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    • Exchange Rates 101
      In light of the collapse of the Ruble I think it’s worth revisiting what controls exchange rates. Supply and Demand. Yeah, if you know something about the subject you’re probably shaking your head. Supply and Demand doesn’t set prices in many cases in the way that an Economics 101 course tells you. Such texts will [...]
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Wednesday News

Good Morning Conflucians!!

Barack Obama had an op-ed piece in yesterday’s WSJ. In it he says we need to balance regulation with businesses need to create jobs and, well, make lots of money. For example:

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

Note that this move is right as Republican’s take over the House and have increased numbers in the Senate, with momentum at their back. So as we see and have seen before, Obama is moving to compromise and move to the right even before debate begins on the topic. That is of course not surprising to us as we’ve noticed his right leanings from before the primaries. This problem is also noticed at Salon:

But on the day before House Republicans are expected to vote to repeal the Affordable Care Act, primarily on the specious grounds that it is a “job-killing” regulatory Frankenstein, the White House’s decision to suddenly be concerned about the right balance between public safety and commerce is strange and discomfiting. The big battles of the next two years are going to be all about defending the regulatory achievements of the Obama administration — healthcare reform and bank reform — in addition to ensuring that the Environmental Protection Agency isn’t hamstrung by Republican opposition as it carries out its Supreme Court mandate to treat greenhouse gases as pollutants under the Clean Air Act.

The Salon article goes on to make the case that this is a terrible fumble by Obama:

The strategy is unfathomable, and the notion that we must now seek to strike the “proper” balance — as if the proponents of greater regulation had been carrying the day in recent years — is just plain nutty.

Here we go again. Why do they keep being deluded with example after example, with signal after signal, with appointment after appointment? Deluded that Obama is left leaning? That he’s even liberal? Other than a few speeches, just words, what in his past would lead them to think this? Haven’t they noticed who funded him, who basically created him? Why do we keep having these perfect examples, perfect demonstrations of who Obama really is only to have places like Salon or HuffPo or others gasp, act surprised, and shake their heads thinking he’s made a mistake or is getting bad advice.

No, it’s not a mistake. It’s not nutty. It’s not a fumble. This is who Obama is. It’s who he has always been. How many more examples do you people need? Have you bothered to read the health care bill or noticed who wrote it? Did you not notice the tax cut for the very wealthy. Did you not notice the lack of regulations or strings attached with the financial bailouts. This stuff has been from day 1 people.


In related news, we’re going to see a new tone as the Republicans make noises like they want to repeal the health insurance lobbies hard fought victory represented by the Obamacare bill:

Obama issued a statement late Tuesday said he is “willing and eager to work with both Democrats and Republicans to improve the Affordable Care Act. But we can’t go backward.”

Republicans largely ignored an attempt by Democrats to rename the “Repealing the Job-Killing Health Care Law Act” to temper the language following the Arizona shooting this month that killed six and injured 13, including Rep. Gabrielle Giffords (D-Ariz.).

But Republicans now mainly refer to the “job-destroying” health care law.

“Obviously there are strong feelings on both sides of the bill and we expect the debate to ensue along policy lines,” said Rep. Eric Cantor (R-Va.), the majority leader. “We are going to be about decency here and engage and promote an active debate on policy.”

Of course what they want to do is repeal any good parts of the bill. And there may even be a few good parts stuck in there against the wishes of the lobbyists who wrote most of the bill. Republicans don’t really have the numbers to do anything in this round of kabuki theater. So this show is about setting the stage for later “compromises” and possible defunding efforts. Which sadly Obama will likely to all to wiling to go along with.


Another front in the battle Republicans are waging against the working class should be of no surprise. Obama set up Elizabeth Warren in a pseudo position just for the purpose of giving the Republicans something to knock down. And that process looks to be starting soon:

The chairman of a financial services oversight panel sent a letter to Elizabeth Warren, head of the Consumer Financial Protection Bureau, saying he is skeptical of the new bureau’s very existence and demanded details about how it will operate.

Rep. Randy Neugebauer (R-Texas), who chairs an oversight panel of the Financial Services Committee, said in the letter sent Tuesday that he thinks Warren is “tasked with executing a fatally flawed plan.”

He then asked Warren to answer three pages worth of questions about the new bureau. Some of the queries are operational, including how Warren will staff and organize the agency. Others are more broad, inviting her to explain how Congress should best perform its oversight role, given the body is not funded through the traditional appropriations process.

Neugenbauer also wants details on meetings Warren has held with the Securities and Exchange Commission, the Federal Reserve, and other financial regulatory agencies.

“What policies are in place to avoid potential duplicative, conflicting or overlapping rulemaking that are currently underway, but will ultimately be under the regulatory authority of the CFPB?” he asked.

He concludes asking Warren to explain how she plans to “avoid the kind of over-regulation that might stifle innovation.”

And so it begins. The only hope we have of some sanity in consumer protection and financial regulations is about to be taken out. And it appears to have been planned this way from the beginning.


As mentioned last night, Joe Lieberman has announced he won’t run for a fifth term. Which means he’ll server two more years. Does that mean he’s planning on running for President? Does that mean he’ll join whoever the Republican party bosses select for their presidential candidate on the ticket as VP? Or maybe he’ll just head over to K-street and collect is rewards.

Also mentioned last night, Sargent Shriver died at age 95. And Don Kirshner died at age 77.


In strange political news, “Baby Doc” Duvalier decided to return to Haiti – never a good idea if you stole nearly 1B. And now he has been arrested and charged with corruption:

Jean-Claude “Baby Doc” Duvalier was charged with corruption and the theft of his country’s meagre funds last night after the former Haitian dictator was hauled before a judge in Port-au-Prince

Two days after his return to the country he left following a brutal 15-year rule, a noisy crowd of his supporters protested outside the state prosecutor’s office while he was questioned over accusations that he stole public funds and committed human rights abuses after taking over as president from his father in 1971.

“His fate is now in the hands of the investigating judge. We have brought charges against him,” said Port-au-Prince’s chief prosecutor, Aristidas Auguste.

He said his office had filed charges against Duvalier, 59, of corruption, theft, misappropriation of funds and other alleged crimes committed during his period in power.

What was he thinking?


After Goldman Sachs invested gobs of money in Facebook with the intent to offer investment opportunities here and abroad, they’ve decided not here. Mostly to skirt around some SEC requirements. You know, being the upstanding corporate citizens that they are:

There was another question about the planned Facebook stock offering that went beyond whether the social media leader is a good investment now or if it’s overpriced. A more serious issue was how investment banker Goldman Sachs was structuring a “private placement” deal to skirt U.S. securities law.

Now it seems Goldman Sachs has decided that “intense media attention” no longer made it worthwhile to go forward with offering a piece of Facebook in the U.S.

Does that mean the deal is over? Does it mean that Facebook will do a deal in the U.S. with proper financial disclosure?

Unfortunately, neither. Instead, the Wall Street Journal is reporting today that Facebook will go ahead with its private stock sale but exclude U.S. investors from the deal.

“In a statement provided to The Wall Street Journal, Goldman said the move came after officials at the New York securities firm ‘concluded the level of media attention might not be consistent with the proper completion of a U.S. private placement under U.S. law,’ ” Aaron Lucchetti reports for the Wall Street Journal.

Under the planned offering, only wealthy clients of the investment firm would have been allowed to purchase a piece of Facebook. The arrangement sounded fairly complex; but basically, the idea was to put all the Goldman investors into a single fund and then count that fund as “one” investor. Why? By doing so, they would get around required public financial disclosures for any company with 500 or more investors. (There was more money coming in from another investment firm in Russia.)

Money for nothing and the clicks are free. Yea, I just made that up. TM by DT. So we the taxpayers make all this possible because they have our money backing them up allowing them to make riskier deals, and the deals they make are not just risky, but they’re fashioned only around the wealthiest clients. And the funny part here, it looks like it’s going to make suckers and losers out of these wealthy clients because they may be making yet another bubble with what they’re doing, that will just pop down the road. Time will tell.

And speaking of Facebook, they were planning on opening up users phone numbers and addresses to third parties, but have backed down, for now, after some complaints:

Just before the weekend, Facebook announced that it had expanded the information users are able to share with external websites and applications, to include home addresses and mobile phone numbers.

This enables developers of e.g. an ecommerce site to more easily fetch the address and phone number of a potential customer to streamline the checkout process.

For the record: users needed to explicitly opt to share this data before any application or website could access it, and they were evidently not able to share their friends’ addresses or mobile phone numbers with applications.

Sure enough, the dialog box (see below) wasn’t super clear about that, so Facebook was unequivocally opening itself up for a new sh*tshorm to hit the deck.

This morning, Facebook announced that it has temporarily disabled the sharing feature, looking to relaunch it in the next few weeks after making some changes.

Facebook dubs these future changes ‘improvements’ repeatedly, but of course the company is responding to the wave of criticism it has received for quietly releasing the new sharing feature, on a Friday evening no less.

I suspect they’ll enable it. But perhaps just add a bit more complexity to the privacy settings systems so there is an additional way to opt out. If you can figure it out of course.

That’s a bit of what’s in the news this morning. Chime in with what you’re reading.

Wednesday News

Good Morning Conflucians!!!

First up in weird news, in case you’re not already getting that apocalyptic vibe from earlier this week, more birds have suddenly died, this time not in Arkansas, but in Louisiana:

Birds dropping dead from the skies and rivers flowing with tens of thousands of dead fish sounds like a cheesy Hollywood movie about the Apocalypse. Or the ravings of a Revelation-obsessed street preacher.

But residents of several US states are coping with the reality of mystery mass wildlife deaths, which have left officials scratching their heads and jumpy members of the public joking (nervously) about the end of the world.

Today it emerged that about 500 red-winged blackbirds and starlings had been found dead in Louisiana. Their tiny corpses littered a short stretch of highway near the city of Labarre after apparently falling dead from the sky.

That would be spooky enough. But the Louisiana bird die-off came just a few days after up to 5,000 blackbirds fell to earth in neighbouring Arkansas in the small town of Beebe. Residents there had reported stumbling upon the bodies littering the ground and even being hit by them as they fell. One woman said she was struck while walking a dog. Another avian corpse bounced off a police car.

In even more grim news, anglers and other members of the public reported that more than 80,000 drum fish had suddenly died in the state’s Arkansas river, about 100 miles west of Beebe. The silvery bodies of the fish floated in the river and washed up on its sides having died at roughly the same time. In another incident, hundreds of miles away on the Maryland coast of Chesapeake Bay, tens of thousands of dead fish also washed up on the shore.

Yea, that’s what I said. WTF? I’ve got rosary beads, incense, a statue of Sheba, among a few other things. What are you holding onto for dear life? What was the name of the other horseman anyway?


In a related news, Goldman Sachs and some Russian group invested nearly 1/2 billion in Facebook. That’s right, those two know everything there is to know about a whole hell of a lot of people now. Wonder if their joint bank account number is 666 by any chance. Note to self, get more statues of other religious figures. Here’s some coverage:

The “great vampire squid” of finance, Goldman Sachs, has invested $450 million in the emerging great vampire squid of cyberspace, Facebook. As the New York Times’ DealBook reported, the deal is gives Goldman a leg up on the huge fees investment banks will get when the social-networking company eventually sells shares to the public. And as the Times and Wall Street Journal also report, Goldman will also haul in huge fees from those clients who want to invest themselves.

Meanwhile, Facebook gets the capital to keep buying talent and startups, and to fuel its expansion in all kinds of other ways — and it gets to sell stock in what amounts to a shadow stock market that’s growing faster than regulators seem willing or able to understand, much less deal with.

This looks like a better deal for Facebook than its investor, putting Facebook’s value at $50 billion, which makes sense in today’s increasingly bubble-like market. Silicon Valley is going a bit wild again– not as crazy as the late 1990s, mind you, but there’s a froth element to the local economy.

Given a deal of this size and importance, there should be some SEC scrutiny. Yea right. But some report that there might be:

Goldman Sachs Group Inc.’s plan to offer clients up to $1.5 billion in Facebook Inc. equity may invite U.S. regulators to take a closer look at whether the owner of the world’s most popular social-networking site is circumventing disclosure rules, securities lawyers said.

The Securities and Exchange Commission, whose rules require any company with more than 499 investors to disclose financial information, is already scrutinizing the market for trading shares of closely held companies including Facebook, according to a person familiar with the inquiry, who declined to be identified because the matter isn’t public

Goldman Sachs invested $450 million in Facebook and is planning to create a special purpose vehicle for its clients to make additional investments worth as much as $1.5 billion, according to two people familiar with the matter who spoke on condition of anonymity because the deal is private. Some private companies avoid crossing the disclosure threshold when investors’ funds are channeled through a single entity, such as a private equity firm or hedge fund.

“The real question is, what are the details of this special purpose vehicle?” said James Angel, a finance professor at Georgetown University’s business school in Washington. If the investment is designed to circumvent the rule, “the SEC should be looking very closely at it.”

Good thing we have a Democratic president that is looking out for us and will do what’s right. Oh wait, no we don’t, she was tossed under the bus. Instead we have an empty suit actually owned by Goldman Sachs. Oh yea. Why is this feeling even more biblical all of the sudden? Maybe we could have some leaks about all these things, about how Goldman Sachs helped fund an unknown candidate, about the Banks and their shady deals, about corruption in government at many levels. No, instead we get none of those useful leaks, but instead leaks that lead us to more wars in the middle east. Nice distraction.


Let’s see what our grand congress has in store for us this session. First we have this from Slate about how the Dems sound like Repubs and the Repubs sound like Dems:

The parties have switched not only offices but arguments. Democratic Rep. Debbie Wasserman Schultz said Republicans were going to spend “countless hours trying to repeal health care reform rather than focusing on jobs, the economy and deficit reduction. Every minute wasted on trying to repeal health care reform fruitlessly is one less minute the Republicans will spend on job creation and turning this economy around.” If that sentiment sounds familiar, it’s because it was a Republican refrain during the House’s debate over health care in 2009 and 2010.

Sometimes this required the Democrats to contradict themselves. They complained that the GOP House effort to repeal health care was a meaningless show because the Democratic Senate will never allow such a measure to proceed. But when defending their record on economic issues from the last session, they pointed to bills they passed that they knew would never get past a Republican filibuster in the Senate.

Democrats also complained that the Republicans were adding to the deficit and have shut them out of the legislative process. Next week, when the House votes to repeal health care (or, “job-killing health care,” as they call it), Democrats will not be allowed to add amendments. They were also not allowed to participate in writing the rules under which the measure will be considered. Democrats did this kind of thing when they were in power, of course, but they say Republicans had pledged to be more open and transparent.

Oh dear. WaPo has more coverage on the upcoming battle over health care insurance bailout. Expect this to be a lot of noise and distraction for a while. Such theater. A Republican bill written by the health insurance lobby where the Repubs (and insurance companies) pretend to hate it and Dems (sadly actually) like it. And the working class are screwed again. As usual.


It looks like there will be some turnover from both the WH staff and the VP staff. There’s some noise about Gibbs possibly leaving. And now we’re hearing that Biden’s CoS is stepping down. Along with that, LATimes has a few more rumors:

The White House staff reshuffle continued Tuesday with Vice President Joe Biden announcing that his chief of staff is leaving, while speculation swirled that the president may appoint a well-connected Chicagoan to a top post.

Biden’s chief of staff, Ron Klain, is resigning to become president of Case Holdings, the holding company of AOL cofounder Steve Case. Over the last two years, Klain helped position Biden as an influential figure in the White House while assisting in the confirmation of a pair of Supreme Court nominees: Sonia Sotomayor and Elena Kagan.

His departure surprised even some members of Biden’s staff. Klain had been mentioned as a possible candidate for President Obama’s chief of staff, but the president may be opting for someone with a higher profile.

After Rahm Emanuel quit to run for mayor of Chicago, Obama appointed longtime aide Peter Rouse to the chief of staff job on an interim basis.

Now, Obama is considering William Daley for a senior position, possibly chief of staff. Daley is the brother of outgoing Chicago Mayor Richard M. Daley, and he served as Commerce secretary under President Clinton.

As the great David Bowie once said: “Ch-ch-ch-ch-Changes.” Something tells me none of these changes are going to be for the better. Any bets?


In some rather funny, in a macabre sort of way, news, a murderer was found guilty in part because of his google search history:

Julie Jensen died as a result of ethylene glycol in her system, an ingredient found in antifreeze. On the morning of her death, someone attempted to “double-delete” (apparently unsuccessfully) the computer’s browsing history, which included a search for “ethylene glycol poisoning.”

Jensen was found guilty of first-degree homicide in 2008 based on this and other incriminating evidence, including a letter written by his wife before her death. He appealed the conviction, arguing for one that the warrantless police search of his computer violated his Fourth Amendment rights. The Wisconsin Court of Appeals did not agree as he had signed a consent form.

As the article humorously mentions, does that mean we’ll be getting a CSI Internet Division spin-off?


In sort of related news, CA Supreme Court ruled that police can search your cell phone without a warrant when you’re under arrest:

The California Supreme Court ruled Monday that police do not need a warrant to search a cell phone carried by someone under arrest.

The justices determined a Ventura County deputy had the right to conduct a warrantless search of the text messages of a man he had arrested on suspicion of participating in a drug deal.

The state court ruled 5-2 that U.S. Supreme Court precedent affirms that police can search items found on defendants when they are arrested.

I understand this in terms of searching your pockets, etc. But the problem with this ruling is one of not keeping up with technology. With smartphones these says, searching what’s in your very powerful large computer (in a small space) that can include pretty much every important document found in your house, bank, accountant, etc. That is, all of your personal records of note could actually be on your phone. This can also provide full access to all of your email, all of your social media accounts, and all of your history of communication of every sort for years. It’s possible that your smartphone could easily be the equivalent of raiding your home, your lawyers office, your doctors office, etc. I hope this issue is revisited with those issues in mind sometime soon. In the mean time, I’ll suggest some privacy protection ideas in a later post.

In other court news, CA Prop 8 is heading directly to the state Supreme Court and bypassing the 9th circuit (more accurately, the 9th circuit just punted):

Instead of resolving a thorny “standing” issue itself, and thus launching the appeal on its way to the United States Supreme Court, a three-judge panel instead first asked the Supreme Court of California for guidance on whether the private litigants who appealed the August 2010 ruling striking down the same-sex marriage ban had the legal right to do so.

The 9th Circuit just acted, to be sure, but not even the most conservative legal scholar can dare call this an instance of “judicial activism.” Instead, the tactical punt from one San Francisco court to another is consistent with a centuries-old judicial concept: never decide what you don’t really have to decide, especially when you have a plausible excuse for not deciding it. Here, the 9th Circuit blamed the not-completely-unexpected detour on the lack of “controlling state precedent” on the question of what to do with an appeal where, as here, both the sitting governor (the since-departed Arnold Schwarzenegger) and the sitting attorney general (the since made-governor Jerry Brown) refused to carry it out.

By diverting the case away from the federal courts and toward the state supreme court, by asking for clarification of state law by and from the state’s highest court, the 9th Circuit has almost certainly delayed a substantive ruling on the merits of the case for at least a year and likely longer. The standing issue will likely have to be briefed all over again before the state high court, and a new oral argument date will likely have to be set, and then a new vigil will begin for people all over the world who are waiting for final word from the courts on whether same-sex couples have a constitutional right to marry.  All of this will take six to nine months, at least.


In news of the “is that news?” department, many people are obsessing and perplexed that Sarah Palin re-tweeted a pro DADT tweet. Yes, you got that right, just by Palin re-tweeting something (with no extra quote), people are actually spending time trying to figure out what she might have meant. I kid you not:

Online pundits are trying to interpret Sarah Palin’s stance on “don’t ask, don’t tell” after she echoed an Internet post by a conservative lesbian commentator who slammed the opposition to the policy’s repeal.

Tammy Bruce wrote Monday on Twitter that “this hypocrisy is just truly too much. Enuf already – the more someone complains about the homos the more we should look under their bed.”

Palin’s retweet of the post raised questions about her own stance on the military’s policy, which was repealed by Congress late last year. The former 2008 Republican vice presidential nominee hasn’t spoken about the policy except to say last February that she was surprised at President Barack Obama’s support for a repeal because it was not a priority at the time.

Palin representatives did not immediately respond to requests for comment Tuesday, but Politico said the retweet is a hint that Palin supports the repeal. Gawker said Palin is not “in the context of her party, rabidly homophobic,” then wondered if perhaps she didn’t understand the tweet or pushed the wrong button.

Now our pundits are reading tea leaves. Oh wait, that’s what they’ve always done. They really should get out more.

That’s a bit of what’s in the news. Chime in with what you’re reading.

Was Obama Wall Street’s BIGGEST Short?

Blankfein (left) and Jamie Dimon (center) at the White House, March 2009

You gotta love Lloyd Blankfein for finally telling it like it is.  Wall Street thinks we’re all suckers.  If you don’t specifically ask whether a security or CDO is crap, shitty or junk, they have no obligation to tell you.  That’s not their job.  They just sell the stuff.  It’s the 2010 version of “I just take orders”.  There’s got to be another Milgram experiment just waiting for a post doc in yesterday’s hearings.

Here are some gems from Lloyd:

Levin asked Blankfein if Goldman has to disclose to investors in securities it sells that the firm plans to take and keep the short side of the transaction.

“I don’t think we have to tell them,” the chief executive replied. In addition, he said that when underwriting a securities offering, Goldman has an obligation to conduct thorough due diligence and provide full disclosure of the assets and risks involved in the deal.

Mortgage-related securities that Goldman underwrote and sold delivered the specific exposure that clients wanted, Blankfein explained. “There are a lot of opinions about how a security will perform against the market it’s in.

“Investors we’re dealing with on the long or the short side know what they want,” he continued. “If they ask the salesperson their opinion, they have a duty of honesty. But we’re selling securities all the time that are weak. The same securities that were the subject of those comments can probably be bought today for pennies on the dollar.”

and this from the NY Times:

Mr. Blankfein was asked repeatedly whether Goldman sold securities that it also bet against, and whether Goldman treated those clients properly.

“You say betting against,” Mr. Blankfein said in a lengthy exchange. But he said the people who were coming to Goldman for risk in the housing market got just that: exposure to the housing market. “The unfortunate thing,” he said, “is that the housing market went south very quickly.”

Senator Levin pressed Mr. Blankfein again on whether the his customers should know what Goldman workers think of deals they are selling, and Mr. Blankfein reiterated his position that sophisticated investors should be allowed to buy what they want.

Mr. Blankfein was also pressed on the deal at the center of the S.E.C. case. He said the investment was not meant to fail, as the S.E.C. claims, and in fact, that the deal was a success, in that it conveyed “risk that people wanted to have, and in a market that’s not a failure.”

Risk.  That’s what Goldman Sachs was selling.  It was all wrapped up in a pretty fiction of established Wall Street investment houses, where bankers arrive at their offices in chauffered limos and eat in luxurious dining facilities and work out in gold plated gyms.  It all looks very clubby.  But the reality was that these people were running a giant Monte Carlo casino using the hard earned retirement funds of carpenters and other working class people.

Behind the plush digs and $600 suits and cottages on The Pond are a bunch of guys with serious gambling addictions.

Sometime back in 2006 as housing prices peaked and started to decline some of them must have started to get a little concerned.  In fact, Michael Lewis, who wrote The Big Short, says that outsiders looking in had the bankers’ number in 2003-2004.  It was March 2007 when the money started to drain away in earnest.

So, when did Wall Street decide to short the presidential election?

Think about it:  Many of the people on Wall Street should be at Gambler’s Anonymous.  in 2007, they were about to lose everything if they couldn’t find suckers to play their games and cover their bets.  Politics could have had a big influence on how much of a hit they actually had to take.  Charlie Ledley, the garage-band head fund guy with a conscience who actually tried to explain the bets to the SEC, was concerned with his own short positions.  He naively thought that if the federal government came to the rescue of homeowners, his CDS’s would be worthless.  As it turned out, the government bailed out the banks instead so Charlie made out big.  The CDO’s are still crap.

But if you are a Wall Street banker, you have to account for all kinds of possibilities.  Picture the following three scenarios:

1.) A Republican wins.  His party saw what happened during the last financial meltdown 80 years ago.  That New Deal thing was a disaster for his party.  He’s not going to make that mistake.  Screw Keynes, enter The Great Depression 2.0.  Oddly, Wall Street is probably not too keen on this idea.  You can’t play the game if you don’t have easy marks on the other side of the bet.  Depressions severely depress the number of easy marks.

2.) Democrat #1 wins.  But she’s too much of a New Dealer type.  She’s got mortgage bailout written all over her.  That would mean regulation and mortgages will be adjusted and bankers will have to take a loss.  That’s too much reality.  She’s like frickin’ rehab.  And besides, there’s always that remote possibility that the people who took out “liar’s loans” will suddenly have stupendous wage increases just in the nick of time when their 2 year teaser rate is up.  It could happen.  So, no, Democrat #1 is out.

3.) Democrat #2 is narcissistic one-trick pony with a pregnant mistress.  Nominating him means the Republican wins.  Moving on.

4.) Democrat #3.  Ooooo, this one is intriguing.  Did Wall Street court him or did he court Wall Street?  Recklessly ambitious type.  Muy simpatico.  He certainly looks like he could fit into Wall Street.  He wants to “form multi-disciplinary task forces to re-engineer our core processes so that we’re a world class organization”.  He speaks their language.  It’s meaningless, of course, and they all know that way down deep inside.  It’s code.  He’ll scratch their backs if they scratch his, to the tune of $900K in campaign contributions from Goldman Sachs employees alone.  With Dem #3, it will be an exciting spin of the wheel.  They’ll get close to the edge, probably a little too close for comfort, but in the end, they’ll be able to walk away with big profits, big bonuses and they can keep on playing.  This guy is an enabler.  Double down.

Obama sure made a lot of campaign money from Wall Street.  His small donors accounted for something like 30% of his campaign stash.  You don’t get a cool billion to run for president without making a lot of banker friends.  It was their biggest short.

In light of that very real possibility, can we on the left finally dispense with the idea that Obama was the Change! agent?  Lots of money will get you a very good PR firm with all of the marketing, astroturfing and social engineering you can eat.  Maybe he’s not the civil rights hero, politically brilliant, 11 dimensional chess playing, post partisan Messiah everyone thought he was.  Maybe he was just the best hedge Wall Street ever made and nothing more than that.  You can stop pinning your hopes and dreams on him.

As Lloyd would say, “the investment was not meant to fail, as the S.E.C. claims, and in fact, that the deal was a success, in that it conveyed “risk that people wanted to have, and in a market that’s not a failure.””

The Obots bought it and made suckers of us all.

Extra: Michael Lewis has a lengthy piece in Slate where he plays his tiny violin for the bond market traders who are suddenly getting blamed for everything they do.

Simon Johnson at BaselineScenario.com has a piece about how some parts of Europe have slipped into “emerging market” status overnight and how the rest of the world is turning their eyes to Obama for comfort and guidance to stem the ensuing panic.  Good luck with that.

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