Key section:

But the other thing that really bothers us about both the TCW transactions and the more recent revelations about GS and the Paulson firm is the fact that the SEC apparently still does not fully understand the symbiotic relationship between the dealer and the hedge fund. In our view, the funds that were involved with these transactions and many, many more examples in the OTC marketplace, did not have an arm’s length relationship with the dealer. Hedge funds exist at the sufferance of the dealers, who finance and execute and act as custodian for their various strategies and use the funds as short-term storage for inventory.

Antidote du jour (hat tip reader Leigh):

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23 comments

  1. ndk

    I’m so glad to see Cassandra Gramlich getting some of the recognition he deserves in the NY Times editorial. The man was the most prescient and vocal amongst all the Fed governors, and Greenspan spat on his untimely grave. Especially after the Times very badly blundered on handling a purported note from Gramlich before his untimely, tragic death. I thought poorly of Greenspan before he did that. Now I genuinely loathe the man.

    This all resonates very strongly with my professional life, where I work on matters relating to digital privacy, security, and secrecy. Organizations that you would think take these things seriously most assuredly do not. Everyone is still in the mindset of easier, simpler, and quicker.

    It’s just a cyclical thing that briefly turned in ’02, ’08 and ’09, but it has flipped back. Easy money and superpowerdom have wide-reaching effects. We won’t recover from any of this anytime soon, no matter what we do now, and all the Cassandras will be left to weep for what could have been done.

  2. MyLessThanPrimeBeef

    That coconut is a home, not an investment. Hopefully, the little guy put enough down.

    1. fresno dan

      I hope he doesn’t eat himself out of house and home by engaging in HELOC (home equity line of credit) abuse, by buying diamond studded acorns.

    1. tyaresun

      Let me be the first to admit that I don’t fully understand the calculations in the Boyce piece. Anyone care to explain? I do understand the overall argument and conclusions, I am talking about the detailed calculations.

      TIA.

  3. fresno dan

    http://www.interfluidity.com/v2/784.html

    I am generally sympathetic to disclosure as a defense, and I felt initially the same as Waldman, but I think as Walkman digs deeper he makes good points about the gaming of the system. One one who buys anything can check every detail. When you buy a car, you can’t have every inch of wiring checked for proper insulation or copper content.
    And I can’t help but think that GS really is smarter than everybody – but are using their smarts to cheat, albeit very subtle, sophisticated, and designed to be see through.

    1. attempter

      I don’t see where the smarts are. Everybody sees Goldman for the parasite it is, and if it didn’t have its government goon there to protect it we’d flick that parasite off us in a second.

      So this is nothing but force. There’s no particular smarts involved.

      Even their financial activities, just taken in themselves, are based far more on leveraging an extortionate oligopolist position than any particular intelligence or competence, as for example detailed here:

      http://www.zerohedge.com/article/exclusive-forensic-reconstruction-goldmans-proprietary-trading-detail-throughout-2008

      http://trueslant.com/matttaibbi/2009/11/16/if-goldmans-so-smart-how-come-their-trading-record-blows/

      They’re really just mediocre thugs who for the moment are in a strong entrenchment.

      Here’s also a blog post of my own on the subject:

      http://attempter.wordpress.com/2009/12/18/goldman/

        1. fresno dan

          I agree GS is evil, but I don’t think the legal mechanisms, unless welded very, VERY well, can bring them to heel. We should not underestimate their cleverness.

    2. tyaresun

      There are individuals at other entities that are as smart, it is just that these other individuals lack the moral flexibility to explore spaces that GS extracts so much profit from.

  4. LeeAnne

    Anger erupts for a volcanic exile
    By Gideon Rachman

    So a very rich journalist finds himself in the middle of an epic natural event and writes a story featuring the inconvenience to his personal flight plans.

    That’s journalism for you. Right there.

  5. LeeAnne

    From Cassandra “Incompetence often plays a role. So does ideology: one reason Mr. Gramlich, a Democratic nominee, was ignored was that his warnings clashed with the anti regulatory convictions of the Bush administration.”

    Rarely is the venality of the Bush administration mentioned when it is he, Cheney and Rumsfeld who are at the center of damage to today’s American life: reducing taxes for the rich; looting Iraq and appointing kids vetted for loyalty to Bush’s brand of religion to run their economy; privatization of the military; legalizing torture and rendition; corrupting the Justice Department tipped in favor of right wing justice; stripping FEMA of experienced personnel and leadership (great job, Brownie) after Clinton built up the agency into a model of competence in the service of people in crisis; starving New Orleans for funds to repair the levies; ditto the SEC.

    Clinton is absolutely correct that under his SEC appointee Arthur Levitt, a lot of this Wall Street stuff would not have occurred. Levitt was a highly respected Wall Street figure unlike the dwipps in charge of the agency since Bush.

  6. Keenan

    RE: The Iceland volcano

    Eyjafjallajökull’s belching could be Gaia’s response to the global financial crisis, to which Iceland was one of the earliest victims. As both events drag on some will connect the dots. Maybe we can placate the volcano by feeding it some banksters.

      1. Keenan

        attempter:
        That is one fine essay and your metaphoric images capture the similarities of the seemingly disparate events.

  7. MindTheGAAP

    If Congress begins to feel that it’s too politically risky to accept campaign contributions from the banks, the game is pretty much up.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aRH8TbMBmuhI&pos=9

    Goldman Donations Spurned in Illinois Campaign for Obama Seat

    Congressman Mark Kirk, the Republican nominee for an open Senate seat in Illinois, said he will return contributions made by Goldman employees because the SEC is investigating the bank.

    Kirk, 50, made the announcement after his Democratic opponent, Illinois Treasurer Alexi Giannoulias, criticized him for taking the donations. The two men are vying for the Senate seat once held by President Barack Obama that will help determine whether Democrats retain control of the chamber.

  8. nowhereman

    I agree with Wolfe, this GS thing is all fluff, and has no meaning until the AG gets involved and criminal charges are laid. Until then these guys are laughing all the way to the bank.

    1. MindTheGAAP

      I’m more of the opinion that it’s the beginning of a change in an agency that up until now was a complete joke. Moreover, Goldman, in its arrogance, is making things much more difficult for itself in the way it’s handling the issue.

      Rule #1: NEVER get into a pissing match with your regulator. EVER!! The banks managed to co-opt and neuter the regulators (at least until now, perhaps), but those are very different things than just pissing them off.

      Rule #2: NEVER get into a pissing match with your regulator when you know you’ve done–at a bare minimum–a lot of very bordeerline shady things for over a decade, and your entire business model is based on continuing to do those shady things for the indefinite future

      Rule #3: NEVER get into a pissing match with your regulator when the public hates your guts.

      Rule #4: NEVER get into a pissing match with your regulator when it gets harder for you to bribe your elected officials.

      Rule #5: NEVER get into a pissing match with your regulator when your regulator can establish his career by taking you on and winning the pissing match, and may end his career if he loses.

      Goldman should roll over and play nice *NOW*. They’re just digging themselves into an ever deepening grave every time they issue another press release or talk to the public (General Counsel saying that Goldman doesn’t believe that a Wells Notice is “material” and for that reason didn’t disclose this one and won’t disclose any others they may have been issued? Are they out of their minds??)

      I don’t understand where Goldman got its reputation for brilliance from–their reaction to this shows a mind-boggling level of sheer stupidity.

      The SEC loses if it backs down. Goldman loses if it keeps this up. The calculations here are sort of obvious…

  9. dearieme

    I had wondered why the Met Office had told us nothing quantitative about the ash. Your link provided “FAAM’s BAe-146-301 large Atmospheric Research Aircraft will not be flying to investigate this – primarily because the aircraft is currently on the ground with all instruments removed immediately prior to a repaint.” Priceless.

  10. MindTheGAAP

    http://www.guardian.co.uk/commentisfree/2010/apr/20/icelandic-volcanic-ash-cloud-editorial

    We remain in a state of confusion over the threat posed by volcanic ash because the basic scientific and technical work needed to measure it more accurately has not yet been done. It has not been done in part because it has not been funded, and in part because competing scientific projects have taken precedence. There is as a result considerable uncertainty on the two fundamental questions of how to gauge more exactly the amount of volcanic material in the atmosphere, and, having gauged it, how to decide what amount aircraft can cope with and what presents a serious danger.

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