Monday, September 29, 2008

Credit Default Swaps - Simplified(?)

Bank X makes a loan to Company Z. Federal law requires Bank X to keep a certain percentage of cash on hand in case Company Z is unable to repay their loan. This cash cannot be loaned out or invested by Bank X. This is a limitation to Bank X because it is much more advantageous for them to loan or invest their cash than to have it in a low (or no) interest bearing account. Here is where the Credit Default Swap comes in to play. In order to free up this cash Bank X sells the risk on the loan made to Company Z to another company, Company Q. Bank X agrees to pay Company Q a certain dollar amount per month in exchange for Company Q agreeing to cover the loan made to Company Z in the event that Company Z defaults. Now Bank X can loan/invest the cash that was previously tied up as the reserve amount for the loan to Company Z. Company Q now gets a new monthly income stream for “insuring” the loan made to Company Z. It’s a win for both entities up until the unfortunate event that Company Z defaults on the loan, at which point Company Q is now on the hook for the loan amount. The contract between Bank X and Company Q is called a Credit Default Swap and becomes a separate investment vehicle that can then be sold by Company Q.

Of course, this is an oversimplified example and credit default swaps are created against a large pool of loans as opposed to a single loan, further complicating the risk evaluation, which was and is part of the problem. Evidently CDSs have been around awhile and didn’t become especially problematic until they became so prevalent with mortgage backed securities (a large pool of mortgages instead of corporate loans). AIG was neck deep in mortgage based credit default swaps (AIG would be equivalent to “Company Q” in my example above).

Allegedly the financial world went ape-shit with CDSs over the last few years and all was well until people started missing their mortgage payments en masse. So here we are.

Wednesday, September 24, 2008

VeePee In A Bubble

I hate to keep harping on this but the red flags keep appearing with such alarming frequency that it warrants continued scrutiny. Sarah Palin. Despite her glowing achievements and unquestionable experience and qualifications (she can see Russia from her front porch for crying out loud!), she’s still too big a liability for the McCain campaign for normal media access. The press is understandably frustrated by this and in my opinion it should be cause for concern for all of us. After all, this is the potential VICE PRESIDENT of the United States.

Sarah is probably a fine person but this situation reminds me a lot of that old movie “Dave” where an average look-alike guy is called upon to stand in for the president who is in a coma. Much like Sarah, Dave requires a great deal of ‘handling’ in order to appear presidential. But unlike Sarah, Dave has some redeeming qualities and takes to the role fairly naturally.

I would assume that this kind of media protection is unprecedented. Last night I saw parts of a PBS special about Ronald Reagan and whatever you think of his presidency, it’s undeniable that he had charisma to spare and was a master of improvisational media interaction. He was articulate and quick on his feet. You got the impression that he genuinely understood the questions he was asked and his answers were appropriate and on topic. (Very Obama-like, if I may say so myself.)

Perhaps more importantly – and getting to my point – he actually enunciated his words and his grammar was respectable, educated sounding. Contrast that to Sarah Palin. Contrast that to Bush. The latter two have one particular verbal flaw in common that should, in and of itself, disqualify anyone from high office.

You can probably guess what I’m talking about. One word. Such an important word in times like these. It’s a dark word that strikes fear all across the land and it’s a word that deserves respect. Unfortunately, it’s a word than when mispronounced sounds so idiotic that it should embarrass the whole nation.

Feel me?

Say it with me now…George, this is for you…”NOO KYOO LER!”. “Newkewler?” Whatever.

“Iran cannot be allowed to obtain a newkewler weapon.”

No, Sarah! You – and anyone else that can’t make what little half-assed effort it would take to learn to say this and other words correctly – cannot be allowed to speak on public television representing this nation. And more importantly, if you lack the dignity and wherewithal to master your native language, you shouldn’t even be allowed into the running for public office. This should be a basic qualification.

A southern accent, I can live with. A little Boston non-rhoticity (think Haahvahd)? No problem. Some degree of geographical dialect is understandable, charming even, depending on your tastes. But some words deserve – no - demand some semblance of proper pronunciation. A president or vice president is more than just a role model, they are the face and voice of an entire nation. They are our first impression. Image counts. Articulation and clarity are paramount.

What happened the last time we elected a person who couldn’t pronounce NUCLEAR? How did that work out?

See what I’m getting at here? Let’s learn from our mistakes. What does it say about a person’s competency level when they have the temerity to butcher such a sensitive word in front of tens of millions of television viewers?

Nuclear. Noo-klee-er. Nothing difficult about that but it immediately adds twenty or so points to perceived IQ level. It doesn’t sound elitist, so stop with that already.

I’m not only disappointed with Sarah Palin over this oratorical fallacy but I think her group of handlers should be taken to task as well. They are the ones shaping and molding her image and this would be a quick and easy fix.

As it is, Sarah is in a protective bubble from media contact and if that doesn’t scare the hell out of you, I don’t know what will. Personally, hearing “noo-kyoo-ler” sends a few shivers down my spine.

What’s the implication here? She’s competent and qualified enough to possibly be in command of the most powerful nation on Earth, but…she has to be buffered from impromptu questions from the media.

Hmmm…

I caught McCain on sixty minutes the other night responding to the question “Do you think Sarah Palin is ready to step in as president of the United States?”

“Absolutely…absolutely…absolutely”, he chanted. He cannot seriously believe this. And if he does, that alone should be ample proof of his lack of judgment. She’s not even ready to ride the media bicycle without the training wheels. She can’t even say nuclear!

I submit that correct pronunciation of the word nuclear should be a mandatory qualification for nomination/election to any government office. Think of the misery we would have been spared had this stipulation been in place eight years ago. Imagine what future misery we could avoid.

Adding Palin to the republican ticket was a blatant and desperate political move that demonstrates McCain’s wreckless ambition to become president. Sure he’ll pick up a few votes as a result. But understand, the people who are now voting for John McCain because of Sarah Palin are the very same ones who would vote for Elmer Fudd as long as he was anti-choice and an NRA member.

I really have no problem with a hockey mom mispronouncing the word nuclear. But the president or vice president of my country? Come on. They should be held to a higher standard. John McCain is selfishly endangering the credibility and future of this country by having Palin on the ticket. She is absurdly inexperienced and requires a constant buffer from the media lest she open her mouth and say something stupid.

America, you should have higher expectations.

Thursday, September 18, 2008

Republicans Are Upset With Themselves

And they should be. Stumbled across this article here where congressional republicans are upset because they “they don’t feel like they understand the coherent strategy” of the Bush administration in regards to this financial debacle. Welcome to my world, congressional republicans. I don’t think anyone on mother Earth, including Bush, understands his strategy on anything; but I’m glad to see a trace of concern aimed at republicans by republicans. It’s heart-warming to a confused and concerned conservaliberal like myself.

Somehow, some way, the die hard and hopelessly indoctrinated right wingers among us are blaming – you guessed it – the democrats for this economic free fall that is shrinking our 401Ks and poo-pooing the FICO score of the United States government (which, by the way, will lead to all kinds of fun things in the future). I’m still new enough to politics for this to be surprising to me, so cut me some slack here. I’m still trying to adjust myself to the reality that politicians work from the standing assumption that the American public is a herd of blindfolded, tranquilized cattle. I’m becoming hip to the fact that some portion of us are indeed just that and another large portion are just blind, unquestioning, partisan loyalists. And then, perhaps worst of all, is another percentage who are indeed quite bright and informed but just can’t bring themselves to admit when they’ve been wrong and who can’t change their position despite being buried in a mountain of crushing evidence against them. Pride, you say? It’s an ugly thing.

No matter your political party you have to admit that McCain has one hell of a quandary in trying to get elected as a republican amidst the wreckage left in the wake of a republican white house and – until the last two years – a republican congress. Let’s be honest here, running your campaign on the theme of “change” and “reform” is kind of like admitting that you messed up and will promise to do better next time. Either McCain did or did not vote in tandem with Bush 90% of the time, and folks, it’s pretty gall darned (trying to avoid sounding ‘elitist’) obvious that he did. I mean, that’s on record, right? You can’t just blame all of the inconvenient facts on the liberal media. Maybe McCain was being a maverick that other 10% of the time but that’s a piss poor track record if I may say so myself, even by government standards.

McCain’s got a lot of experience as a politician, I’ll give him that. In fact, with all that time in office he’s had every chance in the world to make good decisions and take action to avoid history-making disasters like this one. But here we are, six of the last eight years dominated by republican leadership and a case history of lack of regard for fiscal responsibility and, arguably, a lack of regard for human life. The results speak for themselves, do they not?

McCain always seems a little uncomfortable to me, and who could blame him. If he ever was a maverick, and if there is an ounce of integrity and self-honesty that remains, transforming into the very thing he claims to be against has to be a painful undertaking. I kind of feel bad for him. But with all those houses I’m sure he’ll be fine.

The more America comes to her senses the worse McCain’s prospects become. It’s already starting now. The economic cattle prod is moving to and fro across the once green pastures and the herd is stirring. It’s high time for a little introspection on the part of republican politicians. I’ve let go of the na├»ve idea that anyone will take responsibility to what has become of America the apathetic. But I do know who has been running the show for eight years now, and so does anyone else who can read, write, and use the grown-ups potty. This does not – cannot - bode well for a republican campaign.

McCain is tripping all over himself this week and would do well to just take the rest of the week off and go camping or maybe moose hunting with his running mate, avoiding any form of media and any more opportunities to do or say anything stupid.

But even that wouldn’t postpone the inevitable.

Tuesday, September 2, 2008

Teenage Pregnancy – Now Endorsed By “Focus On The Family”

We interrupt our regularly scheduled series of essays to highlight another poignant example of the moral relativism of the religious right. Or maybe double standard would be a better way to put it. As the proverbial cat has been let out of the bag regarding Sarah Palin’s pregnant teenage daughter, evangelicals including Focus On The Family leader James Dobson have rallied to support her and reiterate their endorsement of the republican vp selection.

Apparently the imperative of moral perfection and abstinence only applies to those heathen liberals. Puritans all across the land of conservatism are taking heart that hey, at least she isn’t having an abortion.

Had this scenario played out the other way around with a democratic, pro-choice candidate, the wingers would have celebrated gleefully and gone after the poor guy/girl like rabid pit bulls. O’Reilly and Limbaugh foam out the mouth about this sort of thing and would be name calling and high-fiving like gloating five year olds. Ann Coulter would be shouting “Godless wh#re!” from the rooftops. It would just be further confirmation of the amoral, fornicating tendencies of the liberal left and it would be milked for every ounce of political influence that they could squeeze out of it.

But as it turns out, you get a hug and pat on the back when you happen to be on the republican ticket and a pro-lifer. Once again we see the cherry-picking morality and double standard of the right. We all know that a democrat would have been crucified under this scenario.

Personally I do not think it’s a big deal that this girl is pregnant and I give Obama credit for taking the position that he has. ‘Family is off limits and anyone on my staff that doesn’t respect that will be fired’, he says. Like any reasonable person he understands that we are all human and that sh#t happens. I like to quote the Bible in this kind of situation. “Judge not lest ye be judged”, I say. But then again, I’m not a conservative republican.