12/04/2011 archive

America’s Next TARP Model

A Bloomberg report reveals that the U.S. government loaned banks $7.7 trillion in secret bailout funds at no interest and then borrowed the money back at interest.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future

Find the past “On This Day in History” here.

December 4 is the 338th day of the year (339th in leap years) in the Gregorian calendar. There are 27 days remaining until the end of the year

On this day in 1783, future President George Washington, then commanding general of the Continental Army, summons his military officers to Fraunces Tavern in New York City to inform them that he will be resigning his commission and returning to civilian life.

Washington had led the army through six long years of war against the British before the American forces finally prevailed at the Battle of Yorktown in 1781. There, Washington received the formal surrender of British General Lord Charles Cornwallis, effectively ending the Revolutionary War, although it took almost two more years to conclude a peace treaty and slightly longer for all British troops to leave New York.

Fraunces Tavern is a tavern, restaurant and museum housed in a conjectural reconstruction of a building that played a prominent role in pre-Revolution and Revolution history. The building, located at 54 Pearl Street at the corner of Broad Street, has been owned by Sons of the Revolution in the State of New York Inc. since 1904, which claims it is Manhattan’s oldest surviving building. The building is a tourist site and a part of the American Whiskey Trail and the New York Freedom Trail.

Revolution history

In August 1775, Americans took possession of cannons from the artillery battery at the southern point of Manhattan and fired on the HMS Asia. The British ship retaliated by firing a 32-gun broadside on the city, sending a cannonball through the roof of the building.

When the war was all but won, the building was the site of “British-American Board of Inquiry” meetings, which negotiated to ensure to American leaders that no “American property” (meaning former slaves who were emancipated by the British for their military service) be allowed to leave with British troops. Board members reviewed the evidence and testimonies that were given by freed slaves every Wednesday from April to November 1783, and British representatives were successful in ensuring that almost all of the loyalist blacks of New York maintained their liberty.

After British troops evacuated New York, the tavern hosted an elaborate “turtle feast” dinner on December 4, 1783 in the building’s Long Room for U.S. Gen. George Washington where he bade farewell to his officers of the Continental Army by saying “[w]ith a heart full of love and gratitude, I now take leave of you. I most devoutly wish that your latter days may be as prosperous and happy as your former ones have been glorious and honorable.”

The building housed some offices of the Confederation Congress as the nation struggled under the Articles of Confederation. With the establishment of the U.S. Constitution and the inauguration of Washington as president in 1789, the departments of Foreign Affairs, Treasury and War located offices at the building. The offices were vacated when the location of the U.S. capital moved on December 6, 1790 from New York to Philadelphia.

The art of Griftopia

Felix Salmon, Reuters

Dec 2, 2011 11:43 EST

I’m in Miami right now, for the annual bacchanal of conspicuous consumption that is Art Basel Miami Beach. There are two equally important things going on here (and by “important” I mean “not important at all”) – a tiny group of people spending huge sums of money on art; and a small group of people in extremely expensive shoes gossiping about who’s buying what.

But the money sloshing around the art world is, ultimately, small potatoes. Any one artwork might sell for an astonishing amount of money… (b)ut compared with the sums of money in finance, the entire contemporary-art circus is basically a rounding error.

…

(A) work of art about the way in which the entire financial crisis is utterly incomprehensible to anybody who doesn’t study it day in and day out for months. Everybody wants easy answers or villains, but in fact everybody was to blame, and Powhida’s piece is a great way of showing how difficult it really is to understand this stuff. The CFTC, for instance, has a prominent part in the work, and goes unexplained: if you don’t know what it is – and 95% of the people looking at the work will have no idea what it is – then you’ll begin to get a good idea of just how beyond your grasp the financial crisis lies.

Here at Art Basel, everybody is in their comfort zone – the art world knows how to buy and sell and backstab and gossip, and it does it very well. And wading into the belly of the beast, Postmasters has brought Powhida’s works down to Miami, the natural home for high-impact pieces for people with short attention spans. I doubt they’ll do very well. But you never know: if people are still feeling the pain on the condo they bought at the top of the market because they thought it would be nice way to make a profit while having a pied-à-terre down here, Powhida might just pique their interest.

When art galleries ratify forgeries

Felix Salmon, Reuters

Dec 3, 2011 12:50 EST

Patricia Cohen has uncovered the art-world scandal of the year: it seems as though Knoedler, the 164-year-old Upper East Side institution, closed abruptly on Wednesday in large part to protect itself against a $17 million lawsuit from Pierre Lagrange. Lagrange spent that sum on a Pollock which he then discovered contained two paints which had not been manufactured until after Pollock died. And now it seems that Knoedler regularly sold AbEx paintings procured by Glafira Rosales with the vaguest of provenance.

…

The point here is that the art market, like the stock market, runs on a combination of trust and storytelling ability. The most expensive artists are nearly always those who can be credibly placed into central slot in the history of art; one of the main reasons that Abstract Expressionists in general are so expensive is because they have spent decades as the very heart of MoMA’s collection, which presented them as the pinnacle of 20th Century art, the artists standing on the shoulders of people like Picasso.

When gallerists sell paintings, they tell stories not only about the work, but also about the story behind the work, conjuring up romantic notions of dealings between Robert Motherwell and Mexican sugar magnates, brokered by “man named Alfonso Ossorio”. So long as the institution selling the work is trustworthy, potential buyers tend to take such stories at face value – and, of course, they have a vested financial interest in those stories being true, the minute they actually buy the piece.

…

Freedman would also have found it much harder to sell all those Motherwells if she hadn’t had the full institutional credibility of Knoedler behind her. That’s how galleries can be such lucrative businesses to be in: once you’re established, you can literally add hundreds of thousands or even millions of dollars to the value of a painting, just by hanging it on your wall. A fake Motherwell in a garage in Switzerland is worthless; in an Upper East Side gallery, it’s priceless.

Until the forgery is uncovered, of course.

A metaphor our times.

Massachusetts Attorney General Martha Coakley filed a law suit against five major banks and MERSover deceptive mortgage practices. One of those entities, GMAC, the mortgage lender of Ally Financial Inc., decided to stop mortgage lending in Massachusetts. The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,”. Seriously, they are not going to play in the state because Martha wants them to play by the rules. How dare she!

Yves Smith at naked capitalism says that in essence GMAC Mugs Massachusetts for Insisting on the Rule of Law, Suspends Mortgage Lending in the State

This move by GMAC, now Ally, is remarkably brazen. GMAC has effectively said that Massachusetts must hew to its demands of how to deal with foreclosures. It announced it is withdrawing from mortgage lending in the state in an effort to bring it to heel. [..]

GMAC is trying to get other big banks to follow suit. I hope the state and other groups that do substantial financial business with banks (largish churches are also attractive clients) make it clear than any effort to punish the state for enforcing the law will be met by moving their accounts to smaller institutions that respect the law. [..]

Sorry, for the first decade plus of the private mortgage securitization business, banks and servicers did hew to the requirements of state law. It was only in the late 1990s through 2004 or so that they started to fail to comply with the requirements of their own contracts (the breakdown appears to have taken place over time, with the biggest decay taking place during the 2002-2003 refi boom). That’s what has put their foreclosures on shaky footing, which in turn has led to wideranging legal abuses to get around the mess they created.

The insolence of the securitization industry continues to be astonishing. They act as if they have an imperial right to dictate to governments, and refuse to admit any role in a disaster of their own creation. I hope those of you who do business with Ally close your accounts immediately and tell the bank that it is due to their Mafia style move in Massachusetts.

If you’re a GMAC customer in Massachusetts, it’s time to move your loan.  

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

The Sunday Talking Heads:

Up with Chris Hayes: Sunday’s guests are Rev. Samuel Rodriguez (@NHCLC), President of The National Hispanic Christian Leadership Conference; Dr. Donald Berwick, former administrator for the Centers for Medicare and Medicaid Services under President Obama; Jared Bernstein, former chief economist and economic advisor to Vice President Joe Biden;  Chrystia Freeland, editor of Thomson Reuters Digital; Mahlon Mitchell, President of the Professional Fire Fighters of Wisconsin; John McWhorter, Columbia University Professor of Linguistic and American Studies, and Contributing Editor at New Republic and TheRoot.com; and Katrina Vanden Heuvel, editor & publisher at The Nation magazine.

This Week with Christiane Amanpour: Sunday’s guests are former Pennsylvania senator and Republican presidential candidate Rick Santorum; , Rep. Barney Frank (D-MA) and Academy Award winning actress Angelina Jolie. The rountable pundits are George Will, Democratic strategist Donna Brazile, AOL Huffington Post’s Arianna Huffington, and Major Garrett of National Journal.  

Face the Nation with Bob Schieffer: Guests are RNC Chair Reince Priebus and Obama Campaign Advisor Robert Gibbs. Roundtable analysis from CBS News Chief White House Correspondent Norah O’Donnell, CBS News Political Director John Dickerson, CBS News Congressional Correspondent Nancy Cordes, and Politico’s Chief White House Correspondent Mike Allen.

The Chris Matthews Show: This week’s guests are Joe Klein, TIME Columnist, Helene Cooper, The New York Times White House Correspondent, Gillian Tett, Financial Times U.S. Managing Editor and John Heilemann, New York Magazine National Political Correspondent

Meet the Press with David Gregory: Guests are Obama re-elect chief strategist David Axelrod and RNC Chairman Reince Priebus.

But in separate studios to minimize the level of bull s**t that will be shoveled

The roundtable guests are Publisher of the New Hampshire Union Leader Joe McQuaid, the BBC’s Katty Kay, Fmr. Rep. Harold Ford, Jr. (D-TN) and TIME’s Mark Halperin.

State of the Union with Candy Crowley: Guests are Rep. Ron Paul (R-TX), Rep. Michele Bachmann (R-MI) and Sen. John McCain (R-AZ). Guests on an economic panel are Alice Rivlin, Douglas Holtz-Eakin, and Ron Brownstein.

In Gaza, lives shaped by drones

 

By Scott Wilson, Sunday, December 4

GAZA CITY – The buzz began near midnight on a cool evening last month, a dull distant purr that within moments swelled into the rattling sound of an outboard motor common on the fishing boats working just offshore.

At a busy downtown traffic circle not far from the dormant port, a pickup truck full of police pulled up abruptly. The half-dozen men spilled into the streets.

“Inside, inside,” the officers, all of them bearded in the style favored by the Hamas movement that runs Gaza, urged passersby. Then, pointing to the sky, one muttered, “Zenana, zenana.”