This A.M.: Senators Surly in Reform School; Pols Worsen Global Warming; Warnings of a New Bubble

The Republicans' Deaf Ear Is a Preexisting Condition (WashPost, Dana Milbank)

Funny piece on the first day of the Senate's "debate" on the health-care bill. GOP senator Jim Bunning declared he was against the bill, no matter what form, and then he promptly fell asleep. The Republicans might as well have sung "Whatever It Is, I'm Against It," Groucho Marx's bit from Horse Feathers (1932). Or just stayed home to watch re-plays of former colleague Tom DeLay dancing with the stars.

A New Bubble Of the Fed's Creation (WashPost, Steven Pearlstein)

Stimulus packages boost the market so much that, well, another boom is underway. Here's an example of excessive greedsters feasting on carcasses artificially bloated by government money, from the WSJ: "Speculators Seek Fortune in AIG." The NY Post notes that Lehman alums are setting up funds to pick at the carcass of their failed bank. Stocks are rising and traders are waiting with bated breath as the Fed meets this week to figure what, if any, action it will take.

Delayed Foreclosures Stalk Market (WSJ)

Though some foreclosures are being delayed out of good intentions to help beleaguered homeowners, "some analysts believe the delays are prolonging the mortgage crisis and creating a growing 'shadow' inventory of pent-up supply that will eventually hit the market."

A Teflon Rally Running on Volume Fumes (Seeking Alpha, Babak)

Warning: "... this rally is the largest one powered by the least volume ..." Even crazier, an astonishing share of volume has been from a mere handful of stocks. See Liam Denning's "Smoke Signals From the Stock Rally" in the WSJ.

Prosecutors say half of Bernie Madoff's investors lost nothing in Ponzi scheme (NY Daily News)


This A.M.: Toxic Assets, Staggering Foreclosures, Soaring Unemployment -- Everything Else Humming Along

New Phase of Crisis: Securities Sink Banks (WSJ)

"The U.S. banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks."

Souring Prime Loans Compound Mortgage Woes (WSJ)

Frightening foreclosure figures. One in eight households nationwide are in foreclosure or behind on mortgage payments. "Loans extended to borrowers with good credit are deteriorating at a faster clip" than loans to subprime borrowers. Doesn't feel like "recovery." Calculated Risk's detailed breakdown/analysis points out that Alt-A loans are included in the "prime" category, which may make the high numbers a little misleading. More on that (plus this explanation) from Reuters: "That could be skewing things since Alt-A loans by definition are less than prime and extremely loose lending standards during the boom have made them look more like subprime loans. For example, borrowers taking out an Alt-A loan could state their income rather than prove it."

Rise of the Super-Rich Hits a Sobering Wall (NYT)

John McAfee's net worth has fallen from $100 million to $4 million. Send him a sympathy card.

Burress Will Receive 2-Year Prison Sentence (NYT)

A New York millionaire, football player Plaxico Burress, who wounded no one but himself and threatened no one, gets two years in jail for his gunplay. Other New York millionaires who didn't need to pack heat to cripple millions of Americans are still on the loose on Wall Street.

Insider Selling Highlights Growing Downside Risk (

"... Company insiders are now selling stock at the highest rate in two years. This action does not guarantee a market decline but it does imply the easy money in the current bullish run has been made and downside risks, whether temporary or cyclical, have increased. ..."


Schizo Alert! AIG's Good News Leads Market Surge

AIG options soared today on the company's vow to repay us (among other things), and investors also convinced themselves of other good news regarding manufacturing, leading a generally fine damn day on Wall Street.

Wheee! Can we go again, Daddy? Please? The Dow industrials climbed 71 big points; it didn't matter than unemployment claims were surprisingly higher and second-quarter mortgage delinquencies set a record — 13 percent of borrowers were either foreclosed on or missed at least one payment.

In the spate of good news, it looks as if the FDIC is backing off from the capital requirements it threatened to place on private equity firms if they want to take over failed banks. Good news all around, for those who have jobs.

Oh, and Tom Ridge lied about those Homeland Security alerts he flashed at us during the 2004 campaign. Which means that Howard Dean was right when he accused the Bush-Cheney regime of political manipulation of terror alerts. But that's just old news, right?

This A.M.: Longer Life in Store; YouTube Deal with Time-Warner Will Make It More Entertaining

Credit card issuers boost rates ahead of tougher rules (L.A. Times)

Banks "are getting their shots in while they can," says a prominent observer. More: "For the three months that ended June 30, U.S. households on average carried a credit card balance of $7,987, down from a high of $8,529 in the third quarter of last year, according to Moody's"

The Coming Recovery Will Most Likely Not Be Robust (Seeking Alpha, Tom Lindmark)

Parsing IMF Chief Economist Olivier Blanchard's prediction that the Great Recession has permanently damaged economic growth.

Time Warner, YouTube Reach Video, Ad Rev Agreement (WSJ)

Small picture: Google on the march to make its YouTube unit show a profit. Big picture: Latest in a series of pacts that will allow advertisers to make big footprints on the Internet. (See also "YouTube Pumps More Ads Into Lineup.") Bad news for network TV; great news for bloggers looking to spice up their sites. Even better news: Adult Swim clips will be available on YouTube.

US Life Expectancy Reaches All Time High (Medical News Today)

Is that good news or bad news? We're up to nearly 78, so we'll be even crankier for even longer and will cause more traffic accidents. We'll also require more health care for longer, and you'll have to pay for it.

Princeton, Harvard Share Top Spot in U.S. News College Rankings (Bloomberg)

Meaningless ratings (except for the huge PR value) by the ailing U.S. News & World Report yield the usual suspects. This account by Oliver Staley is an unusually thorough look at a highly (and humorously) flawed process during which schools are increasingly accused of "manipulating" their admission policies to impress an increasing irrelevant news magazine. More scary is that colleges are now judging prospective students by their "personalities," as the WSJ reports. (Mark me down for a trade school.)


This A.M.: It's Your Fault That the Economy Hasn't Recovered and That Twitter May Collapse

Reluctant Shoppers Hold Back Recovery (WSJ)

You're blaming us for "casting a cloud over the durability of the U.S. recovery"? Give us our jobs back and stop the banks from foreclosing on our houses and extorting us with new fees. Then we'll talk about it.

Can Twitter Be Saved? It's in danger of collapsing under its own weight. (The Big Money)

Mark Gimein's take: "[T]he volume of material that Twitter unleashes now puts impossible demands on its users' time and attention. The problem, in a nutshell, is information overload. The more Twitter grows and the more feeds Twitterers follow, the harder it gets to mine it for what is truly useful and engaging. Even as Twitter reaches a peak in the cultural cred cycle, it's time to start asking how it can be saved from itself." But don't tweet that question.

Huffington Post + Facebook = the Future of Journalism: Should we be giddy or terrified? (The Big Money)

Chadwick Matlin: "I'm sharing my HuffPo distaste so you know that I don't take the following statement lightly: On Monday, Huffington Post unveiled the future of journalism."

The Most Outrageous U.S. Lies About Global Healthcare (Foreign Policy)

Debunking the bunkum about how our health-care system is the best in the world.


Bonus Round: Bailed-out Firms Near Deadline for Their Pleas to Pay Czar

Friday's the biggest day yet for the country's biggest bailout recipients: How much money will "Pay Czar" Ken Feinberg let them shell out to their execs? (Versions: Times U.K., Reuters, NYT) They have to hand in their homework tomorrow for Feinberg to start grading. He's got 60 days to decide.

The needy firms and their minions have been burning up the phone lines to Feinberg, trying to figure out how much they can get away with paying themselves.

Feinberg's probably up to the task — he's doled out money to Holocaust victims and 9/11 victims, and he doesn't seem to mind pissing people off — but it's unclear, to say the least, what he will think of the pay plans submitted tomorrow by Citigroup, Bank of America, AIG, Chrysler, GM, and the automakers' financing arms. Some observers say Feinberg's in a non-win situation, but he can't really lose since he's supposedly not getting paid for his work.

Among the very sticky wickets is Citigroup's great $100 million handout to energy trader Andy Hall. AIG and Czar Kenneth have their own special issues.

This A.M.: Congress Flies High With New Planes; Everything Else is Up in the Air

Congress Gets an Upgrade: $500 Million Slated for Purchase of Eight More Planes as Lawmakers' Travel Soars (WSJ)

Solution: One-way tickets.

Job Losses Slow as Rate Drops (WSJ)

This just in. Drop in the unemployment rate "suprising." Perspective: "Though still a terrible loss by historical standards, the data suggest a turning point is at hand after job cuts earlier in the year that totaled as much as 700,000. The economy has lost 6.7 million jobs since the recession started in December 2007."

Key Lawmaker Received Countrywide Loans (WSJ)

That's not the whole story. NY Congressman Edolphus Towns, the sorry-ass successor to Henry Waxman as chair of the House Oversight and Government Reform panel, resisted calls for a probe of a Countrywide mortgage program. Then it turns out that Towns had received loans from Countrywide, one of the major bottom-feeders in the subprime market.

Palin Autographed Xbox on eBay for $1.1 Million (Anchorage Daily News)

Console yourself.

Sentiment Readings Disturbingly Bullish (Pragmatic Capitalist)

"I would liken the current environment to a card counter who has just been on a tear playing blackjack, but finds that the deck is currently running low on face cards. The odds now favor the house. You can stay and press your luck, but the smart move is to simply walk away from the table."

AIG Posts $1.82 Billion in Net Income, First Profit Since 2007 (Bloomberg)

You would think this means that the government won't have to be so panicky as it dismantles AIG, which means that its valuable assets won't be practically given away, which means that taxpayers won't get even more screwed than they have been by AIG's $182.5 billion bailout.

Study finds women directors damage profits (FT)

"Female directors ... had a better record of attending board meetings. ... Yet while those traits often helped badly governed companies, the Ferreira and Adams study suggests that increased monitoring can have a negative effect on well-governed businesses." Are any businesses "well-governed"? In any case, don't shoot the messenger.

Another Hurdle for Jobless: Credit Checks (NYT)

You prospective employers are going to hold our bankruptcy against us? What do you think happened to us after we lost our previous job?

Security experts scramble to decipher Twitter attack (Computerworld)

What was the motive for the Twitter outage? Political (to silence a Georgian activist)? Pissy (nerds' contempt for Twitter)? Pure hacking fun? Whatever, it's a big deal for the rapidly growing phenomenon of social capitalism.

Rodeo booms despite US recession (Telegraph U.K.)

"If anything, the deepest and longest American economic downturn since the Great Depression appears to have boosted the popularity of the Wild West events." And your point is ...?

How To Blow A Bubble (Baseline Scenario, James Kwak)

Greenspan's Fed used to be the "bubble-maker-in-chief." Now, "the ideological initiative may be shifting towards Goldman Sachs."

Hedge Funds Rally as Cash Flows Back In (WSJ)

Investors are writing more checks to Stephen Schwarzman, so that's got to be a good thing.

New York Times Co. confirms Globe is for sale (Boston Globe)

That's not much of a surprise. Neither is the fact the Times hired Goldman Sachs to do the selling. Yet more fees for extremely healthy Goldman, which got bailed out by taxpayers and now is hired to bail out the NYT.

Paying for News: Let's Get On with It (Seeking Alpha, Fred Wilson)

"We can talk until we are blue in the face about whether people will pay for news or not. Talk is cheap. Actions are not. So I'm eager to see the experiments begin." He likes the Financial Times's approach. From an earlier post by Wilson, "Monetize The Audience, Not The Content": "The best freemium models allow anyone to use the service for free and then convert the most serious/frequent/power users to paying customers."

Court OKs nearly $17M in Madoff case legal fees (Newsday)

Most of it goes to Baker & Hostetler; most of the rest goes to trustee Irving Picard, who says he won't take a penny but will give his share to his firm — which is Baker & Hostetler.

Citigroup Takes U.S. Stock Trading to New Levels (Bloomberg)

Attention, history buffs: On Wednesday, Citigroup became the first stock on U.S. exchanges to exceed 2 billion shares being traded in one day. Click on this for other record-setting days.

Artful Ex-AIG Honcho Greenberg Gets Off With $15 Million Wrist Slap for 'False Financial Picture'

weill greenberg gold436.jpg
Ex-Citigroup mogul Weill (left) and ex-AIG mogul Greenberg (right).

Ex-AIG CEO Maurice "Hank" Greenberg keeps coming out smelling like a rose. He got forced out of AIG in 2005 amid federal and state accounting investigations, so he wasn't around for the blame when AIG tanked three years later. He had already made hundreds of millions of dollars from selling only part of his AIG shares after his ouster and before AIG went bust.

And now today, after protracted negotiations, Greenberg is settling that old dispute by shelling out only $15 million to make an SEC lawsuit go away.

Sweet! AIG to raise $1 billion; big banks to rake in big fees; taxpayers get nothing

Aren't you happy for AIG? The bailed-out insurance conglomerate is planning to shed most of its shares in the world's second-largest reinsurer, raising $988 million.

And aren't you happy for JPMorgan Chase, Goldman Sachs, and Morgan Stanley? All three bailout recipients will rake in big fees for not only handling the sale but undoubtedly keeping shares of Transatlantic Holdings for themselves.

Don't get too excited: Taxpayers will likely get no share of the profits and fees churned by this deal. The repaving of Wall Street with your gold continues.

California pleads for a bailout, but Geithner keeps walking

Now that GMAC is all lined up at the trough to snarf down another bailout, you might be whining — especially if you live in dead-ass broke California — what's it going to take to get a bailout in my state, an act of Congress?

According to Treasury Secretary Tim Geithner, that's exactly what it'll take. McClatchy's Rob Hotakainen reports:

[Geithner] said Thursday that it will require an act of Congress to have the federal government guarantee emergency loans for California, complicating the state's efforts to find a way to pay its bills.

Geithner told a House panel that federal law would not allow the Obama administration to act on its own. That's a blow to backers who had hoped to get quick approval from the Treasury Department, bypassing a fight in Congress.

Geithner has cut all kinds of deals with all kinds of banks without having to jump through too many hoops on Capitol Hill. And it's not as if California could even hope to have hoops to jump through for a payoff at the end of such an exercise. California's own Jerry Lewis (not the comedian but the member of House Appropriations) is quoted as saying:

"It's hard for me to quite imagine my colleague from Wisconsin or one of my friends from Kansas ... to say, 'Sure, we'll back your bonds, and we'll pay part of the price, indeed, because we know, we're absolutely certain you're going to reduce your spending patterns and thereby get your economy in order.'"

So as it now stands, California, whose economy is bigger than those of most countries, can't get a bailout of even a fraction of the size of the bailout money that's been given to, for instance, AIG.