Small Business Owners, Job Creators.

Randy Wray: Why We’re Screwed

L. Randall Wray, Naked Capitalism

Monday, July 23, 2012

A century ago Veblen analyzed religion as the quintessential capitalist undertaking. It sells an inherently ephemeral product that can not be quality tested. Most of the value of that product exists only in the minds of the purchasers, and most of that value cannot be realized until death. Dissatisfied customers cannot return the purchased wares to the undertakers who sold them-there is no explicit money back guarantee and in any event, most of the dissatisfied have already been undertaken. The value of the undertaker’s institution is similarly ephemeral, mostly determined by “goodwill”. Aside from a fancy building, very little in the way of productive facilities is actually required by the religious undertaker.

But modern finance has replaced religion as the supreme capitalistic undertaking. Again, it has no need for production facilities-a fancy building, a few Bloomberg screens, greasy snake-oil salesmen, and some rapacious traders is all that is required to separate widows and orphans from their lifesavings and homes. Religious institutions only want 10%; Wall Street currently gets 20% of all the nation’s output (and 40% of profits), but won’t stop until it gets everything.

…

And that is just the start. They also place tens of trillions of dollars of bets on derivatives whose value is purely “notional”. The thieves get paid when something goes wrong-the death of a homeowner, worker, firm, or country triggers payments on Death Settlements, Peasant Insurance, or Credit Default Swaps. To ensure that death comes sooner rather than later, the undertaker works with the likes of John Paulson to handpick the most sickly households, firms and governments to stand behind the derivative bets.

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The top four US Banks hold $171 Trillion worth of derivative deals like this. Derivatives are really just bets by Wall Street that we will get screwed-it is all “insurance” that pays off when we fail. Everything is insured-by them against us.

…

You see, all the top financial institutions are dens of thieves, and thieves know better than to trust one another. So lending to fellow thieves has to be collateralized by safe financial assets-which is the traditional role played by Treasuries. But there were not enough of those to go around so Wall Street securitized home mortgages that were sliced and diced to get tranches that were supposedly as safe as Uncle Sam’s bonds. And there were not enough quality mortgages, so Wall Street foisted mortgages and home equity loans onto riskier borrowers to create more product.

…

Suddenly there was no collateral behind the loans Wall Street’s thieves had made to one another. Each Wall Street thief looked in the mirror and realized everything he was holding was crap, because he knew all of his own debt was crap.

…

And that is why we are screwed.

I see two scenarios playing out. In the first, we allow Wall Street to carry on its merry way, as the foreclosure crisis continues and Wall Street steals all homes, packaging them into bundles to be sold for pennies on the dollar to hedge funds. All wealth will be redistributed to the top 1% who will become modern day feudal lords with the other 99% living at their pleasure on huge feudal estates.

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In the second, the 99% occupy, shut down, and obliterate Wall Street.

Local Boys Geared Up for German Grand Prix, but Not at Pole Position

By BRAD SPURGEON, The New York Times

July 21, 2012

(A) bit of bad German news has been all the talk of how the other track that hosts the German Grand Prix in alternating years, the Nurburgring, is in a complete state of financial ruin and its future in doubt, as the circuit is going bankrupt. In 2009, the local government backed and paid for a renovation of the circuit into both a circuit and a theme park, and it has turned into a fiasco.

Last March, the European Commission sent out a press release that began thus: “The European Commission has opened an in-depth investigation to assess whether a €524 million set of aid measures supporting the racetrack and leisure park at the Nurburgring in Germany is in line with EU state aid rules.”

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And in a final bit of bad news, German media has found the race a good moment to report that prosecutors in Munich are preparing to investigate claims by a German banker that Bernie Ecclestone had attempted to bribe him, offering $44 million in exchange for selling Formula One to CVC Capital a few years ago. The banker, Gerhard Gribkowsky, was recently sentenced to eight and a half years in prison in another matter, after admitting bribery, breach of trust and tax evasion.

F1 : No German arrest for corruption as Formula 1 supremo skips Hockenheim race

F1SA

Sunday, 22 July 2012

The Formula 1 Chief Executive’s absence, unusual for a European race but not unheard of, heightened speculation he is afraid of being arrested.

…

“With Mercedes-Benz stalling on a new Concorde Agreement, and sponsors watching on anxiously, no one knows quite what will happen next,” Tom Cary wrote in the Telegraph.

If you build it, they will come? The Nürburgring folly

Mark Hallam, Deutsche Welle

7/21/12

How do you take the world’s most famous racetrack, with relatively small financial woes, and turn it into a half-billion-euro hole in less than a decade? The answer’s simple: renovate it with things it doesn’t need.

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The idea behind revamping the Nürburgring was to turn it into a publicly-traded company at least partially owned by private investors.

Two businessmen, Kai Richter and Georg Lindner, combined with then-Nürburgring CEO Walter Kafitz to convince the state government that the project was viable. The pair pledged to contribute to Nürburgring GmbH, and said others would flock to the project once the foundations were laid.

No new investors emerged. Midway through the construction process, Richter and Lindner themselves withdrew, saying they were out of money.

…

“Well, firstly, Richter and Lindner obviously must go!” Hahne said. “Secondly, the racing and ‘event’ segments of the company must be divided. And thirdly – this is most important – the race tracks must remain in public possession, either at the regional or federal level.”

His suggestion, in short, is to do everything possible to turn the clock back on five disastrous years, at a great cost to the state and the German taxpayer.

Famed German Tracks Leave Their Mark on Series

By BRAD SPURGEON, The New York Times

Published: July 20, 2012

With the advent of the Schumacher era, Formula One became so popular in Germany that for many years the country hosted both the German Grand Prix at Hockenheim and another race – either the European Grand Prix or the Luxembourg Grand Prix – at the Nürburgring. Since 2008, the German Grand Prix has rotated between the Nürburgring and Hockenheim, while the European Grand Prix has moved to Valencia, Spain.

But many of the most memorable races of the German Grand Prix took place at the old Nürburgring track, the Nordschleife, or north loop, which was a track 20.81 kilometers, or 12.93 miles, long, winding through the forests of the Eiffel hills. It was a roller coaster of a track and on it only the greatest drivers could prove their mettle.

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The Hockenheimring was redesigned in 2002, with a vast portion of long straights through the forest cut off in favor of a small track with a large, tight hairpin to facilitate overtaking.

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The distinctive, winding track in the stadium area has remained, however, and is a favorite for fans to see the cars and for the drivers to see the fans.

3 drivers were penalized for gearbox changes, Rosberg, Grosjean, and Webber (at Silverstone).  Perez was penalized for impeding in Q2.  Red Bull is in violation of Engine Torque mapping rules.  No penalty imposed.

Forecast is for a dry track. Coverage is at noon on Faux

• Formula One Official Site
• Hockenheim
• German Grand Prix
• Guardian Interactive Circuit Guide
• Formula One: Hockenheim Qualifying

Pretty tables below.

Rambouillet / Paris Champs-Élysées (74.6 miles)

Le.  Tour.  De.  France.

I ♥ a parade, as a matter of fact I dare say you’ll find The Stars Hollow Gazette is your leader among left blogs in Parade coverage.

Not to mention professional bicycle racing, Formula One, NCAA Tournament Basketball, Playoff Baseball, and Dog Shows.

Have I mentioned there’s a lot of data in the tables?  I’m having some trouble processing them and so you will have to wait until some late night between now and the Olympics (only Wednesday folks) for me to update the stage diaries and publish comprehensive lists.

I generally skip the Award Ceremonies and today most of my attention is going to be on collecting lap positions at Hockenheim, however that doesn’t start until tape delayed at noon.

The course has two category 4 climbs which will not be enough to change any positions.  They will ride up and down the Champs Élysées 8 times before a sprint which is meaningful mostly in terms of a spectacular stage victory, but should have very little effect on Points.

General Classification

Points

Team

Hill Climb

Youth

Coverage is on Vs. (NBC Sports) starting at 8 am with repeats at noon (on NBC), 2:30 pm, 8 pm, and midnight.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Rambouillet / Paris Champs-Élysées (74.6 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Banks Caught Up In Libor Scandal Seek Group Settlement

By: David Dayen, Firedog Lake

Friday July 20, 2012 7:04 am

As regulators and law enforcement officials around the world begin to dig into the Libor scandal, the 15 or so banks who know they’re responsible for the massive rate-rigging are trying to limit the damage. That’s right, it’s time for another round of: let’s have a global settlement!

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Reuters did add that regulators would like the idea of a global settlement because they would get to have a big press conference and announce a headline number, and I think that’s right. We saw the appeal of that in the foreclosure fraud settlement.

Yves Smith @ Naked Capitalism–

Dudes, we gave you a link last week from Sky News saying the same thing!

Exclusive: Banks in Libor probe consider group settlement – sources

By Katharina Bart and Diane Bartz, Reuters

2012/07/19

A group agreement would appeal to financial watchdogs because they would be able to announce a headline-grabbing figure, showing that they were dealing firmly with the banking industry’s misdemeanors, a banker told Reuters on condition of anonymity.

Earlier this year, five top U.S. banks negotiated a $25 billion settlement with the U.S. Justice Department and other federal and state agencies to resolve allegations of mortgage services abuses.

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However, if they were able to reach a group settlement it would enable them to share the pain of negative publicity.

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Analysts have estimated that the scandal could cost the industry between $20 billion to $40 billion, further damaging a sector that is struggling to work its way through the aftermath of the 2007-2009 financial crisis, economic downturns in Europe and the United States, and increased regulatory demands.

Told you so–

Exclusive: Push For Libor Settlement

Mark Kleinman, City Editor, Sky News

Wednesday 11 July 2012

Investors believe that an industry-wide settlement will be necessary if other banks are to avoid a clear-out of their top executives, although one mitigating factor which might assist those who get fined for Libor-rigging is likely to be the fact that many of them have changed their top management since the periods under investigation.

“A drip-feed of Libor-related fines would be hugely damaging to investors with large exposures to international banks,” one leading shareholder told me.

Of course, it’s the view of many that banks which are found guilty of such an important offence as manipulating the rate of Libor should sack those responsible and that they should face further punishment under the law.

Hah hah hah.

Sigh.

Thank goodness this is the last tape delayed broad cast on Faux this season because it’s just impossible to keep up with the point paying positions without using Speed Racecast and that is live though there is some update lag.

Then you have to watch it to sync them up.

These are the same tricks I used for Valencia and Silverstone.

The good news is that it’s not quite as damp as Silverstone was.  In the morning Practice the weather wasn’t so bad and they were able to turn some laps on the Softs.  It rained all afternoon and the only tires that would work were the Inters.  This is kind of a problem because lots of teams have mid-season aero replacements that have never been tried.

Did I mention mid season?

Yup, race 10 of 20 followed next week by Hungary and then Formula One takes August off entirely.

If the race is run on dry tires the choices on offer are Mediums and Softs.  Hockenheim is known for a lot of brake and tire wear because of its high speed straights and tight corners.

Kobayashi was fined 25k euros for hitting 3 crewmen at Silverstone.  Maldonado received a 10k euro fine for wacking Perez.

• Formula One Official Site
• Hockenheim
• German Grand Prix
• Guardian Interactive Circuit Guide

Bonneval / Chartres (33.25 miles)

Le.  Tour.  De.  France.

The last Time Trial.  The last stage before tomorrow’s Champs-Élysées parade.  I don’t know about you, but I get all nostalgic and sentimental at the end of events like this.  This is the only 99th Le Tour there will ever be.

That said, I’ll also be covering Hockenheim, which will conflict today but not tomorrow since the parade will be live on Vs. (NBC Sports) at 8 am and I’ll do it it while taking lap notes.

It seems the sporting news is coming fast and furious with The Stars Hollow Gazette Olympic coverage starting Wednesday (Women’s Soccer).  We’ll be providing schedules and results and may live blog some of the more obscure events (Fencing, Team Handball).  It’s not Curling, but what can match the excitement and majesty of sliding around big rocks on ice?

Despite their apparent obscurity there are reasons I indulge myself in the diversion of sports.  For one thing the defined time element, things are over when they are.  There is no argument about the score, though the officiating may be questionable.  Their study provides insights into other things AND they have the benefit of novelty.  When you sit down you have no idea how things will turn out.

General Classification

Keep in mind that according to his form in the 2 previous Individual Time Trials Wiggins is expected to gain 5 minutes on this course which is essentially flat.

Coverage is customarily on Vs. (NBC Sports) starting at 8 am with repeats at noon, 2:30 pm, 8 pm, and midnight.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Bonneval / Chartres (33.25 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Blagnac / Brive-la-Gaillarde (138.25 miles)

Le.  Tour.  De.  France.

Yesterday BruceMcF analyzed the 2012, 99th Edition of Le Tour this way-

Hopes that Cadel was having a bad recovery from the rest day faded when I heard him refer to seeing how his “health” recovers. Word was he had a “parasite” he was diagnosed with two hours before the race on Wednesday’s stage. Oh, joy! No wonder he lost big time ~ the wonder is he didn’t drop out of the top ten altogether.

The problem with the Yellow Jersey competition is that the race was designed for a four way show-down between Evans, Wiggins, Andy Schleck, and Alberto Contador, and then Contador was found guilty of doping, Schleck was knocked out by injury, and it seems like Global Warming conspired to do Evans in ~ he’s not got a reputation for coping well with the very hot conditions, and this was one hot run through the Alps they had in week two. If he was fighting at his limit just to hang on, catching some bug on the rest day is no surprise.

What made today’s stage was the King of the Mountains competition ~ Voeckler vs Kessiakoff was a fine fight.

As far as the Mountain stages, its not how long they are, its how long the top contenders put each other under pressure. If you add one more HC to the front of yesterday’s stage ~ the Queen State ~ it wouldn’t add any more racing. Indeed, by wearing down teams other than Sky, it could easily have led to less. Without Schleck and Contador in the peleton, then the two remaining serious climbing contenders, Evans and Nibali, are more pace-climbing riders than attacking climbers.

Some commentators on PodiumCafe question the design of the course for some of the stages. But I can see places on each of the stage where earlier attacks could have been made ~ had someone had the GC contender and the supporting team to launch the attack and then back it up.

In the end, the riders make the race, and the two best GC riders in the race this year were riding on the same team. Move Froome to BMC or Liquigas, and run it again, and the same course would see fireworks, and we would have Froome going into the final time trial leading by a minute or more, but Wiggins making up time in the time trial, just as Evans did rising as second last in the time trial last year, except with an excellent time trialer riding last defending his yellow jersey, instead of Andy Schleck.

Riders that did not appear in Stage 17 were Vladimir Gusev and Grega Bole.  Frank Schleck withdrew after testing positive for the diuretic Xipamide.

Today’s stage is labeled ‘Plains’ and has a category 3 and three category 4 climbs.  Points will be awarded in Hill Climbing but probably not enough to make any difference.  The Award point is in the middle of a category 4 climb 2.5 km from the top, so that could be interesting.

Tomorrow is the 3rd Individual Time Trial, the final day anything much will change (by custom) except amongst the Sprinters.  Sunday we finish Le Tour on the Champs-Élysées.

General Classification

Coverage is customarily on Vs. (NBC Sports) starting at 7:30 am with repeats at noon, 2:30 pm, 8 pm, and midnight.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Blagnac / Brive-la-Gaillarde (138.25 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Bagnères-de-Luchon / Peyragudes (89 miles)

Le.  Tour.  De.  France.

Here’s an article alleging that one goal this year was to use the course setup to encourage competition.

Unprecedented climbs, with record-setting steep slopes, and sprint stages that ended in surprising uphill drags, were among the novelties planners threw into the mix with the hope of boosting the suspense factor in the 99th Tour de France.

…

Yellow jersey holder Bradley Wiggins and his Team Sky have so dominated the Tour that the race’s top 10 has been all but set for the last six stages.

Now if you ask me we spent entirely too much time Sprinting the first week and the Mountain stages, while having severe climbs, were too short with not enough climbs and not enough days doing them.  Individual Time Trials are a pox!  I admit that all this dominance seems quite nice when your side is on top, but having Red Bull win every week is not good for business.

Today are the last hills with an uncategorized climb, two category 1s, a category 2, and a category 3.  The Award point is after the initial 1, 2, 3 climbs.  Tomorrow is Plains, Saturday the Time Trial, and Sunday the Champs.  Formula One at Hockenheim Saturday and Sunday.  Olympics Wednesday.

Yesterday’s winner was Thomas Voeckler (five or six stage wins for France) followed by Chris Anker Sorensen, and Gorka Izaguirre Insausti.  Evans is now in 7th, over 8 minutes back.

General Classification

Coverage is customarily on Vs. (NBC Sports) starting at 7:30 am with repeats at noon, 2:30 pm, 8 pm, and midnight.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Bagnères-de-Luchon / Peyragudes (89 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Pau / Bagnères-de-Luchon (122.4 miles)

Le.  Tour.  De.  France.

This Tour is basically over with commanding leads in both the General Classification and Points but if anyone is going to make a move in the GC it’s either today or tomorrow in the Pyrenees or in the Individual Time Trial the day before the Champs.

It’s this (yawn) gripping duel in the High Mountains you see that justifies the absurdly early 6:30 am coverage start.

The Mountains will certainly be high enough, 2 uncategorized, 2 category 1s.  The Award point is mercifully early before any of the climbs, it could be some Sprinters won’t make the time boundary.  Newly not appearing for the 16th Stage are Sylvain Chavanel, Brett Daniel Lancaster, Yauheni Hutarovich, Kenny Robert Van Hummel, Vincent Jerome, and Giovanni Bernaudeau.

Monday saw Pierrick Fedrigo take a 4th French stage win with Christian Vande Velde second and Thomas Voeckler third.  No changes worth mentioning at the top.

General Classification

Coverage is customarily on Vs. (NBC Sports) starting at 6:30 am with repeats at noon, 2:30 pm, and 8 pm.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Pau / Bagnères-de-Luchon (122.4 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

This set covers Points from Stage 13 to Stage 15.