Classic
by digby
Tristero is busy composing right now, but he wanted me to share this gem with you all:
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"what digby sez..."
Month: December 2007
Complexity In The Pile
by digby
Atrios writes about the possibility of Jebbie Bush being involved in Big Shitpile this morning and says:
I too suspect that the last gasp of Big Shitpile involved finding marks in state and local governments.
I’ve wondered about this myself. Many of you will recall this debacle:
Robert Citron controlled several Orange County funds including the General Fund, the Investment Pool, and the treasury Commingled Pool. He sent out the county’s tax bills with rhyming slogans, such as “Taxes paid on time never draw fines.”[1] He won re-election seven times; in his last election victory, his opponent charged that his handsome gains were the result of risky betting.[1]
As controller of the various Orange County funds, Citron had taken a highly leveraged position using repurchase agreements (repos) and Floating Rate Notes (FRNs). The loss incurred by the usage of these financial instruments reached the amount of $2 billion and was caused by rising federal interest rates.[1]
The Orange County funds, managed by Citron, were worth $20 billion.[1] However, Citron went out to the repo market and leveraged the County Pools to amounts ranging from 158% to over 292%. To obtain this degree of leverage he used Treasury bonds as collateral. Profits of the fund were excessive for a period of time and Citron resorted to concealing the excess earnings. He plead guilty to improperly transferring securities from the Orange County General Fund to the Orange County treasury Commingled Pool.
The county’s finances were not suspect until February of 1994. The Federal Reserve Bank began to raise US interest rates, causing many securities in Orange County’s investment pools to fall in value. As a result, dealers were requesting extra margin payments from Orange County. These extra margin payments were funded in part by another bond issue made by Orange County; the size of that bond issue was $600 million. However, this fix proved to be only temporary. In December 1994, Credit Suisse First Boston (CSFB) realized what was going on and blocked the “rolling over” of $1.25 billion in repos (“rollover” essentially means issuing of another repo when the previous one ends, but, at the new prevailing interest rate). At that point Orange County was left with no recourse other than to file for bankruptcy.
This happened when California was still mired in the last housing downturn and the economy was weakly recovering from the recession of the early 90’s. It certainly wouldn’t surprise me if the cash strapped local and state governments of the past few years have been similarly dabbling in fancy financial, arcane instruments or making shaky “investments” upon the advice of some slick snake oil salesmen.
Let’s just say that we should all prepare ourselves for some fallout in the public sector.
And speaking of Big Shitpile, one of the big problems in this fetid mess is the complexity of it. Bankruptcy courts are having a hard time even figuring out who actually owns these properties that are in foreclosure. You can be sure that this is not the only case where “ownership” in American has become vague and obtuse. And there’s a reason for it.
Bill Moyers Journal featured an piece not long ago in which this issue was discussed in depth:
Exhibit #1: Habana Health Care Center in Tampa, Florida, purchased by a group of private equity firms in 2002. “Within months, the number of clinical registered nurses at the home was half of what it had been a year earlier…budgets for nursing supplies, resident activities and other services also fell…” “When regulators visited, they found malfunctioning fire doors, unhygienic kitchens, and a resident using a leg brace that was broken…” Basing its report on state government data, the TIMES says 15 at Habana died from what their families contend was negligent care. But when families sue, they often can’t find out even who owns the nursing homes because of the complex corporate structures private equity firms have created to cover their tracks. It’s this kind of capitalism that drives John Bogle up the wall, as you’re about to learn. John Bogle believes owners should be in charge — and accountable. He’s known and respected world-wide as the father of index funds and the founder of The Vanguard Group, one of the largest mutual funds anywhere, with over a trillion dollars in assets. FORTUNE magazine named him one of the four giants of the 20th century in the investment industry. TIME magazine called him one of the world’s 100 most powerful and influential people. Among his six books is this one THE BATTLE FOR THE SOUL OF CAPITALISM and more recently THE LITTLE BOOK OF COMMON SENSE INVESTING. In the current issue of DAEDALUS, the Journal of the American Academy of Arts and Sciences, he has a blockbuster of an essay on democracy in corporate America. You’ll find it on our Web site at pbs.org. I talked with John Bogle when he was in town earlier this week.
BILL MOYERS: This story in THE NEW YORK TIMES this week. What do you think when you read a story like that?
JOHN BOGLE: Well, first, it’s a national disgrace. Simply put. And there are some things that must be entrusted to government and some things that must be entrusted to private enterprise. And what we see there, at least in my judgment, is that we’ve taken medical care, healthcare and going from making it a profession in which the patient is the object of the game — preserving the patient “first do no harm” as Hippocrates would say or would have said and turn that into a business. And so, it’s a bottom line. I’ve often said we’re in a bottom line society. We’re measuring the wrong bottom line.
BILL MOYERS:What does it say to you that the real owners of the nursing home, the private investors have created this maze of smoke and mirrors that make it virtually impossible to find out who the owners really are?
JOHN BOGLE:Well, that’s so typical of much that’s going on in American finance, the way we structure these financial instruments, which are stock certificates or debt instruments. But it’s the same thing of the removal of your friendly, local neighborhood bank holding the mortgage and being able to work with you when you fall on hard times to some unnamed, often unknown, financial institution who couldn’t care less.
BILL MOYERS:These private equity firms that own these nursing homes wouldn’t even talk to THE NEW YORK TIMES. They won’t talk to reporters. I mean, there’s no accountability to the public.
JOHN BOGLE: There’s no accountability. And it’s wrong. It’s fundamentally a blight on our society.
BILL MOYERS:What does it say that big private money can operate so secretly, with so little accountability, that the people who are hurt by it, the residents in the nursing home have no recourse?
JOHN BOGLE:It says something very bad about American society. And you wonder — the first question anybody would have after reading the article — how in God’s name do they get away with that? Well, we have all these attorneys that are capable of devising complex instruments, and money managers who are capable of devising highly complex financial schemes. And there’s kind of no one to answer to the call of duty at the end of it.
The fallout from the Bush market is likely to be immense and just as with everything else of this era, it’s going to be nearly impossible to hold anybody responsible. Sweet.
Saturday Night At The Movies
by Dennis Hartley
Stocking Stuffers: Vintage reels for your Xmas creel
By Dennis Hartley
It’s that time of year- for the obligatory Top Ten lists. This week, I thought I would take a look back at some of the best “back catalog” DVD reissues of 2007.
We’ve had a fair amount of “wish list” fulfillment this year, with some rarities making their belated debut on DVD, amongst the inevitable “Definitive Remastering of the Previously Ultimate Restored and Remastered” versions (what’s an obsessive-compulsive/completist to do-buy that new box set, or pay the rent? Oh, the humanity!).
Here are my picks for the Top 10 DVD reissues of 2007 (in no particular ranking order):
Stanley Kubrick – Warner Home Video Directors Series
Straight Time
Ace in the Hole – Criterion Collection
Days of Heaven – Criterion Collection
O Lucky Man! (Two-Disc Special Edition)
Shoot the Moon
Jean De Florette / Manon of the Spring – 2 DVD Set
The Films of Kenneth Anger, Vol. 2
Hearts of Darkness – A Filmmaker’s Apocalypse
Film Noir Classic Collection, Vol. 4 
Honorable mentions (also released in 2007):If… 
Coming soon-As per usual, the releasing studios are saving some real choice stuff for year’s end, so look for these titles over the next few weeks…
December 11-UA 90th Anniversary Prestige Collection (90 Titles)
December 18- Blade Runner (Five-Disc Ultimate Collector’s Edition)
And now for some sneak previews! A few DVD gems to watch for in early 2008:
The Naked Prey – Criterion Collection
Next week: My Top 10 picks for best new films of 2007 (put on your boxing gloves!).
Update: My apologies to Dennis Hartley for mistakenly putting my name at the top of this post. I posted for him and added my name out of habit and in a hurry. digby
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Rudy’s Judy Problem
by digby
Matthews says today, (paraphrasing) “are we really writing off Rudy because of some billing records? Hillary Clinton’s got billing records up to ying yang and we haven’t figured that out yet.”
He was very depressed about these new revelations about his hero Rudy the manly, mans man. When a guest suggested that Rudy really couldn’t take credit for reducing all the crime in New York because his predecessor had successfully persuaded the state to provide money for 5,000 more police before he left office, Chris objected saying that it was true on a “symbolic level” whatever that means.
I assume that Chris doesn’t think this is any big deal either, being as Rudy’s a big city man, a man dripping with manliness who acts like a man when a man needs to be a man:
The revelations continue in the case of former Mayor Rudy Giuliani and the security detail for Judith Nathan, his one-time mistress who is now his wife.
Did Nathan misuse the city police detail that Giuliani assigned to protect her?
At the dawn of 2001, Nathan was Giuliani’s good friend and was receiving a blanket of police protection.
It was an unusual circumstance. His wife, first lady Donna Hanover, was still living at Gracie Mansion with their children.
But the mayor was unapologetic, citing security concerns.
“If you had any concern for people’s safety, you’d have the decency to leave it alone. You should be ashamed of yourselves,” the former mayor said back in 2001.
Six years later, presidential candidate Giuliani is facing questions about that security. A source involved with the mayor’s operations at the time tells CBS 2 HD that Nathan took flagrant advantage of that police car and driver.
The source says Nathan forced police to chauffeur her friends and family around the city — even when she wasn’t in the car.
That set off alarms with ethics watchdogs.
“The rules are clear, you can’t use city resources for private reasons,” said Gene Russianoff of the New York Public Interest Research Group. “And if you’re using a city car, a police driven car to chauffeur around relatives, unless they’re explicitly protected and their [sic] deemed to be the subject of potential security threats, it’s just wrong.”
Nathan’s detail was approved by the NYPD after a stranger made an unspecified threat to her. The commissioner at the time was Bernard Kerik, who was recently indicted on tax fraud charges in an unrelated matter.
“It wasn’t about her being the mayor’s girlfriend,” Kerik said. “The person spoke to her by name and made comments to her.”
On Friday, Giuliani avoided reporters’ questions about the security for Nathan back then. He told reporters off camera “we’ve explained it.”
Giuliani’s press secretary, Maria Comella, angrily denounced the use of an unnamed source in this story.
But she did not deny the assertion that Nathan used her police detail to ferry around friends and family.
And she repeated what Giuliani has said about reports questioning how his security detail was financed, saying, “This is nothing more than partisan politics aimed at the Republican front-runner.”
Ok, maybe there’s nothing wrong with that. Bernie Kerik, once more stepping into the breach, says that the security had nothing to do with her being the mayor’s mistress. I didn’t know that the NYPD offered personal security to every citizen who is threatened, but that’s a nice perk you New Yorkers have going there. (Here in LA we’re told to lock our doors and keep and eye out for anybody who looks suspicious.)
But I’m looking forward to hearing him explain how his girlfriend having the NYPD ferry her friends around New York is substantially different from this:
The state’s chief financial officer, Comptroller Alan Hevesi, resigned Friday and pleaded guilty to a felony for using state a employee as his wife’s chauffeur.
The plea effectively ended Hevesi’s 35-year political career and wrapped up an investigation by Albany County District Attorney David Soares, who had been presenting evidence about Hevesi to a grand jury.
Hevesi, 66, will serve no jail time. He agreed to pay a $5,000 fine and to not file any appeals. He also agreed not to take office on Jan. 1. The New York City Democrat had been re-elected in November despite amid the scandal.
[…]
In court, Hevesi acknowledged that he used a state employee to provide services for his wife that “could not be properly characterized as security” during 2005 and 2006.
Hevesi admitted to defrauding the government, a felony that carries a maximum penalty of 1 1/3 to four years in prison. He must submit DNA for the state’s databank and is scheduled to be sentenced Feb. 9.
In October, the bipartisan state Ethics Commission determined his use of state employees as chauffeurs violated state law.
Rudy is reported to be acting like his old, pissed-off self, refusing to answer questions, and his security is manhandling the reporters. He seems a little bit unnerved. I wonder why?
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