Volt porn

G'wan... you know you want it...

(Click for slideshow)

OoooOooOOoOoooooooo.....

(H/t Good blog)

Kwak, translating for Barofsky, sheds light on Maiden Lane III

Maiden Lane, the government's financial simulacrum on the A.I.G. bailout, has never made a lot of sense.

The IG report came out and (at least for types like me) is nigh impenetrable. Enter James Kwak over at Baseline Scenario. He's done the dirty work and written a seriously crunchy post on what happened and why we should give a damn.

Here an especially chewy bit:

...first AIG contributed $5 billion to Maiden Lane III and the New York Fed gave it a $24.3 billion loan. Then Maiden Lane III gave all $26.8 billion to the banks in exchange for the CDOs. (The banks accepted $26.8 billion because they already held $35.0 billion in collateral; together that makes $61.8 billion — as I said, I can’t get $300 million to reconcile.) Then Maiden Lane III gave $2.5 billion right back to AIG (this is the amount by which AIG had overcollateralized). As part of the deal, the banks agreed to tear up the original CDS on the CDOs, so AIG couldn’t lose any more on the CDS (which, remember, are separate from the CDOs).

The controversy is not over paying $29.3 (or $29.6) billion for the CDOs, since that was the market price. The controversy is over whether AIG should have agreed to settle the CDS at 100 cents on the dollar (meaning that the banks get the difference between the face value of the CDOs and their current market value). Bloomberg reported a while back that prior to the government bailout, AIG had been trying to negotiate a settlement at 60-70 cents on the dollar, but that that portion of the term sheet was crossed out in the final agreement. The implication is that paying the swaps off in full was a back-door, off-the-books way of funneling cash to banks that we didn’t want to fail.

So that's the setup. The Fed steers major cash into Maiden Lane, which offers insanely good terms to A.I.G.'s creditors.

This scenario would be made considerably worse if these were "naked swaps" (i.e. not swaps designed to insure the creditor's investment - but a bet that somebody else's investment was about to tank).

Did banks have their bets paid in full by taxpayers?

Let's ask our illustrious Treasury Secretary, Tim Geithner:

"I will not answer that question."

Now, that's according to an interview with Rep. Peter DeFazio - and the NY fed is disputing this - but don't you think we should have a firm answer on this question?

Somebody knows the answer for real and should be able to prove it.

Did we cover their bets?

UEFA monitors betting patterns?

Here we go again:

About 200 European football games are under investigation in a match-fixing inquiry, German prosecutors have said.
...

On Thursday police carried out about 50 raids in Germany, the UK, Switzerland and Austria, making 17 arrests and seizing cash and property.

Yeah, yeah... more corruption, but what's interesting - at the end of the article about (yet another) investigation of match fixing in European soccer, there was this little tidbit:

[Following a German scandal in 2005] Uefa has since introduced an early warning system which flags up unusual betting patterns.

The betting fraud detection system monitors real-time betting, giving investigators an immediate idea of whether there are irregular patterns.

The recent arrests would seem to indicate the detection process is working, but the scale of the manipulation must be a concern...

I'll just *ahem* bet

FIFA to Ireland: Get over it

It's official. FIFA will do nothing about Thierry Henry's blatant handball that led to Ireland's elimination from the 2010 World Cup.

Gasp.

I get why FIFA isn't eager to change the status quote. Setting a precedent for "do-overs" (or writing a rule enshrining them) would be the thin end of a wedge of problems.

But you would think that at an individual level, they could address the conduct of the player. Henry could get the card he should have received for the handball.

Denying France their star striker in the group stage is no compensation for Ireland. But the current situation is tells players to do whatever they can get away with.

Ft. Hood: Yet again, the first draft is wrong

This is old news by now, but I thought it was interesting.

Here's the account of an eyewitness to the shooting of Maj. Hasan, as recorded by the NYT:

[The witness] said he was walking in a roadway between the main building, known as the Sportsdome, and five smaller buildings. Major Hasan was headed toward the main building, the witness said, when Sergeant Munley came around the corner of a smaller building. Major Hasan wheeled on her and shot her several times, the witness said. It was unclear whether she squeezed off a shot or not, but she fell over backward, with wounds in her legs and her wrist, the witness said.

Major Hasan then turned his back and began to shove another magazine into his pistol. He did not appear wounded, the witness said. A few seconds later, Sergeant Todd came around another corner of the same building, raised his weapon and fired several times at Major Hasan, who pitched over backward and stopped moving.

“He shot her, turned away from her and was reloading when he was shot,” said the witness, who was nearby.

Which is not to say this eyewitness couldn't be wrong, but read the full story if you haven't already seen it. It makes a case that the news networks might do a better job reporting if they shut up for awhile and got their facts right.

Draft Elizabeth Warren

(Via CJR)

“The time for pitchforks and torches is over.”
Scott Talbott, chief lobbyist for the Financial Services Roundtable, discussing the current appetite for financial regulation.

All due respect, Mr. Talbott - but you're totally full of sh!t.

Prof. Elizabeth Warren has been uncovering all manner of shameful behavior by public and private financial officials. While I've loved her message, I've thought that it was tragic that the only reason she would speak the truth is because her right to speak was her only power.

Bloomberg has a great profile of Prof. Warren and her effect to date - but here's the bit that leaps off the page for me:

The House of Representatives will vote in December on [Prof. Warren's] idea. She suggested a Financial Product Safety Commission in a 2007 article in the magazine Democracy. President Barack Obama proposed it to Congress in June as the Consumer Financial Protection Agency.

Warren won’t discuss whether she may be a candidate to lead the authority, which would have the power to regulate $13.7 trillion of debt products. A Warren nomination would tell banks that Obama is determined to force reduced checking-account fees and limit lender claims in mortgage advertising, among other measures the industry opposes, said Thomas Cooley, dean of New York University’s Stern School of Business.

Now, I can appreciate that there are many hurdles before you have Prof. Warren heading a consumer protection agency with regulatory powers - but this sort of thing was only voiced by crazies only a few months ago. Now you have Bloomberg covering it as a tangible "what-if."

Wild.

Erin go whaa?

That's soccer.

Whenever a bad call is made by the ref or their assistants - this is the mantra that is spit out in the name of moving on.

The goal was clearly offside, yet was allowed to count. That's soccer.

Or:

We were denied a clear penalty, but that's soccer.

I suspect the line is an easy refuge for those who are prevented from expressing their true opinion. It lets them assume the mantle of sportsmanship - of stepping back to see the bigger picture. And in some cases, this can be more than just posturing - it can be an asset to the game.

But then there's sh!t like this:

That, is most definitely not soccer. That is cheating. That it is being done by the greatest player of the '86 World Cup (who suggested his goal was due to the "Hand of God") makes no difference. The world saw him cheat - then watched as FIFA did nothing about it.

That's soccer is not going to make something like that go away.

Neither is it going to do anything for the Irish - who are the latest victims of the policy that the on field ref is the sole arbiter of the game.

Ireland was tied at 1-1 on aggregate with France, which pushed them into extra time at the Stade de France. On a free kick into the Irish box - the ball went to France's Thierry Henry - who then palmed the ball to keep it from going out of bounds, directed the ball towards his foot, and then flicked the ball to Gallas - who nodded in the easy header.

It's on video and it's big as life. Henry even admits the ball hit his hand - although he hasn't admitted that it hit his hand because he grabbed the ball.

So the French go to the World Cup finals and the Irish go home.

Ireland is demanding a re-match - and FIFA is trying to stick to their guns. I understand the principle: once you open these things to any kind of after the fact arbitration, you turn soccer into politics and open the door for (yet more) corruption.

But fans will never forgive the injustice.

FIFA and the French are trying the "that's soccer" route - and it's ringing more hollow than ever. The French coach utterly disgraced himself by suggesting that we should all move on. "It's in the past, let's enjoy the moment..." to which the Irish manager (with admirable restraint) simply asked him if he'd seen the same match everybody else had.

In the past, bad calls were seen by a relatively small percentage of fans. But the speed of modern media makes it possible for a majority of fans to scream in unison and in real time.

FIFA simply cannot continue to sit on the sidelines.

Federal Court to the Corps: pay up

A small acknowledgment of the colossal failure of the Army Corps of Engineers to protect New Orleans:

"It is the court's opinion that the negligence of the Corps, in this instance by failing to maintain the MRGO properly, was not policy, but insouciance, myopia and short-sightedness," U.S. District Court Judge Stanwood Duval Jr. wrote in his lengthy ruling, referring to the Mississippi River-Gulf Outlet canal.

Oh, and they ordered a payout of just over $700,000.

I'm picturing a metaphorical levee, holding back hundreds of thousands of similar legal claims.

-and I'm thinking that levee won't hold.

TARP Inspector General's report: weak

Ryan Chittum is all over the latest chapter of how badly US taxpayers were served by the TARP bailout.

And he directs us to Yves Smith venting his spleen about the whole mess.

Cripes.

Also, I love the little addendum to Chittum's other post on this. He's quoting Floyd Norris - who asks:

If Goldman and other banks hedged against A.I.G. blowing up and defaulting on the credit default swaps, what companies agreed to cover the risk that A.I.G. would blow up?

Those companies were spared billions worth of losses by the A.I.G. rescue - and we don't even know who they are. The risk kept getting passed around, but somebody knows. And since we all generously agreed to save these people from their bad bet, I think they owe us the courtesy of an introduction.

Detroit gone wild

James Griffioen is a self-described freelance writer and photographer living in Detroit, Michigan.

He's posted an amazing collection of photographs of his city's abandoned houses. He calls them Feral Houses, and you'd be hard pressed to come up with a better name.

Modern Detroit is a boom town of abandoned structures. The usual remedies for such things don't appear to be able to cope with the current numbers.

So - nature's giving a hand:

(H/t E)

Odd science fact of the day, starring... Lithium

Courtesy of Dr. Phil Plait: (emphasis mine)

Somehow, having planets means a star loses its lithium. How the heck does that happen?

A brief digression. Lithium is a weird element. It’s the third lightest after hydrogen and helium, and unlike every other element after it on the periodic table, we don’t think it’s made inside stars. It’s too fragile; the nuclei get smashed up easily, and so it doesn’t last long in the cores of stars. That means that as far as we can tell, all the lithium in the Universe was created in the Big Bang.

Just because it gets wrecked in the cores of stars does not mean they have no lithium at all. Lithium created in the Big Bang would have been in clouds where stars formed, and if a lithium nucleus can avoid the core of the star by staying nearer the surface, it can survive. The Sun has lithium in it, for example, but at far less abundance (<1%) than what you see out in gas clouds. That means the Sun has destroyed a lot - but not all - of its lithium supply.

When astronomers look at other stars like the Sun, the amount of lithium they possess varies wildly. But now it appears that the amount of lithium in a Sun-like star depends on whether it has planets or not. Stars without planets have, on average, 10 times the lithium as stars with planets in the sample.

Weird.