Melt Down Monday: Another Fine Mess Trumplicans got us into

Posted: March 13, 2023 | Author: | Filed under: just because | Tags: , , , , , , , , , , , , , | 15 Comments

My body still tells me to say Good Morning!

I’m only on my second cup of coffee while waiting for my Irish Oats to cook. The clock tells me it’s afternoon, but something about me refuses to believe it.  Why am I rudely being pushed into a part of the day rather than enjoying my lazy morning and looking forward to my Night Life?  The best thing about teaching Grad school is that I no longer teach morning classes.  Thanks to Dubya (wrecked the country) Bush, I only have that sacred space with its full glory for about 4 months a year. I’m grading midterms and wading through a seriously unnecessary set of bank failures in a bit of a fog. This is my version of No Exit.

Every time I teach my Grad Derivatives class in the Spring, some unnecessary financial crisis pops up.  It’s not a huge one like another thing for which we can thank Dubya (wrecked the economy), Bush, and his cronies.  This will not be the next “Great Recession” creator.

The Republicans under Theodore Roosevelt and Ulysses S Grant determined that you cannot trust huge actors in concentrated markets to regulate themselves.  They called them trusts back then. They muck things up worse than the regulations while taking advantage of their customers for extraordinary profits until the jig is up. They also lead to substantial negative spillover costs paid for with taxpayer money. Many times, especially with situations like the Norfolk situation, victims of these costs never fully recover their losses.  Real economists know this.  It’s why Republicans haven’t had one around since Bernanke.

I wrote extensively about why the financial system ran amok and wrecked the economy around 2008.  I am again writing about a very similar situation.  Much of it’s rooted in the chipping away of protections set up to protect us from a recurrence of the Great Recession removed by Trump, the Republicans, and any elected official that basically gets vast donations from Wall Street and Banks. NBC News Sahil Kapur follows the ties between that and what’s happening now. “Silicon Valley Bank collapse puts new spotlight on a 2018 bank deregulation law. Democratic Sen. Elizabeth Warren, who led the push against that Trump-era law, now wants to restore those rules on financial institutions. Biden is also calling on Congress to act.”

Five years ago, Warren was the most outspoken opponent of the Republican-led Congress’ push to undo regulations imposed under the 2010 Dodd-Frank law for small and midsize banks. The bill, led by Sen. Mike Crapo, R-Idaho, sought to reclassify the “too big to fail” standard, which came with enhanced regulatory scrutiny. By raising the threshold from $50 billion in assets to $250 billion, medium-size banks were exempted from those regulations.

“Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks,” Warren wrote Monday. “They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B‌., the‌ bank couldn’t withstand the pressure — and Signature’s collapse was close behind.”

Sen. Bernie Sanders, I-Vt., who also opposed the 2018 law, blamed it for Silicon Valley Bank’s collapse.

“Let’s be clear. The failure of Silicon Valley Bank is a direct result of an absurd 2018 bank deregulation bill signed by Donald Trump that I strongly opposed,” he said in a statement. “Five years ago, the Republican Director of the Congressional Budget Office released a report finding that this legislation would ‘increase the likelihood that a large financial firm with assets of between $100 billion and $250 billion would fail.’”

The 2018 battle featured intense lobbying by banks — including Silicon Valley Bank and an array of smaller community banks — that were seeking regulatory relief.

The bill passed the House 258-159, winning 225 Republicans and 33 Democrats. In the Senate, it needed some Democrats to defeat a filibuster and achieve 60 votes. Warren infuriated some colleagues when she called out some Senate Democrats by name for trying to weaken Dodd-Frank rules.

In the end, 17 Democrats joined a unanimous Senate Republican conference to pass it. Trump signed it into law.

The entire financial industry plays a role in the economy held by no other.  The safekeeping role is why rules for bank deposits, the FDIC insurance mandates exist, and capitalization laws are in place. I think no one teaches about the Bank Holidays and Runs we experienced during the Great Depression. The more you chip away at what used to be legal differences and responsibilities between banks with deposits and fiduciary responsibility and their ability to play around with risky loans and investments, the more these things will reoccur.  Also, speculative investors like hedge funds’ special tax treatment lower their risk costs and increase their ability to make investment decisions that have a likelihood of implosion. The rollback of substantial sections of Dodd-Frank was integral to last week’s runs.

https://twitter.com/ritujay/status/1634432765692366849

More importantly, the recent failures of financial institutions and companies involved with Cryptocurrencies will be part of the focus as state and federal regulators–including the Fed–do a post-mortem on both Silicon Valley and the Signature Bank in New York. These banks look like Country Clubs for risky and poorly managed loan portfolios. They have many big accounts backed up by cryptocurrency, a highly speculative and risky asset. This is from CNBC. “Regulators close crypto-focused Signature Bank, citing systemic risk.” The reporter is Yun Li.

 The banking regulators said depositors at Signature Bank will have full access to their deposits, a move similar to that which was made to ensure depositors at the failed Silicon Valley Bank will get their money back.

“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” the regulators said.

The regulators shuttered Silicon Valley Bank on Friday and seized its deposits in the largest U.S. banking failure since the 2008 financial crisis — and the second-largest ever. The dramatic moves come just days after the tech-focused institution reported it was struggling, triggering a run on the bank’s deposits.

Signature is one of the main banks to the cryptocurrency industry, the biggest one next to Silvergate, which announced its impending liquidation last week. It had a market value of $4.4 billion as of Friday after a 40% sell-off this year, according to FactSet.

As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing.

To stem the damage and stave off a bigger crisis, the Fed and Treasury created an emergency program to backstop all deposits at both Signature Bank and Silicon Valley Bank using the Fed’s emergency lending authority.

The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 cap on guaranteed deposits.

While depositors will have access to their money, equity and bondholders at both banks are being wiped out, a senior Treasury official said.

The article is written by DDay. “The Silicon Valley Bank Bailout Didn’t Need to Happen.  The debate over protecting all deposits in a blink looks past the incompetence that got us here.”  Buried in the fine print of the joint statement is something exciting. It states that “certain unsecured debtholders” and shareholders are not protected.  Certain unsecured debtholders may likely apply to crypto-tainted accounts used to secure debt.  The Fed has been anxious to get more involved with the rogue market.  Will today’s Republican Congress let them?

The brightest minds in and around San Francisco Bay had an unadulterated meltdown over the weekend over the failure of Silicon Valley Bank. This was a failure that they themselves caused, mind you, engineering a digital flash bank run that forced SVB to realize heavy losses, mostly from interest rate hikes and the bank’s unbelievable failure to even attempt to manage interest rate risk.

The venture capitalist–led mob quickly moved on to another dire warning: Because over 90 percent of SVB’s depositors exceeded $250,000 in guaranteed FDIC insurance, the government must make them 100 percent whole, immediately, or every regional bank in America will see the same failure. Hedge fund titan Bill Ackman, venture capitalist David Sacks, and angel investor Jason Calacanis led the charge, saying that thousands of startup firms will have trouble making payroll, and other regionals won’t be able to stop a torrent of withdrawals. They essentially took out a match next to a gas pump and demanded that federal regulators not force them to light it.

It worked. Federal officials announced a backstop to “fully protect all depositors” at both Silicon Valley Bank and Signature Bank, which was also closed on Sunday. “Depositors will have access to all of their money starting Monday, March 13,” the joint announcement by Treasury, the Federal Reserve, and the FDIC read. A special bank assessment will offset losses, they say; all shareholders and bondholders “will not be protected,” with senior management fired. A $25 billion fund has been initiated to protect deposits, even though the theory is that no taxpayer funds will be implicated.

Run on San Antonio’s City-Central Bank and Trust Company during the Depression, 1931

Have I ever mentioned how much I’d admire California Representative Katie Porter?

THE FIRST WORDS OUT OF THE MOUTH of Rep. Katie Porter (D-CA) when I talked to her on Sunday were: “Can you believe we have to talk about this shit again?” She was referring to a conversation we had in 2018, when she was still just a financial expert and a candidate for Congress, about S.2155, which I call the Crapo bill, a reference to its co-author (Idaho Republican Sen. Mike Crapo) and its underlying contents.

Some of these provisions don’t mitigate risk; they encourage it. For depository institutions with fiduciary responsibilities, it’s like giving Bourbon-drenched pecan pie to alcoholics.  Remember when Bill Gates sold Tesla short? Anyone with an excellent eye for financial statement analysis can see this stuff coming.  But wait, how do you explain that “KPMG Gave SVB, Signature Bank Clean Bill of Health Weeks Before Collapse. Accounting firm faces scrutiny for audits of failed banks“?  This is from Jonathan Weil and WSJ.

Silicon Valley Bank failed just 14 days after KPMG LLP gave the lender a clean bill of health. Signature Bank went down 11 days after the accounting firm signed off on its audit.

What KPMG knew about the two banks’ financial situation and what it missed will likely be the subject of regulatory scrutiny and lawsuits.

KPMG signed the audit report for Silicon Valley Bank’s parent, SVB Financial Group SIVB 0.00%increase; green up pointing triangle, on Feb. 24. Regulators seized the bank on March 10 after a surge of withdrawals threatened to leave it short of cash.

“Common sense tells you that an auditor issuing a clean report, a clean bill of health, on the 16th-largest bank in the United States that within two weeks fails without any warning, is trouble for the auditor,” said Lynn Turner, who was chief accountant of the Securities and Exchange Commission from 1998 to 2001.

Two crucial facts for determining whether KPMG missed the banks’ problems are when the bank runs began in earnest and when the bank’s management and KPMG’s auditors became aware of the crisis.

This reminds me of Moody’s, which had no idea how to rate tranches of mortgage-based swaps and completely missed the boat on the Mortgage crisis in 2008. You may also remember Moody’s role during the Junk Bond Kings’ rule in the late ’80s. This was also a time of intense deregulation of the industry.

.   Moody’s also missed this current one.  “Moody’s Failed to Warn About Silicon Valley Bank’s Problems. The prestigious rating agency still gave the bank of startups an A rating until its collapse on March 10, repeating the same errors of the subprime crisis in 2008.”  This is from The Street and Luc Olinga.

Fifteen years after the subprime mortgage crisis which devastated the global economy, rating agencies continue to make the same mistakes.

At least, this seems to be the case with the prestigious rating agency Moody’s Investors Service.

Regulators shut down California’s Silicon Valley Bank on March 10, after its US Treasury bets went awry, due to the interest rate hike by the Federal Reserve.

Consequently, the Federal Deposit Insurance Corporation (FDIC) seized its assets and created a new entity, which will begin operating on March 13.

Created in 1983, Silicon Valley Bank, which presented itself as a “partner for the innovation economy,” offered higher interest rates on deposits than its larger rivals, to attract customers. The company then invested the clients’ money in long-dated Treasury bonds and mortgage bonds with strong returns.

Moody’s Gave Silicon Valley Bank an A Rating

This strategy had worked well in recent years. The bank’s deposits doubled to $102 billion at the end of 2020 from $49 billion in 2018. In 2021, deposits increased to $189.2 billion.

But everything turned upside down when the Federal Reserve began to raise interest rates, which made existing bonds held by SVB less valuable. As a result, the bank had to sell the bonds at a discount to cover withdrawals from its customers. In selling these bond positions, SVB had to take a significant loss of $1.8 billion.

Due to this loss, SVB suddenly announced that it needed to raise additional capital of $2.25 billion, by issuing new common and convertible preferred shares. This decision caused panic and a run on the bank.

While investors saw nothing coming, this is also the case with Moody’s Investors Service, whose role is to assess the intrinsic value of a company and its ability to meet its obligations, including its ability to pay lenders back. Rating agencies must flag the financial risks associated with a company.

But everything turned upside down when the Federal Reserve began to raise interest rates, which made existing bonds held by SVB less valuable. As a result, the bank had to sell the bonds at a discount to cover withdrawals from its customers. In selling these bond positions, SVB had to take a significant loss of $1.8 billion.

Due to this loss, SVB suddenly announced that it needed to raise additional capital of $2.25 billion, by issuing new common and convertible preferred shares. This decision caused panic and a run on the bank.

While investors saw nothing coming, this is also the case with Moody’s Investors Service, whose role is to assess the intrinsic value of a company and its ability to meet its obligations, including its ability to pay lenders back. Rating agencies must flag the financial risks associated with a company.

American Union Bank, New York City. April 26, 1932.

I’ve lived through a banking crisis in charge of strategic planning and financial statement forecasting for one of the original too big to fail Savings and Loan Companies in the early 1980s.  I was also trying to hedge our loan commitments using GNMA futures which is why Derivatives are real to me. Any time interest rates start moving in the wrong direction and any bank that hasn’t realigned their related risks, like being long on one side of the balance sheet and short on the other, you’ll lose big.

I had to tell the head of Financial Operations there was no way to break even when every rate marks an asset to market with every tick, and you’re mismatched. I was barely 25 at the time. I also saw loan brokers selling mortgages where due diligence was lacking in 2005.  A student told me he was being offered a mortgage based on his student loan as income.  I can’t imagine any in-house loan officer being that ignorant. That’s what happens when you farm out your core business ou to salespeople earning money by volume.  I can’t imagine how Moody’s or major Auditing firms keep missing this.  They’re probably as captured by their customers as the politicians are captured by their lobbyists and checks.  Right Senator Sinema?

James Stewart and Donna Reed in a scene from the film ‘It’s A Wonderful Life’, 1946. (Photo by RKO Radio Picture/Getty Images)

So, these bank runs don’t exactly look like the ones in those black-and-white photographs from the 1930s.  This is a good explanation from Fast Company. What exactly is a Digital Flash Bank Run?  It’s not a DC comic. Silicon Valley Bank: An ‘It’s a Wonderful Life’ bank run for the digital age. The downfall of the Valley institution, which has been called “the backbone of the startup economy,” was caused by a good old-fashioned bank run, but one that ran at internet speed.”

The run began on Thursday, after a powerful Silicon Valley VC—Peter Thiel’s Founders Fund—had begun advising its portfolio companies to withdraw their money from SVB, sources told Fast Company. Other VCs soon caught wind of the advisory and began advising their own portfolio companies to withdraw funds from SVB, the people said. As the withdrawals accelerated, the bank began taking steps to stem the tide and preserve its solvency—just like George Bailey did in the 1946 classic It’s a Wonderful Life.

SVB Financial Group CEO Greg Becker seemed to be reading from director Frank Capra’s script when he uttered the fateful words “stay calm” during a Thursday conference call with customers, as fears over the bank’s solvency grew. Those words probably only increased depositors’ anxieties. And the withdrawals likely continued to snowball.

“The whole thing was predicated on a few folks who put out calls to make withdrawals,” Spencer Greene, a general partner at the venture fund TSVC, tells Fast Company. “I think the folks who made those calls weren’t correct on the facts, but once the thing got going it was hard to stop.” In other words, before the run started there was not sufficient evidence to suggest the bank was facing serious solvency issues.

Northern Rock Bank run, September 2007

Just another point, we knew these things could happen.  Here’s a 2019 article speculating about a digital bank flash run by Joe McGrath, writing for The Raconteur. “Turmoil, panic and bank runs in a digital future.”

Potentially, cash can now be transferred from accounts in greater amounts, more quickly than before and, even if banks enforce temporary limits on online withdrawals, what effect would the resulting panic have on the banking system as a whole?

“In a world without physical cash, the rules of engagement for situations such as a bank run will require a different framework,” says Simon Fairbairn, director of solution development, western Europe, for Ingenico Group. “The rules and systems of today will need to evolve to accommodate the demands of a run.”

Mr Fairbairn questions whether present digital banking infrastructure is sufficient to cope with sustained pressure of this nature. “Regulation, compliance, technology; processes have all evolved to try and prevent the sins of the past, but until tested, can we really be sure it won’t already be found wanting,” he says.

It may sound like scaremongering, but Mr Fairbairn’s cautious view has broad support from many in the financial services community.

“A digital bank run in a hypothetical future would be much more dangerous as it would happen in seconds and minutes when clients could simply use mobile banking apps to transfer money to another account,” says Susanne Chishti, chief executive of Fintech Circle.

“Such a digital bank run would be much more difficult to contain and an appropriate technical response for such a scenario would have to be coded in at the outset to offer any chance of being effective.”

In 2020, Harvest Finance experienced the first type of digital bank run. “Harvest Finance: $24M Attack Triggers $570M ‘Bank Run’ in Latest DeFi Exploit, Harvest Finance has seen its total value locked drop by more than $500 million in the 12 hours since being hit by a flash loan attack.” DeFi is short for Decentralized Finance, which is based on peer-to-peer finance services on blockchains. Welcome to the Wild West World of cryptocurrency and bitcoins. This should give you pause.

An arbitrage trade exploiting weak points in decentralized finance (DeFi) protocol Harvest Finance led to some $24 million in stablecoins being siphoned away from the project’s pools on Monday, according to CoinGecko.

According to reports, an attacker used a flash loan – a technique that allows a trader to take on massive leverage without any downside – to manipulate DeFi prices for profit. The exploit sent the platform’s native token, FARM, tumbling by 65% in less than an hour, followed by the project’s total value locked (TVL), which dropped from over $1 billion before the exploit to $430 million as of press time.

The funds were eventually swapped for bitcoin (BTC), but not before being swept through Ethereum mixing service Tornado Cash.

The jargon term for this was a “bad harvest.”   Stay out of this stuff is the only thing I have to say, which is the advice I would have given to these banks. Unfortunately, Silicon Valley is rife with Elon Musk Clones taking risks for adventure and attention. All traders have their own language. I’m still surprised youngest daughter can keep her department of derivatives traders and products on a leash. They’ve always thought of themselves as Wild West Cowboys. (See Lions of Wall Street.) But then, she and the brokerage firms she’s worked for are licensed and babysat by the SEC to keep the nonsense in check.  We both stay out of this market.

So, a part of this and a bit more will be a lecture for me tomorrow.  Last year the Game Stop thing did this to me.  You’ll be glad to know billionaire Carl Icahn is happy about that crash.  Someone always is because there are two sides to every trade. If you’re head’s spinning, you’re doing just fine. I got a Ph.D. and real-life experience in the stuff, plus a daughter that lives it daily and who I consult for a reality check. It still makes my head spin.

What’s on your reading and blogging list today?

And the SEC is far behind
Down in the swamp with the gators and flamingos
A long way from Liechtenstein
I’m a junk bond king playing Seminole Bingo
And my Wall Street wiles
Don’t help me even slightly
‘Cause I never have the numbers
And I’m losing nightly
I cashed in the last of my Triple B bonds
Got a double-wide on the Tamiami Trail
I parked it right outside the reservation
Fifteen minutes from the Collier County Jail

(Warren Zevon, backed up by Neil Young live)

DNC Live Blog: Day 3

Posted: September 6, 2012 | Author: | Filed under: 2012 presidential campaign, Barack Obama, Live Blog, Mitt Romney, Reproductive Rights, The DNC, the GOP, U.S. Economy, U.S. Politics, War on Women, Women's Healthcare | Tags: , , , , , , , , , , , , , , , | 46 Comments

Here we go . . . This is the last night of the 2012 Democratic National Convention. We can only hope the speeches will be as thrilling as the ones we heard last night.

Tonight Vice President Joe Biden and President Barack Obama will accept their nominations to run for reelection. In addition, there will be a who slew of celebrity appearances, including Natalie Portman, Scarlett Johansson, The Foo Fighters, Eva Longoria, Mary J. Blige, James Taylor, Earth Wind & Fire, Marc Anthony, and Kerry Washington. Former Arizona Rep. Gabrielle Giffords will lead the pledge of allegiance.

At 8:00, former Florida Governor Charlie Crist will speak. At 10:00, we’ll hear from Eva Longoria, Joe Biden, and President Obama. The rest of the night’s schedule has not been released.

Just a few headlines to get you going:

Amanda Marcotte: Sandra Fluke’s Speech Made Republicans Crazy. Which Is Just What the Democrats Want.

For a short period yesterday evening, a moment of panicked confusion broke out among those of us obsessively watching and tweeting the Democratic National Convention, when Sandra Fluke did not go on stage as scheduled. It turns out that we needn’t have worried; convention organizers made an apparently last minute decision to move Fluke’s speech to later in the night, giving her a prime-time audience. It’s a move that indicates Democrats have finally stopped freaking out at the first sign of reactionary histrionics, and instead have embraced the strategy of taking the fight to conservatives.

After decades of playing along with conservatives who dress up their hostility to female sexuality as nothing more than an interest in “life,” Democrats have finally realized that baiting the anti-choice right into showing its misogynist, sex-phobic side may just be a winning strategy.

Marcotte posts some of the rageful Republican tweets at the link.

HuffPo: Unions Hope Democratic National Convention Draws Attention To Plight Of North Carolina Workers

North Carolina passed right-to-work legislation in 1947, barring contracts that require all workers at unionized companies to pay union dues. North Carolina is now the least-unionized state in the country, with about 3 percent of workers belonging to one, according to the Labor Department. The state also bans collective bargaining for public-sector workers. Feeling snubbed, some activists skipped the convention in favor of what was billed as a “shadow convention” for organized labor in Philadelphia.

“This entire saga, from the beginning to today ­– the site selection, the state selection — the way it’s been handled is just nothing more than confirmation to me that the standing of organized labor in the eyes of the Democratic Party is lower than it’s ever been in my time,” said Chris Townsend, political director of the United Electrical, Radio and Machine Workers of America union, who has been in the labor movement for more than three decades.

CNN Money: Is Wall Street Being Bamboozled by Romney?

FORTUNE — Wall Street is taking quite a pounding at the Democratic National Convention this week as speakers, like Massachusetts Senate hopeful Elizabeth Warren, fire populist missives so inflammatory it would cause even the most liberal banker to cringe. While the speeches are meant to fire up the Democratic base, they are also likely to induce some financiers to double their contributions to Republicans, namely, Presidential hopeful Mitt Romney.

But is that a safe bet? Much of Wall Street’s concerns derive from the passage of the Dodd-Frank financial reform bill, even though some of the most controversial aspects of the bill seem permanently lost in regulatory limbo. Going forward, there remain questions as to what, if anything, a Romney Presidency could truly deliver in the next four years that would be so different from a second term Obama presidency. Given that uncertainty, Wall Street could possibly be better off sticking with the devil they already know.

New York Observer: We Can All Breathe a Sigh of Relief: Mitt Romney Has a Plan to End the Housing Crisis

Is Mitt Romney really the man to solve the housing crisis? Well, consider this: Mr. Romney may not have ever struggled “to put food on the table” as folksy politicians are so fond of saying, but he has four houses. Four. So he knows a thing or two about home ownership. And, unlike some homeowners who took out mortgages and couldn’t pay them back, Mr. Romney is wealthy enough not to have to take out mortgages (although there’s a possibility that he did—the man does have the common touch, at times).

In any event, the Republican candidate has revealed his four-point plan while taking a few swings at Obama, like: “the dream of home ownership is out of reach for many Americans as a result of President Obama’s failed policies and stalled economy.”

Because Americans were doing so well with home ownership before Mr. Obama took the helm. Ha! Good one! As though the “stalled economy” and, well, the “economic crisis” weren’t a result of the fact that many Americans were actually really horrible when it came to assessing risk and making responsible choices about home ownership.

The consensus is that it’s not much of a “plan.”

ABC News: Paul Ryan Anticipates and Counters Obama’s Convention Speech Tonight

COLORADO SPRINGS–Just hours before the president takes the stage at the Democratic National Convention, Paul Ryan attempted to counter Obama’s speech by reminding voters in this battleground state of then candidate Obama’s promises in his 2008 speech in Denver.

“Right here in Colorado, four years ago with the Styrofoam Greek columns, the big stadium, the president gave this long speech with lots of big promises,” Ryan said. “He said … that Democrats have a very different measure of what constitutes progress. By those very measurements, his leadership has fallen woefully short.”

Yawn. . . Lots more of Lyin’ Ryan’s psychic predictions at the link. Frankly, after the spanking he got from Bill Clinton last night, the little twerp would do better to just STFU; but I’m hoping he continues making a fool of himself. I guess he doesn’t know that he has lost all credibility with everyone but obsessive Fox watchers.

Detroit News: Conservatives Pull Ads from Michigan

Mitt Romney’s conservative allies are bypassing Michigan with their advertising while stepping up efforts in other battleground states — suggesting campaign strategists don’t believe his road to the White House leads through his native state.

The pro-Romney groups American Crossroads and Americans for Prosperity are pouring nearly $13 million into advertising in key states, indicating they remain eager to lend considerable financial muscle to Romney in states viewed as truly competitive.

There are no presidential campaign ads of any kind airing in Pennsylvania and Michigan, according to information provided by media trackers to the Associated Press.

Nate Silver: The Simple Case for Why Obama Is the Favorite

…our forecast has moved toward President Obama over the past several days. It now gives him about a three-in-four chance of winning the Electoral College on Nov. 6.

I’ll explain a little bit more about how the model comes to that conclusion in a moment, but the intuition behind it is pretty simple:

1. Polls usually overrate the standing of the candidate who just held his convention.
2. Mitt Romney just held his convention. But he seems to have gotten a below-average bounce out of it. The national polls that have come out since the Republican National Convention have shown an almost exact tie in the race.
3. If the polls overrate Mr. Romney, and they show only a tie for him now, then he will eventually lose.
The first point is the simplest of all, but perhaps the most important. There is a lot of focus on the bounce that a candidate gets after his convention — that is, how the polls conducted just after the convention compare with the ones taken immediately beforehand.

Silver predicted the 2008 election results almost perfectly.

I’m looking forward to reading your comments tonight, so bring it!

Thursday Reads

Posted: June 14, 2012 | Author: | Filed under: 2012 presidential campaign, Banksters, child sexual abuse, children, Crime, morning reads, U.S. Politics | Tags: , , , , , , , , , , , , , , , , , , , , | 28 Comments

Good Morning!

Wall Street Royal Jamie Dimon deigned to appear before a Senate Committee yesterday, and the Senators mostly sucked up to him. I’m surprised they didn’t ask if he needed a pillow for his chair. MSNBC: Senate treats JPMorgan CEO Dimon with kid gloves

Dimon was expected to receive a frosty reception in his first congressional appearance since he announced the bank sustained a trading loss some analysts now estimate is at least $3 billion. It was a massive loss for the nation’s biggest financial institution.

Instead, Dimon, who has won praise for bringing JPMorgan (JPM) through the financial crisis relatively unscathed, was treated cordially by most of members of the Senate Banking Committee. They peppered him with questions about regulation and risky practices at the bank, but did not press him to give an update on the losses resulting from the trade. JPMorgan is expected to give an update to shareholders when it reports its second-quarter earnings July 13.

“I think it was a pretty favorable day,” David Konrad, a Keefe, Bruyette & Woods banking analyst, told CNBC. Konrad said he was surprised that the questioning of Dimon by lawmakers was so “professional.”

Excuse me, “professional” for a Senator would have been sending this man to the woodshed. NPR’s Marketplace called the treatment of Dimon “a wake for Dodd-Frank.”

Yahoo has named the winner of the “Most Tepid Endorsement of Mitt Romney” contest: it’s a bumper sticker that reads “At least he’s not a communist.”

Until recently, it appeared that no one could unseat Indiana Gov. Mitch Daniels as the champion of the tepid Romney endorsement. Since Yahoo News started conducting reader polls on the politicians who supported Mitt Romney in the least enthusiastic terms, Daniels has defeated original champ George Pataki and defended the crown against Newt Gingrich, Rick Santorum and George W. Bush. (The former president came the closest to unseating Daniels.)

We thought the book was closed on the tepid endorsement bracket until Yahoo News reporter Chris Moody spotted a bumper sticker at last weekend’s regional CPAC conference in Chicago bearing these words of praise: “At least he’s not a communist.”

You can read the other tepid endorsements at the link.

First Romney made fun of Obama for wanting to help cities and states pay for cops, teachers, and firefighters. Then he went on Fox News and said it was a “strange accusation” for anyone to say he didn’t want to hire teachers and first responders.

After an extended skewering of President Obama for a gaffe about the private sector last week, ending with the charge that it was proof the president was “out of touch” Romney was asked by Fox and Friends’ Brian Kilmeade for his response to Obama saying it was Romney who was clueless (Romney’s comment comes at about the 1:40 mark) :

[BRIAN] KILMEADE: He says that you’re out of touch. He says you want to cut firefighters and teachers, that you don’t understand what’s going on in these communities. What do you say to that, Governor?

ROMNEY: Well, that’s a very strange accusation. Of course, teachers and firemen and policemen are hired at the local level and also by states. The federal government doesn’t pay for teachers, firefighters or policemen. So, obviously that’s completely absurd.

But of course the federal government does subsidize states and they often use the money to pay for these public employees. In fact, the reason so many teachers, firefighters and cops are getting laid off now is because stimulus money has run out.

Yesterday Greg Sargent pointed out that Romney’s plan would indeed cut billions from cops, firefighters and teachers

Yesterday Mitt Romney claimed that it was “ completely absurd” of the Obama campaign to argue that he favors cutbacks in cops, firefighters and teachers. “The federal government doesn’t pay for teachers, firefighters or policemen,” Romney said, adding that they were paid by states and localities.

What’s getting lost in the back and forth here is that Romney’s actual economic plan would, in fact, cut billions of dollars in federal money that goes to cops, firefighters, and teachers — perhaps more than $10 billion a year, in fact.

This is the conclusion of the Center on Budget and Policy Priorities, which analyzed Romney’s plan through the prism of the debate over public workers at my request.

As Michael McAuliff reported yesterday, despite Romney’s claim, the federal government does give billions of dollars to states and localities through programs like Title 1, the COPS program, FEMA and others — which pay for first responders and teachers.

This is amazing. Romney finally broke down and decided to talk to a media source that isn’t Fox News! He will be on Face The Nation on Sunday morning.

A full year into his presidential campaign, presumptive Republican nominee Mitt Romney will venture out of his Fox comfort zone this Sunday to make his first appearance on a rival network’s political talk show.

Romney has been interviewed several times on ”Fox News Sunday” this campaign cycle, but has declined repeated invitations to appear on any of the other Sunday shows, occasionally drawing scorn from veteran anchors accustomed to interviewing presidential candidates.

Let’s hope Shieffer asks a few tough questions. One thing Shieffer will probably ask about is Romney’s choice of Vice President. One of the leading contenders, Marco Rubio, announced yesterday that he supports the illegal Florida voter purge.

“How can you argue against a state identifying people who are not rightfully on the voter rolls?” he said at a Bloomberg event, according to the Tampa Bay Times.

Rubio’s comments put him in line with Florida Gov. Rick Scott (R) who on Tuesday declared the debate on the merits of the purge “over,” because the probe had supposedly turned up more than 50 non-citizen voters who had cast ballots.

The Department of Justice didn’t agree. Later Tuesday, it announced it was launching a federal lawsuit against Florida over complaints that the purge was taking place within 90 days of its August 14 primary election, as well as over its alleged violation of a voting rights law meant to prevent states from suppressing voters.

That might not help Romney win over Latino voters.

John Avlon has a piece at CNN on Jeb Bush and other “moderate” Republicans who are starting to fight back against Grover Norquist:

This is what happens when politics starts looking like a cult: Jeb Bush gets attacked for being a traitor to the conservative cause.

The former Florida governor has been speaking with the freedom of someone not running for office, saying that both his father and Ronald Reagan would have had a hard time in today’s hard-right GOP and questioning the wisdom of Grover Norquist’s absolutist anti-tax pledge.

That set off a fascinating public fight between Bush and Norquist, two faces of competing factions within Republican Party. It is the latest evidence of a growing GOP backlash against the ideological straitjacket Norquist has attempted to impose on governing in the United States.

And Jeb is not alone.

As it turns out, Norquist has reason to be concerned. It’s not just Jeb Bush. A growing number of Republicans are rejecting his pledge. Oklahoma conservative Sen. Tom Coburn called the pledge’s effective veto of deficit reduction plans “ridiculous” when talking with Erin Burnett on “OutFront.”

Sen. Lindsey Graham of South Carolina on Tuesday declared his independence from the pledge, saying, “We’re so far in debt, that if you don’t give up some ideological ground, the country sinks.”

Add to those voices seven other Republican U.S. senators — from Maine’s Susan Collins to Iowa’s Chuck Grassley to Wyoming’s John Barrasso — and 11 Republican House members, ranging from centrist New Yorker Richard Hanna to tea party Floridian Allen West.

In pedophile news, Jerry Sandusky had another bad day in court yesterday with three victims testifying that he manipulated and threatened them into putting up with his sick sexual behavior.

The trio of young men who testified against Jerry Sandusky on the third day of his sexual-abuse trial couldn’t have been more different in personality and temperament. Yet each of their testimonies was sexually graphic and disturbing—and midway through the prosecution’s fast-tracked arguments, a clear pattern has emerged in their allegations.

I’m not going to quote all of the sordid details–there are too many of them anyway. You can read it all at the link. I’ll just give you one excerpt that shows what Sandusky is all about:

Then, the witness told the jury of a time he visited the Sandusky home.

“We were in the basement. We were wrestling,” he said in a monotone frequently heard from abuse victims who have had to tell their stories multiple times. “The defendant pinned me to the floor, pulled down my gym shorts, and started to perform oral sex on me.” Asked by prosecutor Joe McGettigan what his reaction was at the time, the witness said, “I freaked out.”

“Did he ever say anything to you about it?” McGettigan asked.

“He told me if I ever told anyone I’d never see my family again,” the young man replied. “Later he apologized and said he didn’t mean it, that he loved me.”

I hope Sandusky goes to prison for life, and I want to see prosecutions of his enablers at Penn State. It’s an outrage that he was allowed to go on abusing children for years after many at the school knew about his behavior.

And then there’s the Catholic Church: U.S. Catholics still suspect priests sexually abuse children: Report

The National Review Board said that, a decade after the US Conference of Catholic Bishops issued a child protection charter, there has been a “striking improvement” in the way the Church deals with the abuse of minors by clergy.

“Children are safer now because of the creation of safe environments, and action has been taken to permanently remove offenders from ministry,” said the report, released as the Conference began its annual spring meeting in Atlanta.

But it acknowledged: “Despite solid evidence (to the contrary), many of the faithful believe that sexual abuse by clergy is occurring at high levels and is still being covered up by bishops.”

Well, what did they expect? I’m certainly not surprised. In fact I’d be surprised if there aren’t still pedophile priests abusing children.

Forest boy

I’ll end with the strange story of “Forest Boy.”

Berlin police on Wednesday released photos an English-speaking teenage boy who wandered into the city nine months ago saying he had been living for the last five years in the forest with his father.
Police spokesman Thomas Neuendorf said all attempts to identify the boy since he emerged in the German capital on Sept. 5 have been unsuccessful, and they are now hoping the release of his photo may produce some leads.

“We have checked his DNA against all missing person reports, sent the data to Interpol so that they could check it internationally, but unfortunately without any success,” Neuendorf said.
The boy has told authorities his father called him “Ray” and that he was born June 20, 1994, but claims not to know his last name or where he’s from.

He said his mother, Doreen, died in a car accident when he was 12 and after that he and his father, Ryan, took to the forest. He said they wandered using maps and a compass, staying in tents or caves overnight.

He told authorities that after his father died in August, 2011, he buried him in the forest and then walked five days north before ending up in Berlin, and showed up at city hall.

As of last night, the identity of the boy was still a mystery even after release of the photos.

What’s on your reading and blogging list today?