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Aug 26 2011

DocuDharma Digest

Our Regular Features-

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DocuDharma

Aug 26 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 Russia ‘grounds Soyuz rockets’ after space crash

By Stuart Williams, AFP

5 hrs ago

Russia on Thursday grounded its Soyuz rockets after a space ship carrying tonnes of cargo for the International Space Station (ISS) crashed into Siberia shortly after blast-off, officials said.

The failed launch of the unmanned Progress capsule on a Soyuz-U rocket was a spectacular blow for Russia which proudly became the sole nation capable of taking humans to the ISS after the July withdrawal of the US space shuttle.

Emergency services blocked access to the site of the crash in the Altai region of Siberia, state television said, amid fears the space freighter could have dumped highly-toxic fuel in the area.

Aug 25 2011

Another Dow(n) Day on Wall Street

Yes, I know the financial markets are only peripherally connected to the actual economy and the Dow is a poor indicator even of that but it’s sometimes amusing to watch the numbers at the big casino.

Thursday is jobless day and once again the number of newly unemployed is over 400,000 with an upward revision of last week’s much better number so that they are now even worse than this week.  Green shoots, Recovery Summer don’t you know.

But these titans are not so much worried about that as they are once again about Greece.

Greek Bond Yields Climb to Record High on Speculation Bailout Will Fail

By Emma Charlton and Keith Jenkins, Bloomberg News

Aug 25, 2011 10:49 AM ET

Greek bonds slumped, with 10-year yields rising for an eighth day to a euro-era record, amid concern Finland’s demands for loan collateral jeopardize Greece’s second bailout package and may trigger a default.

…

“Markets are doubting whether the second bailout package will ever be ratified by all the euro-region member states,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “There’s not much that can worsen the situation from where we are now.”

Greek 10-year bond yields rose 49 basis points to 18.38 at 3:44 p.m. in London, after climbing as high as 18.55 percent.

…

The two-year yield jumped 185 basis points to 45.88 percent, extending a 5.6 percentage point increase over the past two days. It earlier reached a euro-era record 45.91 percent.

The cost of credit-default swaps insuring Greek debt rose three basis points today to 2,253 basis points, the highest in more than a month, according to CMA.

Greek Default Fears Rise

By RIVA FROYMOVICH And MARK BROWN, The Wall Street Journal

AUGUST 25, 2011, 11:33 A.M. ET

BRUSSELS-Euro-zone policy makers appeared nowhere near settling a dispute Thursday over Finland’s collateral demands in exchange for participating in a €109 billion ($157.1 million) bailout for Greece, raising concerns the Mediterranean nation may default.

…

Under that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral against those same loans at the expense of other euro-zone countries. Since Finland is set to contribute just 2% of Greece’s total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland.

Which leads to headlines like this one in The Telegraph–

Market crash ‘could hit within weeks’, warn bankers

A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.

By Harry Wilson, and Philip Aldrick, The Telegraph

9:50PM BST 24 Aug 2011

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender’s bonds against default is now £343,540.

The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.

…

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank.

Here’s a bit of video from the BBC of an interview with Nassim Taleb-

(I wanted to include a quote from Robert Alexander Dumas at MyFiredog Lake, but it’s crashing the piece so I’ll try and figure it out later.)

But you shouldn’t worry or fret.  Warren Buffet just dropped $5 Billion of new capital into Bank of America so my advice is that you take all the money you have in the world and view this downturn as a buying opportunity to get long in banks.

Sucker.

Aug 25 2011

Another Dow(n) Day on Wall Street

Yes, I know the financial markets are only peripherally connected to the actual economy and the Dow is a poor indicator even of that but it’s sometimes amusing to watch the numbers at the big casino.

Thursday is jobless day and once again the number of newly unemployed is over 400,000 with an upward revision of last week’s much better number so that they are now even worse than this week.  Green shoots, Recovery Summer don’t you know.

But these titans are not so much worried about that as they are once again about Greece.

Greek Bond Yields Climb to Record High on Speculation Bailout Will Fail

By Emma Charlton and Keith Jenkins, Bloomberg News

Aug 25, 2011 10:49 AM ET

Greek bonds slumped, with 10-year yields rising for an eighth day to a euro-era record, amid concern Finland’s demands for loan collateral jeopardize Greece’s second bailout package and may trigger a default.

…

“Markets are doubting whether the second bailout package will ever be ratified by all the euro-region member states,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “There’s not much that can worsen the situation from where we are now.”

Greek 10-year bond yields rose 49 basis points to 18.38 at 3:44 p.m. in London, after climbing as high as 18.55 percent.

…

The two-year yield jumped 185 basis points to 45.88 percent, extending a 5.6 percentage point increase over the past two days. It earlier reached a euro-era record 45.91 percent.

The cost of credit-default swaps insuring Greek debt rose three basis points today to 2,253 basis points, the highest in more than a month, according to CMA.

Greek Default Fears Rise

By RIVA FROYMOVICH And MARK BROWN, The Wall Street Journal

AUGUST 25, 2011, 11:33 A.M. ET

BRUSSELS-Euro-zone policy makers appeared nowhere near settling a dispute Thursday over Finland’s collateral demands in exchange for participating in a €109 billion ($157.1 million) bailout for Greece, raising concerns the Mediterranean nation may default.

…

Under that deal, Greece would pay Finland hundreds of millions of euros from its bailout loans as collateral against those same loans at the expense of other euro-zone countries. Since Finland is set to contribute just 2% of Greece’s total rescue package, guarantees from the richer euro-zone nations would be going directly to Finland.

Which leads to headlines like this one in The Telegraph–

Market crash ‘could hit within weeks’, warn bankers

A more severe crash than the one triggered by the collapse of Lehman Brothers could be on the way, according to alarm signals in the credit markets.

By Harry Wilson, and Philip Aldrick, The Telegraph

9:50PM BST 24 Aug 2011

Credit default swaps on the bonds of Royal Bank of Scotland, BNP Paribas, Deutsche Bank and Intesa Sanpaolo, among others, flashed warning signals on Wednesday. Credit default swaps (CDS) on RBS were trading at 343.54 basis points, meaning the annual cost to insure £10m of the state-backed lender’s bonds against default is now £343,540.

The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.

…

“I think we are heading for a market shock in September or October that will match anything we have ever seen before,” said a senior credit banker at a major European bank.

Here’s a bit of video from the BBC of an interview with Nassim Taleb-

Aug 25 2011

DocuDharma Digest

Our Regular Features-

Featured Essays-

DocuDharma

Aug 25 2011

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 First proof that climate is a trigger for conflict: study

By Richard Ingham, AFP

6 hrs ago

Climate shift has at times been fingered as a culprit in triggering conflict, fuelling for instance the 1789 French Revolution by wrecking harvests and driving hungry peasants to the city.

Evidence to back the theory has often been contested as sketchy or anecdotal — but the case has been boosted by the first scientific study to declare an unmistakeable link between climate fluctuations and violence.

It says tropical countries affected by the notorious El Nino weather event are twice as likely to be hit by internal unrest compared to the phenomenon’s cooler, wetter counterpart, La Nina.

Aug 24 2011

A Global Crisis of Institutional Legitimacy

Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash

Yves Smith

Monday, August 22, 2011

So get this: we have unemployment at roughly 16% if you include discouraged workers, and many “employed” workers are underemployed. The housing market hasn’t bottomed; experts have pushed their hopes estimates from 2011 to 2012. And continued concerns about unaddressed chain of title issues may well impede any housing recovery.

Yet rather than address real, serious problems, senior administration officials are instead devoting time and effort to orchestrating a faux grass roots campaign to con a state AG into thinking his supporters are deserting him because he has dared challenge the supremacy of the banks.

…

“Wall Street is our Main Street.” That came from finance’s favorite camp follower, Kathryn S. Wylde. As we described in an earlier post, she’s wil(l)ing to throw the rule of law under the bus to serve the interests of the banks who happen to be major funders of the business-promoting not for profit she heads. And she is also a director of the New York Fed. So it should not be surprising that she got in a “contentious conversation” with Schneiderman when they crossed paths in public.

…

If you think that is an unfair rendition of Wylde’s remark, consider the damage the major banks have done. They have failed so badly at being competent lenders and record keepers that when judges in New York demand that bank attorneys certify that they have taken reasonable steps to verify documents submitted to the courts, foreclosures grind to a near halt. Two separate investigations, one by Fortune, the other by the New York Post, ascertained that an overwhelming majority of foreclosures took place when the banks failed to demonstrate that they had the right to do so. Banks have foreclosed illegally on servicemen, and have also foreclosed on people who didn’t have mortgages. Their is ample evidence that they have systematically violated their own contracts, the agreements that govern mortgage securitizations, and have on a widespread basis charged impermissible fees to borrowers. And when these junk and pyramiding fees precipitate foreclosures, the servicers have effectively ripped off investors too. They have tooth and nail fought every effort that would help borrowers if it in any way impinged on their profits, even though their very survival is the result of taxpayer munificence. Finally, they’ve made a mess of property records in this country.

…

Felix Salmon wrote today of a global crisis of institutional legitimacy, and although his tour started with Libya, it focused mainly on Europe and the US. If you want to know why the governed are withdrawing their consent in advanced economies, you need look no further than toadies like Donovan and Wylde who defend institutionalized profiteering and seek to undermine the few like Schneiderman who’ve managed, despite the odds, to get in a position where they might be able to do something to reverse it.

If you are a New York resident, I hope you’ll call (800 771-7755 or 212 416-8000) or e-mail Schneiderman and thank him for standing up to the corruption of the banks and their enablers in the Administration. I think he will appreciate the show of support.

(h/t Gaius Publius @ Americablog)

Aug 24 2011

DocuDharma Digest

Our Regular Features-

Featured Essays-

DocuDharma

Aug 24 2011

Hinky Tubes

Things have been slow bordering on non functional all afternoon.  I don’t blame it in the quake though there may be some relation.

I’ll try to catch up later on.

Aug 23 2011

Boeing Boeing

Ah yes, exceptional Americanism or American exceptionalism.

You know, whatever.

The 787 project has been delayed for over 4 years now, principally due to the fact that Boeing outsourced all the parts to nickle and dime their highly skilled and unionized labor force to death.

Unsurprisingly when they got them back for assembly they didn’t fit together.

Now this is a problem that was solved by one of Connecticut’s favorite sons, Eli Whitney, in 1798 because he needed some money after making institutionalized slavery profitable (we are proud of our Benedict Arnolds here in the Nutmeg State) but apparently ideas like interchangeability take a long, long time to get over the the Oregon trail to Washington.

And so as a consequence there are airports full of uncompleted 787s in various stages of decrepitude, covered in plastic tarps and weighed down with high tech cinder blocks so they don’t blow away.

Boeing’s 787 Glut Casts $16.2 Billion Cloud Over FAA Approval

By Susanna Ray, Bloomberg News

Aug 23, 2011 12:01 AM ET

Boeing amassed $16.2 billion worth of inventory related to the 787 through June 30, with so many almost-finished jets the company ran out of room to park them. There are 35 scattered outside the Everett, Washington, plant, in leased space across an adjacent airfield and in a facility in Texas. Many lack seats and lavatories and have black plastic over the windows and concrete blocks hanging from the wings to keep them from tipping over before engines are installed.

…

The mothballed jets represent almost $6 a share in inventory growth since 2009. Counting four planes in the factory and six test jets, Boeing has more 787s on hand than Richard Branson’s Virgin Atlantic Airways has planes in service.

…

Credit-default swaps tied to Boeing bonds, which rise as investor confidence falls, closed yesterday at the highest since Dec. 7, 2009, gaining 1.3 basis points to 84.5 basis points, according to data compiled by CMA. A basis point is $1,000 a year on a contract protecting $10 million of debt.

…

Boeing can “eat some of the dirt of the inventory cost” by spreading it out over the initial block of 787s, using so- called program accounting, said Demisch, the consultant. The company plans to reveal the size of that accounting block with its third-quarter earnings in October.

…

The 45th plane to be built — in the factory now — will probably cost Boeing at least $184 million, Harned estimated after analyzing inventory figures. That would make the average cost over the first 1,000 jets, including a learning curve, at least $116 million per plane, he projects. FAA approval this week after a flight-test program that began in December 2009 would set the stage for delivery of the first 787 to All Nippon Airways Co. next month.

…

Each plane is in a different state of readiness, since Boeing kept improving processes after the jets began rolling out of the factory in 2009.

They have undergone waves of repairs based on testing discoveries, and numerous jobs remain on “various and sundry components” before they’re ready for delivery, said Scott Fancher, Boeing’s 787 chief.

…

“Anytime you’re building an airplane out of sequence, the amount of work that’s required probably goes up by a factor of 10, because they have to unbuild all the things you built on top of whatever you have to change, and then build it all back,” said Demisch, the consultant. “It’s better than starting the airplanes from scratch, but it’s cost that will be added to production and make the likelihood of a profit on this program over the next half-dozen years very, very low.”

As much as I hate flying in general, let me just say I can’t wait to strap myself into one of those puppies.

I want to die peacefully in my sleep like my Grandfather the pilot,

not screaming in terror like his passengers.

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