KRESKIN

Posted in Quick Hits on January 28th, 2009 by Ed

I found a neat article from March 19, 2008 in the UK publication MoneyWeek about using Credit Default Swap rates to spot banks on the verge of failure. Author James Ferguson deserves admiration for his foresight. In the nine months after this article was published, HBOS, Kaputhing, Anglo-Irish, and Landsbanki indeed went belly-up as Ferguson predicted. Royal Bank of Scotland (RBS) is circling the drain, and if it survives it will only be with intervention to the point of nationalization.

That has become the question – with the next jolt, it is inevitable that more banks will fail. Will they be allowed to or will we see a wave of de-privatizations? My sense is that European countries with a banking industry dominated by a single entity (i.e., ING Groep in Holland) will prop up their de facto national banks to the end. Countries like Britain and the US have too many passengers and not enough lifeboats.

INSANITY, OR AT LEAST AMNESIA

Posted in Rants on January 28th, 2009 by Ed

In his later years, Mafia kingpin Vincent "The Chin" Gigante took to wandering the streets of New York clad only in a bathrobe and mumbling to himself. Facing indictment and good odds that he would die in prison, The Chin decided that putting on a well-publicized and elaborate display of "crazy" behavior would help him cop an insanity plea in court. When Federal prosecutors threatened to add perjury charges to his already daunting dossier of felonies, Gigante finally admitted in 2003 that his "insanity" was nothing but an act concocted to avoid prosecution.

This story came to mind immediately when I saw this:

Concerned that he didn't look enough like a Bond villain, he added a black stetson hat to his cane-and-wheelchair ensemble. Now, I am being only partly serious here. Obama, whose balls sure have shrunk and retracted a lot in the past month, has already made it clear that Cheney will never need an insanity defense or any other. Everyone gets a pass on the past eight years. Apparently we are going to do a big, national "Mistakes were made. But why talk about the past?" rationalization to excuse everything that happened.

I find this curious.

It's not a surprise that the political elite have little interest in investigations and criminal charges. What's truly disturbing is how little clamor for accountability there is among the voting public. I think this has a fairly simple explanation: a large percentage of this country feels culpable. They voted to put these lunatics in charge, voted to re-elect them, bought an almost laughably absurd rationale for war (and its supporting "evidence") without a moment's hesitation, applauded the criminally negligent economic stewardship (Boy, those $300 stimulus checks were neat! Remember those? Me neither!), and generally made excuses for the administration for eight years. To investigate or charge anyone with a crime would be to dredge up painful memories of how naive, selfish, arrogant, and flat-out dumb a lot of the public behaved after 9/11 and into Bush's second term. Like a victim of a scam who is too embarassed about being duped to call the police and file charges, Americans have no interest in re-living the days in which the Patriot Act seemed like a good idea, "excessive regulation" was our greatest economic problem, and a nation watched Uncle Colin's UN performance and fell for it. Hook, line, and sinker. Amnesia regarding 2001-2005 has already affected millions of people and I suspect that it will continue to spread for the forseeable future.