Central Banks Pouring Money into Markets
August 13th, 2007Move along. Nothing to see here. Go to Disneyland. Buy junk from Wal Mart. Stay asleep.
The Federal Reserve will print money to keep your reckless, crap shoot, dog shit investments afloat. (For now.) This is the “free market” after all.
Via: Yahoo:
Wall Street opened higher Monday after the Federal Reserve and other central banks added more cash to their banking systems, helping investors set aside some concerns about credit tightness.
The Fed said minutes after the opening bell that it would add $2 billion in liquidity in a one-day repurchase. That follows a move by the Bank of Japan to put $5 billion into the markets and an addition by the European Central Bank of $65.3 billion; the ECB added more than $200 billion last week. The moves, following similar injections by the Fed last week, placated Wall Street for now and allowed it to look ahead to a week of fresh economic data.
Hitachi Releases Hard Drive with One Terabyte of Storage Capacity
August 13th, 2007In 2000, the company I worked for budgeted $15,000 for me to build a storage array with an initial capacity of one terabyte. I set about planning to build the thing. Rack density. Thermal dissipation. Power. Networking. Redundancy. Scalability… These were the factors I was considering as I devised my plan to build that system.
Things are just a liiiiiiiiiiittle bit different now.
Via: TechReport:
IMAGINE ONE THOUSAND thousand thousand thousand bytes. A terabyte, if you will. But more than just that—a milestone in storage capacity that hard drive manufacturers have been chasing for years. After more than a decade of living in a world of gigabytes, the bar has finally been raised by Hitachi’s terabyte-capacity Deskstar 7K1000.
Being first to the terabyte mark gives Hitachi bragging rights, and more importantly, the ability to offer single-drive storage capacity 33% greater than that of its competitors.
Magic 8 Ball Gambling Antics Going Off the Rails
August 13th, 2007Sound investments for the future = reckless gambling
Pay close attention to the part in bold below.
Via: Financial Times:
The much-heralded financial rocket scientists responsible for the explosion in complex mathematical trading strategies are bracing themselves for fresh pain after what one team of analysts called “the perfect storm†last week.
Quantitative strategists, or “quants†as they are known, attempt to profit from pricing inefficiencies identified through mathematical models. These send buy and sell signals on small variations in price between different securities.
One hedge funds manager said the average quantitative fund manager was down about 15 per cent in the first few days of August.
“Nothing seems to be working. Previously uncorrelated factors have recently been falling with the same pace, leaving investors with very few places to hide,†said Citigroup analysts in a report to clients last week.
Hedge fund managers who have suffered in the first few days of August and late July include James Simons, long acknowledged as the “king of quantsâ€, at Renaissance Technologies and Clifford Asness of AQR Capital Management. Quantitative managers at Goldman Sachs and Highbridge Capital Management have also experienced difficulties.
Statistical arbitrage funds have run into particular problems. Their mathematical models rely on past trading patterns to predict how particular securities will perform in the future if other securities, say, fall in price. But their models are unlikely to take into account current trading conditions where investors, desperate to raise cash, are selling everything they can.
They are also unwinding short positions, which means buying back stock they sold earlier. Thus, companies with poor prospects have seen shares rise and vice versa, undermining the logic of “stat arb†models. Compounding the problem is that many stat arb managers have borrowed heavily to buy shares.
One hedge fund manager estimated that statistical arbitrage funds with more than $100bn (€73bn, £49bn) in assets had on average borrowed four times their actual assets. These borrowings magnify significantly any moves they may make in the market.
It is these more heavily indebted statistical arbitrage funds that have proved most attractive for pension funds seeking supposedly lower risk hedge fund strategies.
It is also these funds that ran into problems at the end of July when volatility began to rock the market.
Fatigue Cripples U.S. Army in Iraq
August 13th, 2007Even the “Public Affairs” people, who are paid to lie to reporters, are having trouble maintaining appearances now.
Via: Guardian:
Where once the war in Iraq was defined in conversations with these men by untenable ideas – bringing democracy or defeating al-Qaeda – these days the war in Iraq is defined by different ways of expressing the idea of being weary. It is a theme that is endlessly reiterated as you travel around Iraq. ‘The army is worn out. We are just keeping people in theatre who are exhausted,’ says a soldier working for the US army public affairs office who is supposed to be telling me how well things have been going since the ‘surge’ in Baghdad began.
Structured Investment Vehicles’ Role in Crisis
August 13th, 2007This is the most frightening financial story I’ve come across in a long time.
Hundreds of billions of dollars worth of what, exactly? Nobody seems to know. Well, somebody probably knows, but investors, the financial press and government regulators have no idea WTF is going on. Yep. Situation normal. You know the rest.
There is one sentence in the piece below that really stood out in my mind:
“No investors are sure exactly what assets SIVs and conduits are holding, or how damaged those holdings might be.”
Becky and I have no stock, bond or mutual fund holdings. (As you know, we are holding, cash, guns, gold, beer, cows, goats, open pollinated seeds, etc.) But I know that many of you could get hit by this, and sooner, rather than later—uh, today and Wednesday, actually, according to the article. Because whatever this toxic waste nonsense ponzi scheme crap is, lots of it needs to be refinanced now. Whether or not there’s enough funny money out there to do it is the big question at the moment.
But just wait until you get to the part about faith. Yes, friends, faith. And, no, we’re not talking snake handlers at a down home Pentecostal revival meeting.
Via: Financial Times:
Policymakers and investors have been obsessed in recent years about the potential for a hedge fund collapse to spread financial panic. But it seems one of the biggest threats to stability is coming from the age-old risk of short-term borrowing to fund investments in illiquid long-term products.
In a corner of the market few people knew existed, regulators are scrambling to understand what is happening in structured investment vehicles (SIVs), a breed of often huge, mainly bank-run, programmes deÂsigned to profit from the difference between short-term borrowing rates and longer-term returns from structured product investments.
These have proliferated in recent years and control assets worth hundreds of billions of dollars. Depending on whether they are fully rated by credit rating agencies and on how strictly they have to conform to certain rules, they are known as SIVs, SIV-lites, or conduits.
They are typically quite opaque, invest in complex securities and often do not need to be displayed on a bank’s balance sheet.
It seems they have played a key role in last week’s liquidity crunch.
“We are in the middle of a mini-crisis in the commercial paper market, at least half of which is related to the SIV conduits,†says Robert McAdie, global head of credit strategy at Barclays.
These programmes typically invest in credit market instruments, such as US subprime mortgage-backed bonds and collateralised debt obligations. These assets tend to be the highly rated, supposedly safe versions of such debt, but in the recent fear-driven turmoil have shown just how illiquid and hard to value they can be.
The profit for those who run such programmes comes from the fact that the assets pay fairly high yields, while the conduits and SIVs fund their purchases with short-term borrowings in which interest and principal payments are backed by financial assets that are deemed to have stable cash flow. Collectively this so-called “asset-backed commercial paper†– or ABCP – lasts for anything between a few days and a few months before needing to be refunded.
The problem could be thrown into relief when billions of dollars of ABCP mature today and on Wednesday, with great unÂcertainty as to whether this can be refinanced.
Everything in this market depends on investors in the ABCP market maintaining their faith in the programmes and the assets they hold. With the current rush for the exits in many structured credit markets, this faith has been evaporating wholesale. No investors are sure exactly what assets SIVs and conduits are holding, or how damaged those holdings might be.
Research Credit: GP
The System, Like the Berlin Wall, Must Come Down
August 12th, 2007Nice essay on the Soviet style free market.
Via: Unknown News:
One hugely interesting aspect of this week’s mortgage and debt shenanigans is the role of the Federal Reserve as “Protector of the Realm” when “The System” freezes up and begins to implode upon itself.
Normally the Fed diligently attends to its primary functions of 1) controlling inflation and b) maintaining unemployment (read those both ways, chortle).
But they also have a Crisis Mode in which they print money and then loan it at below market interest rates to wealthy corporations such as banks and brokerages. Not only that, but they are authorized to buy “things” with their newly printed money: gold, stock index futures, US Treasury notes and bills, anything.
If The Powers That Be decide that TEOTWAWKI (The End Of The World As We Know It) is at hand, the Federal Reserve will gladly spend all of the public treasury and all of the next ten generations of citizens’ money, if that is what it takes today to stop the Dow Jones average from falling an extra hundred points, or to stop J.P. Morgan from being forced to reduce its dividend by one percent.
It’s standard operating procedure in our “free market” system. When corporate profits and asset prices are rising, the wealthy get wealthier and Larry Kudlow reiterates for the 10 gazillionth time on CNBC that “It is always morning in America.” But when corporate profits and asset prices actually start falling the government — through its authorized agent, the Fed — immediately socializes the losses.
Got that? “Free market” profits are owned by Private Citizens, while “free market” losses are owned the public.
When everything is going great the citizen billionaires hold parties with ice statues of Michaelangelo’s “David” pissing Stoli, and when everything turns to shit then all of a sudden they morph into communists demanding that the Fed “inject liquidity” into the vital state owned tractor factories so that GOP’s Five Year plan quota can be met.
Italy Probe Unearths Huge Iraq Arms Deal
August 12th, 2007What is it about Italy and weird arms deals involving Iraq? Remember, Iraqi Insurgents Carrying Covert Ops Bump Guns?
Via: Yahoo / AP:
In a hidden corner of Rome’s busy Fiumicino Airport, police dug quietly through a traveler’s checked baggage, looking for smuggled drugs. What they found instead was a catalog of weapons, a clue to something bigger.
Their discovery led anti-Mafia investigators down a monthslong trail of telephone and e-mail intercepts, into the midst of a huge black-market transaction, as Iraqi and Italian partners haggled over shipping more than 100,000 Russian-made automatic weapons into the bloodbath of Iraq.
As the secretive, $40 million deal neared completion, Italian authorities moved in, making arrests and breaking it up. But key questions remain unanswered.
For one thing, The Associated Press has learned that Iraqi government officials were involved in the deal, apparently without the knowledge of the U.S. Baghdad command — a departure from the usual pattern of U.S.-overseen arms purchases.
Why these officials resorted to “black” channels and where the weapons were headed is unclear.
The purchase would merely have been the most spectacular example of how Iraq has become a magnet for arms traffickers and a place of vanishing weapons stockpiles and uncontrolled gun markets since the 2003 U.S. invasion and the onset of civil war.
Some guns the U.S. bought for Iraq’s police and army are unaccounted for, possibly fallen into the hands of insurgents or sectarian militias. Meanwhile, the planned replacement of the army’s AK-47s with U.S.-made M-16s may throw more assault rifles onto the black market. And the weapons free-for-all apparently is spilling over borders: Turkey and Iran complain U.S.-supplied guns are flowing from Iraq to anti-government militants on their soil.
Iraqi middlemen in the Italian deal, in intercepted e-mails, claimed the arrangement had official American approval. A U.S. spokesman in Baghdad denied that.
…
Reached at his office in Amman, Jordan, Waleed Noori al-Handal denied the family firm had done anything wrong in the Italian arms case.
“We don’t have anything to hide,” he told the AP.
Citing the names of “friends” in top U.S. military ranks in Iraq, al-Handal said his company has fulfilled scores of supply and service contracts for the U.S. occupation. Asked why he claimed U.S. approval for the abortive Italian weapons purchase, he said he had a document from the U.S. Army “that says, ‘We allow al-Thuraya Group to do all kinds of business.'”
Remember Real ID? Same Shit, Different Card
August 12th, 2007Via: The Times and Democrat:
U.S. Sen. Lindsey Graham said Tuesday he will introduce legislation to replace all paper Social Security cards with plastic biometric cards that can’t be duplicated, so employers can be certain of the legal status of their workers.
The South Carolina Republican said Congress must address the out-of-control illegal immigration problem, and last month’s defeat of comprehensive immigration reform in the Senate means the problem must be tackled piecemeal.
Comments Require Registration
August 12th, 2007Behind the scenes, there are problems with trolls/idiots/lunatics. Most people don’t abuse open comment systems, but this isn’t about most people.
I never intended comments to become a vector for trolls/idiots/lunatics to spread their rat poison, but that’s what they’re trying to do here. Filtering this nonsense out has been requiring more time lately. I need to get it under control.
If you have something to say that substantially adds to the understanding of a post, by all means, submit it. Those are the only comments that will appear from now on.
I actually read an excellent argument for turning comments off:
Even if you never read a single thing Dave Winer wrote in his 439 years of blogging, it’s worth taking time to study his ideas about comments on blogs (he doesn’t allow them).
“…to the extent that comments interfere with the natural expression of the unedited voice of an individual, comments may act to make something not a blog…. The cool thing about blogs is that while they may be quiet, and it may be hard to find what you’re looking for, at least you can say what you think without being shouted down. This makes it possible for unpopular ideas to be expressed. And if you know history, the most important ideas often are the unpopular ones…. That’s what’s important about blogs, not that people can comment on your ideas. As long as they can start their own blog, there will be no shortage of places to comment.”
The important thing to notice here is that Dave does not see blog comments as productive to the free exchange of ideas. They are a part of the problem, not the solution. You don’t have a right to post your thoughts at the bottom of someone else’s thoughts. That’s not freedom of expression, that’s an infringement on their freedom of expression. Get your own space, write compelling things, and if your ideas are smart, they’ll be linked to, and Google will notice, and you’ll move up in PageRank, and you’ll have influence and your ideas will have power.
When a blog allows comments right below the writer’s post, what you get is a bunch of interesting ideas, carefully constructed, followed by a long spew of noise, filth, and anonymous rubbish that nobody … nobody … would say out loud if they had to take ownership of their words.
So, we’ll see how this goes.
Dick Cheney ’94: Invading Baghdad Would Create Quagmire
August 12th, 2007Via: Grand Theft Country:
