A libertarian-economist-MBA's opinion on why we need government to deficit spend during this depression

Read entire article & comments at his blog.
Read entire article & comments at nakedcapitalism.com.
It's interesting comparing the comments due to somewhat different readership of each blog.

I totally agree with his take on the real problem. Think, houses being used as ATM's with home equity loans. Then value of homes collapse, re: collateral, with the same loans outstanding. The ones that aren't in default that is.:

But, make no mistake, the housing and writedown problems are only symptoms. The real problem is the debt – specifically an overly indebted private sector (note the phrase ‘private sector’ as I will return to this topic).

On why we're heading into a depression vs. a recession:

Depressions [are] marked by balance sheet compression[.]
Recessions are typically characterized by inventory cycles – 80% of the decline in GDP is typically due to the de-stocking in the manufacturing sector. Traditional policy stimulus almost always works to absorb the excess by stimulating domestic demand. Depressions often are marked by balance sheet compression and deleveraging: debt elimination, asset liquidation and rising savings rates. When the credit expansion reaches bubble proportions, the distance to the mean is longer and deeper. Unfortunately, as our former investment strategist Bob Farrell’s Rule #3 points out, excesses in one direction lead to excesses in the opposite direction.

He goes into what the public sector, ie: federal government:

If the private sector is a net saver, the public sector must, I repeat must, run a deficit. That’s the law of double entry book-keeping.

About the author.

Gorillamobile tri-pods for mobile devices

I have a buddy who has their Gorillapod & it's addictively fun & easy to use. Now they have one for mobile devices. Super cool.
Hat tip Daring Fireball.

Judge rules Cheney interview must be released

From NPR.org:

But U.S. District Judge Emmet Sullivan ruled there was no justification to withhold the entire 67 pages of FBI records documenting Fitzgerald's interview since the Plame leak investigation has concluded. He said that limited parts could be withheld to protect national security and private communications between the president and vice president.

More transparency on ABS proposed, industry trade group opposes

From Bloomberg:

Securities firms may be forced to report trading data for asset-backed securities after the opaqueness of that market helped create the worst financial crisis since the Great Depression, the U.S. brokerage industry’s main regulator said.

And from the article, an interesting objection:

Brokers represented by the Securities Industry and Financial Markets Association and Regional Bond Dealers Association objected to that expansion in comment letters, saying it would impair market liquidity.

You know, impair market liquidity that could create enough chaos in a "market" that could cause it to crash. In other words, this market crashed in 2007-2008 being opaque and they want to keep it opaque so it doesn't crash again.

How CDS is complicating loans to 70% of small businesses

CIT Group, you never heard of them, provide financing to roughly 70% of small businesses. They've been on the verge of bankruptcy for over a year. Won't bore you with all the details, but under TARP we loaned them $2B to keep them afloat.

They now need more money or they're history. Which would be incredibly complicated for the small businesses that depend on them for financing. More economic chaos would result and one can only guess how these businesses could get alternative financing to help them weather the worst economy in decades.

They have a plan to restructure their debt outside of bankruptcy, but CDS holders have an incentive to have them file bankruptcy.

Complicating negotiations trying to keep them out of filing is the amount of outstanding Credit Default Swaps[CDS].

From FT.com:

They suspect that some of the largest holders still have significant enough holdings of the credit default swaps that they would gain more on the value of their credit protection than they would lose with the loss on the debt if the company filed for bankruptcy protection.

But one of the frustrating things for advisers to companies trying to stay out of the bankruptcy court is that it is virtually impossible to have an exact understanding of the dynamics of the creditors.

From NYTimes.

VF's Q&A with NYTimes' writer Andrew Sorkin about Wall Street meltdown 2008

At Vanity Fair:

VF Daily: In your own words, what do you think is the significance of the new revelations and the excerpts in your book?

Andrew Ross Sorkin: Well, I think this is the first time the public is going to get a true, inside-the-room account of what happened where you actually get to see all of the machinations, all of the interlinking relationships—the sort of inter-web—and even some of the duplicity among the various actors in this drama. It hopefully brings all of it to life for the first time and also helps solve the larger mystery, which is, How did this happen? We have all read the headlines during those harrowing days, but as I got further and further into my research, I realized that news reports at the time only scratched the surface of what really happened.

If you "invest" and don't read enough to understand what happened & what's going on now - you are crazy.

On a side note, don't look at VF's story and slideshow about Penelop Cruz.

FDIC proposes banks pay premiums early

From NYTimes.com:

If adopted, the proposal, the agency’s third restoration plan for the fund in a year, would raise $45 billion from the banks to replenish the fund.

That would almost certainly wipe out the industry’s earnings for this year — in the first half of the year the banking industry reported $1.8 billion in income.

Regulators have told the banks that they will not have to record the prepayments as an expense until the fees would ordinarily have been due, postponing the hit to balance sheets until a time when officials believe the industry will be better able to weather the costs.

Senior officials emphasized that the plight of the fund would have no impact on insurance for bank deposits.

That obviously makes more sense than the crazy idea of the FDIC borrowing needed reserves from the banks floated a couple weeks ago. Previously posted here.

Taking over the zombie banks wouldn't hurt either.
Let the lobbying begin.

What you want to know about social networking sites & your privacy

The Electronic Frontier Foundation posted Part 2 that shows how social networking sites help create data bases of your online activity.

This example is about job searches:

Let's start with an example of 3rd party tracking: when we went to CareerBuilder.com, which is the largest online jobs site in the United States, and searched for a job, CareerBuilder included JavaScript code from 10 (!) different tracking domains: Rubicon Project, AdSonar, Advertising.com, Tacoda.net (all three are divisions of AOL advertising), Quantcast, Pulse 360, Undertone, AdBureau (part of Microsoft Advertising), Traffic Marketplace, and DoubleClick (which is owned by Google). On other visits we've also seen CareerBuilder include tracking scripts and non-JavaScript web bugs from several other domains. There are pretty sound reasons to hope that when you search for a job online, that fact isn't broadcast to dozens of companies you've never heard of — but that's precisely what's happening here.

Be sure to check out Part 1 about Cookies and how hard they are to remove and how advance they've become.

EFF wins release of more Telecom lobbying records

From EFF's press release:

A judge ordered the government Thursday to release more records about the lobbying campaign to provide immunity to the telecommunications giants that participated in the NSA's warrantless surveillance program. U.S. District Judge Jeffrey S. White ordered the records be provided to the Electronic Frontier Foundation (EFF) by October 9, 2009.

Related news from EFF, a new bill was introduced to push this further:

Yesterday, four US Senators, led by Senator Chris Dodd, announced plans to introduce "The Retroactive Immunity Repeal Act." That bill, endorsed by EFF, would repeal the retroactive immunity granted by Congress as part of the FISA Amendments Act (FAA) to phone companies that illegally assisted in domestic spying by US intelligence agencies and would revive EFF's recently dismissed lawsuit against AT&T for its collaboration in the NSA's warrantless wiretapping program.

Buy the new $95 homeless doll Gwen to teach, not sure what

Seriously. A $95 homeless doll.

From Consumerist.com:

Gwen is a limited edition toy, so non-homeless girls with the $95 to spare only have a few more months to buy one. Real homeless children aren't a limited edition, and will still be in shelters and on the streets, long after Gwen disappears from shelves.

Go buy Gwen at AmericanGirl.com. I wonder if 100% of the proceeds go to helping eradicate homeless children.

Recovery.gov redesigned & improved

Track the money.

Here's a look at Virginia's info.

Hot link to Report Fraud, Waste & Abuse:

One of the core missions of the Recovery Board is to prevent fraud, waste, and mismanagement of Recovery funds. Recovery.gov gives you the ability to find Recovery projects in your own neighborhood and if you suspect fraudulent actions related to the project you can report those concerns in several ways[.]

Fannie Mae sees single family conventional home loan deliquencies explode

From CalculatedRisk.com:

Fannie Mae reported that the serious delinquency rate for conventional loans in its single-family guarantee business increased to 4.17 percent in July... and up from 1.45% in July 2008.

That is not subprime! Those are conventional plain vanilla loans.

Fannie Mae? That's the public/private entity that is basically insolvent that we bailed out last year.

By the way, over 90% of all mortgages made in the 3rd Quarter were touched in someway by the Federal Govt. Wonder how the housing market would have been without that involvement. At Market Place.

Alive & Well at the Wells Theater

Go see it. The End.

Virginia Stage Company:

ALIVE AND WELL
Kenny Finkle
September 15-October 4, 2009
In this funny new play by VSC favorite Kenny Finkle, our country's continuing struggle between the North and South is on full display as a heartbroken Civil War re-enactor and an emotionally desperate New York journalist search for the oldest living Civil War veteran. Trekking through the heart of Virginia, they find more than they bargained for in this irreverent take on modern America. This is the second play in VSC's American Soil series, a new play project exploring the cultural and historical foundations of Hampton Roads.

Some reasons to see it. You:

• like theater
• love great acting & perfect chemistry between actors
  
• are passionate about something and think you're crazy
• are told you're crazy because of that passion
• haven't been to the Wells Theater [lately]
  

Allow extra time, or park in MacArthur Mall as Monticello is torn up due to the light rail construction.

Ken Burns National Parks doc starts tonight baby!

And... for us semi-anti-tv-non-tivo-owners, PBS is putting them all online!

At PBS.org Ken Burns' National Parks America's Best Idea.

At the site, they have sections entitled Full Episodes, Video Clips, Deleted Scenes, & Untold Stories. You can also send ePostCards, purchase the book, DVD, or CD, download from iTunes & of course donate.

PBS also has this groovy Scrapbook widget that:

Create your own personalized scrapbook page! As you view the website, save photos, video, and text passages that you like to your scrapbook for future easy reference

Check out their sample Scrapbook page.

There is also a section where you can Share Your Story. I put the RSS feed in the right column. Submit your story & check out others'.

Member of Netflix? You can also put the DVD in your que.