Weekend Economists' Hostile Takeover of "Car Talk" April 23-25, 2010

[Demeter]

Well, maybe not so much hostile as "the sincerest form of flattery".

We are the Children of the Automobile. We of the Boomer generation were usually raised with instant transportation, both as a daily event, and on vacations with interminable car trips. Some of us may even have been conceived or born in an automobile. It is the salient feature of the American Way of Life. That and supermarkets.

Those of us not blessed with hundreds of horsepower were to be pitied. The dream of every young person was to get his/her first car, a measure of independence and freedom that only adulthood brings.

The 20th century United States, thanks to the insight of Henry Ford, who reasoned that he would sell a lot more cars if his own employees could afford one, was built on the automobile. Technology in all areas of manufacturing, basic business practices, marketing schemes, all got a great boost from autos.

And in the 21st century, the shadow banking system and the financiers brought this great engine to its knees. We will look at the economy through the windscreen of the motor vehicle in all its manifest forms.

Please add your stories, gleanings, and opinions--this thread is a cooperative venture!

http://www.youtube.com/watch?v=SJYXUkqpA40

[Tansy_Gold]

1. What we boomers came of age with

It was more than transportation -- it was our culture. And not just pop culture. The automobile industry, with good-paying union jobs in the assembly plants and the support industries, fueled our prosperity. Everything from manufacturing brake pads and radial tires to highway construction to the mushrooming of suburbs and even exurbs, the credit and/or blame goes to the American automobile.

We grew up with it, we passed it along to our children, and we expected it to make our retirements truly golden.

Something happened.




http://www.youtube.com/watch?v=o_FSicQWimU

[Demeter]

2. We have 4 fewer banks in Illinois tonight--RIP

Amcore Bank, National Association, Rockford, Illinois, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Harris National Association, Chicago, Illinois, to assume all of the deposits of Amcore Bank, National Association.

The 58 branches of Amcore Bank, National Association will reopen on Saturday as branches of Harris National Association...As of December 31, 2009, Amcore Bank, National Association had approximately $3.8 billion in total assets and $3.4 billion in total deposits. Harris National Association will pay the FDIC a premium of 0.01 percent to assume all of the deposits of Amcore Bank, National Association. In addition to assuming all of the deposits of the failed bank, Harris National Association agreed to purchase essentially all of the assets...The FDIC and Harris National Association entered into a loss-share transaction on $2.0 billion of Amcore Bank, National Association's assets. Harris National Association will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $220.3 million. Harris National Association's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Amcore Bank, National Association is the 51st FDIC-insured institution to fail in the nation this year, and the fourth in Illinois. The last FDIC-insured institution closed in the state was Bank of Illinois, Normal, on March 3, 2010.

Broadway Bank, Chicago, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation — Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of Broadway Bank.

The four branches of Broadway Bank will reopen on Saturday as branches of MB Financial Bank, National Association...As of December 31, 2009, Broadway Bank had approximately $1.2 billion in total assets and $1.1 billion in total deposits. MB Financial Bank, National Association did not pay the FDIC a premium for the deposits of Broadway Bank. In addition to assuming all of the deposits of the failed bank, MB Financial Bank, National Association agreed to purchase essentially all of the assets.

The FDIC and MB Financial Bank, National Association entered into a loss-share transaction on $878.4 million of Broadway Bank's assets. MB Financial Bank, National Association will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $394.3 million. MB Financial Bank, National Association's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Broadway Bank is the 52nd FDIC-insured institution to fail in the nation this year, and the fifth in Illinois.

Citizens Bank&Trust Company of Chicago, Chicago, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation — Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Republic Bank of Chicago, Oak Brook, Illinois, to assume all of the deposits of Citizens Bank&Trust Company of Chicago.

The sole branch of Citizens Bank&Trust Company of Chicago will reopen on Saturday as a branch of Republic Bank of Chicago...As of December 31, 2009, Citizens Bank&Trust Company of Chicago had approximately $77.3 million in total assets and $74.5 million in total deposits. Republic Bank of Chicago will pay the FDIC a premium of 0.00013 percent to assume all of the deposits of Citizens Bank&Trust Company of Chicago. The FDIC as receiver will retain most of the assets from Citizens Bank&Trust Company of Chicago for later disposition...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $20.9 million. Republic Bank of Chicago's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Citizens Bank&Trust Company of Chicago is the 53rd FDIC-insured institution to fail in the nation this year, and the sixth in Illinois.

New Century Bank, Chicago, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation — Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with MB Financial Bank, National Association, Chicago, Illinois, to assume all of the deposits of New Century Bank.

The three branches of New Century Bank will reopen on Saturday as branches of MB Financial Bank, National Association...As of December 31, 2009, New Century Bank had approximately $485.6 million in total assets and $492.0 million in total deposits. MB Financial Bank, National Association did not pay the FDIC a premium for the deposits of New Century Bank. In addition to assuming all of the deposits of the failed bank, MB Financial Bank, National Association agreed to purchase essentially all of the assets.

The FDIC and MB Financial Bank, National Association entered into a loss-share transaction on $429.1 million of New Century Bank's assets. MB Financial Bank, National Association will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $125.3 million. MB Financial Bank, National Association's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. New Century Bank is the 54th FDIC-insured institution to fail in the nation this year, and the seventh in Illinois.

[burf]

11. It looks as though the earth is swallowing

up the banks in Illinois.

On Friday, April 23, 2010, Wheatland Bank, Naperville, IL was closed by the Illinois Department of Financial and Professional Regulation - Division of Banking, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, April 23, 2010, Peotone Bank and Trust Company, Peotone, IL was closed by the Illinois Department of Financial and Professional Regulation, Division of Banking, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

On Friday, April 23, 2010, Lincoln Park Savings Bank, Chicago, IL was closed by the Illinois Department of Financial and Professional Regulation, Division of Banking, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

[Demeter]

13. And Another 3 Banks in Illinois Bite the Dust

Wheatland Bank, Naperville, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Wheaton Bank & Trust, Wheaton, Illinois, to assume all of the deposits of Wheatland Bank.

The sole branch of Wheatland Bank will reopen on Saturday as a branch of Wheaton Bank & Trust...As of December 31, 2009, Wheatland Bank had approximately $437.2 million in total assets and $438.5 million in total deposits. Wheaton Bank & Trust will pay the FDIC a premium of 0.4 percent to assume all of the deposits of Wheatland Bank. In addition to assuming all of the deposits of the failed bank, Wheaton Bank & Trust agreed to purchase essentially all of the assets.

The FDIC and Wheaton Bank & Trust entered into a loss-share transaction on $300.2 million of Wheatland Bank's assets. Wheaton Bank & Trust will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $133.0 million. Wheaton Bank & Trust's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Wheatland Bank is the 57th FDIC-insured institution to fail in the nation this year, and the tenth in Illinois.

Peotone Bank and Trust Company, Peotone, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Midwest Bank, Itasca, Illinois, to assume all of the deposits of Peotone Bank and Trust Company.

The two branches of Peotone Bank and Trust Company will reopen on Saturday as branches of First Midwest Bank...As of December 31, 2009, Peotone Bank and Trust Company had approximately $130.2 million in total assets and $127.0 million in total deposits. First Midwest Bank will pay the FDIC a premium of 1.0 percent to assume all of the deposits of Peotone Bank and Trust Company. In addition to assuming all of the deposits of the failed bank, First Midwest Bank agreed to purchase essentially all of the assets.

The FDIC and First Midwest Bank entered into a loss-share transaction on $57.5 million of Peotone Bank and Trust Company's assets. First Midwest Bank will share in the losses on the asset pools covered under the loss-share agreement.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.7 million. First Midwest Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Peotone Bank and Trust Company is the 56th FDIC-insured institution to fail in the nation this year, and the ninth in Illinois.

Lincoln Park Savings Bank, Chicago, Illinois, was closed today by the Illinois Department of Financial and Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Northbrook Bank and Trust Company, Northbrook, Illinois, to assume all of the deposits of Lincoln Park Savings Bank.

The four branches of Lincoln Park Savings Bank will reopen on Saturday as branches of Northbrook Bank and Trust Company...As of December 31, 2009, Lincoln Park Savings Bank had approximately $199.9 million in total assets and $171.5 million in total deposits. Northbrook Bank and Trust Company will pay the FDIC a premium of 0.4 percent to assume all of the deposits of Lincoln Park Savings Bank. In addition to assuming all of the deposits of the failed bank, Northbrook Bank and Trust Company agreed to purchase essentially all of the assets.

The FDIC and Northbrook Bank and Trust Company entered into a loss-share transaction on $141.5 million of Lincoln Park Savings Bank's assets. Northbrook Bank and Trust Company will share in the losses on the asset pools covered under the loss-share agreement...The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $48.4 million. Northbrook Bank and Trust Company's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to all alternatives. Lincoln Park Savings Bank is the 55th FDIC-insured institution to fail in the nation this year, and the eighth in Illinois.

[Demeter]

27. Total Damages to the Public: $973.9 Million

Assuming no further closings after 9PM Eastern....

[Demeter]

44. Candidate for Obama's old US Senate seat undaunted

http://news.yahoo.com/s/ap/20100424/ap_on_bi_ge/us_illinois_senate_troubled_bank

Illinois Treasurer Alexi Giannoulias appeared undaunted by the shuttering of his family's bank, saying he would continue his bid to keep President Barack Obama's old Senate seat in Democratic hands with renewed purpose.

"My campaign for the United States Senate goes forward with a renewed determination to turn Illinois' economy around and to fix what's broken in Washington, D.C.," he told reporters late Friday, just hours after regulators shut down Broadway Bank.

The closure was expected but still presents an election challenge for Giannoulias, who worked as a senior loan officer at the bank until he was elected treasurer four years ago.

Broadway Bank, which was heavy into real estate loans and lost $75 million last year, had been given until Monday to raise about $85 million in new capital, but the Federal Deposit Insurance Corp. announced at the close of business Friday that Broadway was among seven Illinois banks that had failed.

Giannoulias, 34, has tried to take some of the political and public relations sting out of the collapse, acknowledging that the bank was likely to fail but blaming the bad economy. He said the business was financially healthy when he left four years ago.

Late Friday, Giannoulias' voice broke as he talked about the collapse and vowed to work harder in his bid to win the Senate race. He said he knows first hand the impact that the economy has had on people and businesses in Illinois.

"There was no bailout for my father's bank. It is an incredibly sad and heartbreaking day for me and for my family. This bank has helped thousands of people when no one else would give them a chance," he said.

His Republican opponent, U.S. Rep. Mark Kirk, has made the bank's finances a central issue in their Senate race.

"While years of risky lending schemes, hot money investments and loans to organized crime led to today's failure, it's a sad day for Broadway Bank employees who may lose their jobs due to Mr. Giannoulias' reckless business practices," Kirk spokeswoman Kirsten Kukowski said in a statement Friday night.

Giannoulias' campaign and Democratic insiders have maintained he can still beat Kirk, a moderate Republican and an officer in the Naval Reserves. Democrats outnumber Republicans in Illinois, and Obama remains a popular figure in the state.

On Friday, before the bank failure was announced, the White House said Obama intends to help Illinois Democrats "up and down the ballot."

"I think that the White House's comments tonight that they're going to come to Illinois and help out is great. I'm looking forward to it," said Giannoulias. He doesn't plan to be in Quincy next week when Obama makes a stop there.

Joey O'Neill, a Broadway customer for 20 years said Friday that he won't hold the bank's failure against Giannoulias.

"They've always been good to me," O'Neill said before the bank closure was announced.

With the election nearly seven months away, the campaign has time on its side to try to repair any damage and change the focus of the race — and help Democrats avoid the embarrassing loss of another high-profile Senate seat.

Giannoulias said Friday that the bank's troubles are not what voters talk to him about when he travels the state. He said they are concerned with jobs and the economy.

"I have a new perspective on just how tough it is out there for so many people and that's what's going to make me fight even harder and work even harder to make sure that people understand we cannot afford to go back to the failed and reckless economic policies that have put this economy on the precipice of disaster," he said.

[izquierdista]

3. And how unnecessary

Americans have NO clue how unnecessary cars are and the negatives they bring to life. With a car, you could move to the suburbs; which means that now you HAVE to drive to get to work, shopping, recreation, entertainment, etc. How much cheaper could you live if everything you needed was in walking distance? That's the way it is in most cities in Europe; cars are a luxury there, but not a necessity. Unfortunately, cars keep a good part of the US GNP turning, what with their fuel, insurance, repairs, maintenance, etc.

[Demeter]

8. Europe Is a Very Small, Compact Place

It is very easy to sneer at the US from the comfort of the Old World. It is much harder to see alternatives. The US is a very big place--not as big as Russia, but the comparison is relevant.

The US tried water travel--ocean, river, canals, barges. The US tried railroads--which would have been much better if the financiers had been kicked off them and the effort been nationalized a century before Amtrak.

There were electric trams in many cities--I recall seeing them in Detroit as a very young child--all the wires hanging over the street. But the auto companies bought up all the trams, shut them down and put bus lines in their place.

And then Eisenhower, fresh from the European Front, decided that the Autobahns of Germany were admirable ways of moving troops and matériel across a continent. The rest is history.

The automobile is a technology. It is how one uses a technology that determines its value. Engineers keep harping on this point especially.

[izquierdista]

12. Small?

All right, ship your car to Bremerhaven and drive to Donetsk (still in Europe) and get back to me on how "small" Europe is. If that hasn't convinced you of the foolishness of your assertion, then turn south and drive to Cadiz.

The US is in the deplorable situation it is in because of the automobile and gasoline industry deciding to run the country in a way that works for them, not the average citizen. They have sold the public on the car culture until Americans can't enjoy life without one.

[Demeter]

14. I refer you to the following chart

http://en.wikipedia.org/wiki/List_of_countries_and_outlying_territories_by_total_area


Canada, Mainland China, and the United States have roughly equal land mass.

Most of Canada is uninhabited. It cannot sustain life.
A large portion of China is also deserted as it is inhospitable to life.

The United States has relatively little land area that cannot sustain life, however, due to economic and transportation limitations, some areas are becoming uninhabited by default.

The largest nation on the European continent, if Russia is eliminated because of its peculiar politics, is France. France has less than 6.6% of the land that the United States has. Hence the great tragedy that Napoleon sold the Louisiana Purchase so cheaply!

While one is entitled to one's own opinions, one is not entitled to one's own facts.

[izquierdista]

15. So get some facts

In comparisons like you make, you should look at the entire EU, not just pick a country to support your "facts". If you want to compare the Czech republic to Ohio, that might make some sense. The situation that has evolved in the EU as regards transportation and commerce across borders shows what could be a brighter future for the US, as opposed to the one that has been sold to Americans through advertising.

[tclambert]

17. Okay, I think you guys are comparing oranges and tangerines.

Demeter seems to be saying individual countries in Europe are small compared to the USA. Izquierdista is saying Europe as a whole, as in from Spain to Poland, Italy to Denmark, is comparably large.

[Hugin]

35. Ahem, If I may be so rude as to intrude...

Here's a great little museum (pun intended) somewhere in GA... Which specializes in collecting 40 years of European (and some American)
MICROCARS!

The Bruce Weiner Microcar museum.

[Demeter]

36. I Saw the Cube Today

It was actually not as awful as it appeared in the ad.

[Hugin]

38. For those who want a corner office...

:D

(I encourage you to take a little browse around the virtual tour, Demeter. I think you'll appreciate the combination of thrift and
design in the machines on display.)

[Demeter]

43. Very Pretty Boy Toys

[bluedigger]

69. I've been driving a rental Cube the last two weeks - yes, it is awful.

It has less interior space than a Jeep Wrangler with none of the utility or capability of the Jeep. Underpowered, short wheelbase that rides like it has no suspension, crappy transmission, huge greenhouse (ok, good visibility) that heats up the interior, stupidly placed cupholders, lousy instrument cluster... need I go on? It might do as a urban commuter car, if you have good streets.

edited to add: Wind noise! It whistles!:grr: :rant:

[Demeter]

72. Thanks for the report

I only saw it--the owners have elderly parents who find it easy to enter and exit. And they do use it on relatively good urban streets...

[bluedigger]

75. That reminds me.

Those huge doors have hit both me and a passenger in the legs. Ouch! Big square corners. Of course you only do that once.:rofl:

[Hugin]

74. It whistles!?!?

Sounds like you were really testing the envelope with that baby! :rofl:

You are indeed a brave spirit and live fully to the age old words words of honor... Drive it like you rented it!


Anyhow, the designers of autos need to revisit the Tacoma Narrows Bridge disaster. I've had the privilege of driving several models
lately that if the rear windows are open even to the slightest degree, it sets up an extremely painful acoustical resonance
in the interior of the vehicle. I'm like... "What's that you're saying officer? I can't hear you, my ears are bleeding..."

[bluedigger]

76. It's a pretty small envelope!

Anything over sixty mph and she sings like a banshee. Radio's not bad, though.:eyes:

[Hugin]

78. Quite the achivement for a Test Pilot!

You've broken the Cube Barrier! Aerodynamic effects kick in at around 50mph...

Gosh! Can I call you Chuck, Mr. Yeagar?

[bluedigger]

80. And I do it without a helmet!

[tclambert]

83. Okay, Europe is ahead of America in many ways, We can't say that too loud, though,

or the Europe-haters will start shouting. Universal health care, universal college education, better labor laws, more vacation, child care, and better cooking. Europe has some pretty sweet cars, too: Lamborghini, Ferrari, Porsche, Alfa Romeo, Aston Martin, Bugatti, Jaguar, Konigsegg, Gumpert, . . . I've been watching Top Gear on BBC America. About the only American car they like is the Corvette ZR1.

But why do you want to go hating on our car culture? We love our cars . . . and our guns. And barbecue. And frying stuff. Deep-fried Twinkies! What a country!

[Demeter]

84. the Corvette Is Awful!

I had to carpool in a Corvette in the 80's. It ran so hot your legs cooked from the heat in the engine compartment. And it is so low to the ground, it crippled you getting in or out. And it's a cop magnet by definition...

[Demeter]

4. President Obama's Big Bank Speech

http://prospect.org/csnc/blogs/tapped_archive?month=04&year=2010&base_name=president_obamas_big_bank_spee



Remarks of President Barack Obama – As Prepared for Delivery
Wall Street Reform at Cooper Union
Thursday, April 22, 2010
New York City, New York

It’s good to be back in the Great Hall at Cooper Union, where generations of leaders and citizens have come to defend their ideas and contest their differences. It’s also good being back in Lower Manhattan, a few blocks from Wall Street, the heart of our nation’s financial sector.

Since I last spoke here two years ago, our country has been through a terrible trial. More than 8 million people have lost their jobs. Countless small businesses have had to shut their doors. Trillions of dollars in savings has been lost, forcing seniors to put off retirement, young people to postpone college, and entrepreneurs to give up on the dream of starting a company. And as a nation we were forced to take unprecedented steps to rescue the financial system and the broader economy.

As a result of the decisions we made – some which were unpopular – we are seeing hopeful signs. Little more than one year ago, we were losing an average of 750,000 jobs each month. Today, America is adding jobs again. One year ago, the economy was shrinking rapidly. Today, the economy is growing. In fact, we’ve seen the fastest turnaround in growth in nearly three decades.

But we have more work to do. Until this progress is felt not just on Wall Street but Main Street we cannot be satisfied. Until the millions of our neighbors who are looking for work can find jobs, and wages are growing at a meaningful pace, we may be able to claim a recovery – but we will not have recovered. And even as we seek to revive this economy, it is incumbent on us to rebuild it stronger than before. That means addressing some of the underlying problems that led to this turmoil and devastation in the first place.

One of the most significant contributors to this recession was a financial crisis as dire as any we’ve known in generations. And that crisis was born of a failure of responsibility – from Wall Street to Washington – that brought down many of the world’s largest financial firms and nearly dragged our economy into a second Great Depression.

It was that failure of responsibility that I spoke about when I came to New York more than two years ago – before the worst of the crisis had unfolded. I take no satisfaction in noting that my comments have largely been borne out by the events that followed. But I repeat what I said then because it is essential that we learn the lessons of this crisis, so we don’t doom ourselves to repeat it. And make no mistake, that is exactly what will happen if we allow this moment to pass – an outcome that is unacceptable to me and to the American people.

As I said two years ago on this stage, I believe in the power of the free market. I believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. But a free market was never meant to be a free license to take whatever you can get, however you can get it. That is what happened too often in the years leading up to the crisis. Some on Wall Street forgot that behind every dollar traded or leveraged, there is family looking to buy a house, pay for an education, open a business, or save for retirement. What happens here has real consequences across our country.

I have also spoken before about the need to build a new foundation for economic growth in the 21st century. And, given the importance of the financial sector, Wall Street reform is an absolutely essential part of that foundation. Without it, our house will continue to sit on shifting sands, leaving our families, businesses and the global economy vulnerable to future crises. That is why I feel so strongly that we need to enact a set of updated, commonsense rules to ensure accountability on Wall Street and to protect consumers in our financial system.

A comprehensive plan to achieve these reforms has passed the House of Representatives. A Senate version is currently being debated, drawing on the ideas of Democrats and Republicans. Both bills represent significant improvement on the flawed rules we have in place today, despite the furious efforts of industry lobbyists to shape them to their special interests. I am sure that many of those lobbyists work for some of you. But I am here today because I want to urge you to join us, instead of fighting us in this effort. I am here because I believe that these reforms are, in the end, not only in the best interest of our country, but in the best interest of our financial sector. And I am here to explain what reform will look like, and why it matters.

First, the bill being considered in the Senate would create what we did not have before: a way to protect the financial system, the broader economy, and American taxpayers in the event that a large financial firm begins to fail. If an ordinary local bank approaches insolvency, we have a process through the FDIC that insures depositors and maintains confidence in the banking system. And it works. Customers and taxpayers are protected and the owners and management lose their equity. But we don’t have any kind of process designed to contain the failure of a Lehman Brothers or any of the largest and most interconnected financial firms in our country.

That’s why, when this crisis began, crucial decisions about what would happen to some of the world’s biggest companies – companies employing tens of thousands of people and holding hundreds of billions of dollars in assets – had to take place in hurried discussions in the middle of the night. That’s why, to save the entire economy from an even worse catastrophe, we had to deploy taxpayer dollars. And although much of that money has now been paid back – and my administration has proposed a fee to be paid by large financial firms to recover the rest – the American people should never have been put in that position in the first place.

It is for this reason that we need a system to shut these firms down with the least amount of collateral damage to innocent people and businesses. And from the start, I’ve insisted that the financial industry – and not taxpayers – shoulder the costs in the event that a large financial company should falter. The goal is to make certain that taxpayers are never again on the hook because a firm is deemed “too big to fail.”

Now, there is a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. But what is not legitimate is to suggest that we’re enabling or encouraging future taxpayer bailouts, as some have claimed. That may make for a good sound bite, but it’s not factually accurate. In fact, the system as it stands is what led to a series of massive, costly taxpayer bailouts. Only with reform can we avoid a similar outcome in the future. A vote for reform is a vote to put a stop to taxpayer-funded bailouts. That’s the truth.

And these changes have the added benefit of creating incentives within the industry to ensure that no one company can ever threaten to bring down the whole economy. To that end, the bill would also enact what’s known as the Volcker Rule: which places some limits on the size of banks and the kinds of risks that banking institutions can take. This will not only safeguard our system against crises; this will also make our system stronger and more competitive by instilling confidence here at home and across the globe. Markets depend on that confidence. Part of what led to the turmoil of the past two years was that, in the absence of clear rules and sound practices, people did not trust that our system was one in which it was safe to invest or lend. As we’ve seen, that harms all of us. By enacting these reforms, we’ll help ensure that our financial system – and our economy – continues to be the envy of the world.

Second, reform would bring new transparency to many financial markets. As you know, part of what led to this crisis was firms like AIG and others making huge and risky bets – using derivatives and other complicated financial instruments – in ways that defied accountability, or even common sense. In fact, many practices were so opaque and complex that few within these companies – let alone those charged with oversight – were fully aware of the massive wagers being made. That’s what led Warren Buffett to describe derivatives that were bought and sold with little oversight as “financial weapons of mass destruction.” And that’s why reform will rein in excess and help ensure that these kinds of transactions take place in the light of day.

There has been a great deal of concern about these changes. So I want to reiterate: there is a legitimate role for these financial instruments in our economy. They help allay risk and spur investment. And there are a great many companies that use these instruments to that end – managing exposure to fluctuating prices, currencies, and markets. A business might hedge against rising oil prices, for example, by buying a financial product to secure stable fuel costs. That’s how markets are supposed to work. The problem is, these markets operated in the shadows of our economy, invisible to regulators and to the public. Reckless practices were rampant. Risks accrued until they threatened our entire financial system.

That’s why these reforms are designed to respect legitimate activities but prevent reckless risk taking. And that’s why we want to ensure that financial products like standardized derivatives are traded in the open, in full view of businesses, investors, and those charged with oversight. I was encouraged to see a Republican Senator join with Democrats this week in moving forward on this issue. For without action, we’ll continue to see what amounts to highly-leveraged, loosely-monitored gambling in our financial system, putting taxpayers and the economy in jeopardy. And the only people who ought to fear this kind of oversight and transparency are those whose conduct will fail its scrutiny.

Third, this plan would enact the strongest consumer financial protections ever. This is absolutely necessary. Because this financial crisis wasn’t just the result of decisions made in the executive suites on Wall Street; it was also the result of decisions made around kitchen tables across America, by folks taking on mortgages and credit cards and auto loans. And while it’s true that many Americans took on financial obligations they knew – or should have known – they could not afford, millions of others were, frankly, duped. They were misled by deceptive terms and conditions, buried deep in the fine print.

And while a few companies made out like bandits by exploiting their customers, our entire economy suffered. Millions of people have lost homes – and tens of millions more have lost value in their homes. Just about every sector of our economy has felt the pain, whether you’re paving driveways in Arizona or selling houses in Ohio, doing home repairs in California or using your home equity to start a small business in Florida.

That’s why we need to give consumers more protection and power in our financial system. This is not about stifling competition or innovation. Just the opposite: with a dedicated agency setting ground rules and looking out for ordinary people in our financial system, we’ll empower consumers with clear and concise information when making financial decisions. Instead of competing to offer confusing products, companies will compete the old-fashioned way: by offering better products. That will mean more choices for consumers, more opportunities for businesses, and more stability in our financial system. And unless your business model depends on bilking people, there is little to fear from these new rules.

Finally, these Wall Street reforms will give shareholders new power in the financial system. They’ll get a say on pay: a voice with respect to the salaries and bonuses awarded to top executives. And the SEC will have the authority to give shareholders more say in corporate elections, so that investors and pension holders have a stronger role in determining who manages the companies in which they’ve placed their savings.

Now, Americans don’t begrudge anybody for success when that success is earned. But when we read in the past about enormous executive bonuses at firms even as they were relying on assistance from taxpayers, it offended our fundamental values.

Not only that, some of the salaries and bonuses we’ve seen created perverse incentives to take reckless risks that contributed to the crisis. It’s what helped lead to a relentless focus on a company’s next quarter, to the detriment of its next year or decade. And it led to a situation in which folks with the most to lose – stock and pension holders – had the least to say in the process. That has to change.

I’ll close by saying this. I have laid out a set of Wall Street reforms. These are reforms that would put an end to taxpayer bailouts; that would bring complex financial dealings out of the shadows; that would protect consumers; and that would give shareholders more power in the financial system. But we also need reform in Washington. And the debate over these changes is a perfect example.

We’ve seen battalions of financial industry lobbyists descending on Capitol Hill, as firms spend millions to influence the outcome of this debate. We’ve seen misleading arguments and attacks designed not to improve the bill but to weaken or kill it. And we’ve seen a bipartisan process buckle under the weight of these withering forces, even as we have produced a proposal that is by all accounts a common-sense, reasonable, non-ideological approach to target the root problems that led to the turmoil in our financial sector.

But I believe we can and must put this kind of cynical politics aside. That’s why I am here today. We will not always see eye to eye. We will not always agree. But that does not mean we have to choose between two extremes. We do not have to choose between markets unfettered by even modest protections against crisis, and markets stymied by onerous rules that suppress enterprise and innovation. That’s a false choice. And we need no more proof than the crisis we’ve just been through.

There has always been a tension between the desire to allow markets to function without interference – and the absolute necessity of rules to prevent markets from falling out of balance. But managing that tension, one we’ve debated since our founding, is what has allowed our country to keep up with a changing world. For in taking up this debate, in figuring out how to apply our well-worn principles with each new age, we ensure that we do not tip too far one way or the other – that our democracy remains as dynamic as the economy itself. Yes, the debate can be contentious. It can be heated. But in the end it serves to make our country stronger. It has allowed us to adapt and thrive.

I read a report recently that I think fairly illustrates this point. It’s from Time Magazine. And I quote: “Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed … would rivet upon their institutions what they considered a monstrous system… Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level.” That appeared in Time Magazine – in June of 1933. The system that caused so much concern and consternation? The Federal Deposit Insurance Corporation – the FDIC – an institution that has successfully secured the deposits of generations of Americans.

In the end, our system only works – our markets are only free – when there are basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system. And that is what these reforms are designed to achieve: no more, no less. Because that is how we will ensure that our economy works for consumers, that it works for investors, that it works for financial institutions – that it works for all of us.

This is the central lesson not only of this crisis but of our history. It’s what I said when I spoke here two years ago. Ultimately, there is no dividing line between Main Street and Wall Street. We rise or we fall together as one nation. So I urge you to join me – to join those who are seeking to pass these commonsense reforms. And I urge you to do so not only because it is in the interests of your industry, but because it is in the interests of our country.

Thank you. God bless you. And may God bless the United States of America.

[Demeter]

5. Commentary -- Tim Fernholz

Didn't blow my mind; he was in Full Professor mode today. The entire speech is after the jump. Would you believe that Obama thinks the financial-reform bill is a reasonable, commonsense set of reforms that is being undercut by cynicism in Washington, and yet he still hopes that a bipartisan resolution is within reach? Yes, you would. If you're reading this blog, you're familiar with the arguments for the policy, so let's settle in as the president reaches for a broader theme:

There has always been a tension between the desire to allow markets to function without interference – and the absolute necessity of rules to prevent markets from falling out of balance. But managing that tension, one we’ve debated since our founding, is what has allowed our country to keep up with a changing world. For in taking up this debate, in figuring out how to apply our well-worn principles with each new age, we ensure that we do not tip too far one way or the other – that our democracy remains as dynamic as the economy itself. Yes, the debate can be contentious. It can be heated. But in the end it serves to make our country stronger. It has allowed us to adapt and thrive.

I read a report recently that I think fairly illustrates this point. It’s from Time Magazine. And I quote: “Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed … would rivet upon their institutions what they considered a monstrous system… Such a system, they felt, would not only rob them of their pride of profession but would reduce all U.S. banking to its lowest level.” That appeared in Time Magazine – in June of 1933. The system that caused so much concern and consternation? The Federal Deposit Insurance Corporation – the FDIC – an institution that has successfully secured the deposits of generations of Americans.

Financial reform has the air of inevitability now, which means the last-minute tinkering has to be closely watched. Nonetheless, it feels like we're about to see yet another major legislative victory for the Obama team.

[Demeter]

6. Additional posted comment at link (FEEL FREE TO ADD YOURS)

We need fewer victories for "Team Obama" and more victories for America and it's people.

This is a lame bill, and it will probably be all they ever do on this issue. It looks more likely to institutionalize bailouts than it will end them.

When it comes time to use their authority, the government will find excuses not to fire anyone or wipe out the owners and investors. Thats what the elite do in America: Ignore the law with impunity.

Posted by: soullite | April 22, 2010 1:53 PM

[Tansy_Gold]

7. All the way back to 1905. . . .

http://www.virtualvictrola.com/2009/04/in-my-merry-oldsmobile.html


In My Merry Oldsmobile
Probably the most enduring popular song written about the automobile is Gus Edwards' and Vincent Bryan's "In My Merry Oldsmobile," which was written in 1905 and is still recognized by a great many people today:

Young Johnny Steele has an Oldsmobile
He loves his dear little girl
She is the queen of his gas machine
She has his heart in a whirl
Now when they go for a spin, you know,
She tries to learn the auto, so
He lets her steer, while he gets her ear
And whispers soft and low...


Come away with me, Lucille
In my merry Oldsmobile
Down the road of life we'll fly
"Automobubbling," you and I
To the church we'll swiftly steal
Then our wedding bells will peal
You can go as far as you like with me
In my merry Oldsmobile.


(Check out the cartoon on this site!)


And a slightly more modern version -- 1966 Cutlass

[Demeter]

9. Even Harder Times for Renters-- Monica Potts

http://www.prospect.org/csnc/blogs/tapped_archive?month=04&year=2010&base_name=even_harder_times_fo_renters

The National Coalition for Low Income Housing released its annual report on rental costs yesterday, and the outlook is pretty grim for most families. The average fair market rent for a two-bedroom apartment is just under $1,000 a month, and a family would need to earn about $38,000 a year, or $18 an hour, to be able to comfortably afford it. That's $4 more an hour than they actually make.

It's even worse in markets in the Northeast, where the average one-bedroom apartment is $850 a month (and good luck finding that). Rental conditions have been bad for awhile, of course, but more and more families are looking for rental housing now after the housing crisis. The coalition's president, Sheila Crowley, called on Congress to fund the $1 billion-National Housing Trust Fund, which was created in 2008 but never capitalized. The fund is meant to create and preserve affordable rental housing, with a majority of it reserved for lower-income families, and funding it is part of the Department of Housing and Urban Development's budget for 2011.

I've hoped before that the housing crisis will lead to a saner, affordable rental policy. All signs seem to show that the federal government wants to create balance between removing barriers to homeownership and providing stable housing for families that can't afford to own. It would also be nice if we could stop moralizing about which type of housing creates a better community. The first and biggest step would be to provide money for the trust fund, but that's still up to lawmakers.

[Demeter]

10. The Virtual University / Anya Kamenetz

http://prospect.org/cs/articles?article=the_virtual_university

Why cash-strapped colleges need to stop worrying and learn to love the online classroom.

For most of the thousand years or so since it was invented, a university education was thought to be suited for only a tiny group -- a ruling class or a subculture of scholars. Today, nine out of 10 American high school seniors say they want to go to college. Since World War II, this country has turned higher education into not only a mass-market product but the best hope of achieving a middle-class income. Sending your kids to college is now part of the American dream, just like homeownership. And like homeownership, it's something for which we have been willing to go deeply into hock.

Faith in the universal power of higher learning is at the heart of modernity. From enhancing our basic humanity to preserving culture, from developing our economy and technology to redressing ills like global warming and AIDS, there are very few needs for which more education has not been prescribed. As H.G. Wells famously put it, "Human history becomes more and more a race between education and catastrophe."

Young people worldwide are caught between the spiraling cost of college and an apparently bottomless hunger for it. According to a 2009 report by the United Nations Educational, Scientific and Cultural Organization (UNESCO), today 150 million students are enrolled in some kind of education beyond high school, a 53 percent increase in less than one decade. With such numbers, there is no foreseeable way enough traditional universities could be physically built in the next two decades to match the demand.

Meanwhile, here in America, the birthplace of mass higher education, we are stalling in our educational attainment while the rest of the world is roaring ahead. In the U.S., about 30 percent of high school students drop out, and just 56 percent of college freshmen complete their bachelor's degree after six years, 150 percent of the time allotted. Only a little more than a third of Americans end up with any kind of college degree. For more than a century, arguably the world's most educated nation, we've now fallen behind nine others. Unlike citizens of every other rich country except Germany, Americans in their late teens and early 20s are no more educated than older generations.

President Barack Obama clearly understands the problem. In his first address to Congress, he promised, "We will provide the support necessary for all to complete college and meet a new goal: By 2020, America will once again have the highest proportion of college graduates in the world."

Obama has appointed some wonderful advocates for students to the Department of Education. His administration has backed great proposals, like increasing the Pell grant's maximum amount, cutting corporate subsidies out of the student-loan program, simplifying the federal student-aid application process, and raising funding for community colleges. But nothing on the table addresses the underlying issues that make tuition rise or the capacity problems and leaks in the system.

College tuition has been outpacing inflation for decades. Between 1990 and 2008, tuition and fees rose 248 percent in real dollars, more than any other major component of the consumer price index. Raising the Pell grant's maximum doesn't address this underlying problem. Constant transfusions of public money help keep the patient alive but do not stop the bleeding.

What's to be done about dropout rates and outstanding student-loan debt that currently totals over $730 billion, or $23,200 per graduating senior in 2008? At first, I stood with progressives who say the federal government should increase grants and rein in the parasitic student-loan business. But while the student-loan industry has been part of the problem, and more grants are part of the solution, there is more to this story.

***

The higher-education system has a lot in common with another great challenge our country is confronting: health care. Colleges, like hospitals, have little incentive to conserve resources or compete on price. They can actually gain prestige by raising tuition. They shift costs to students to make up for gaps in state funding and then hand out grant money to the applicants they want the most, not the ones who need the most help. Community colleges dedicated to serving the poorest get a fraction of the public money that goes to flagship state universities.

The fact is, as aspirations toward, and for, higher learning grow, the model of inexorably growing bureaucratic institutions of formal education is under extreme pressure. "Our learning institutions, for the most part, are acting as if the world has not suddenly, irrevocably, cataclysmically, epistemically changed -- and changed precisely in the area of learning," Cathy N. Davidson and David Theo Goldberg write in their 2009 book The Future of Learning Institutions in a Digital Age. Universities may be on the brink of a phase change from something monolithic to something more fluid: a sea of smaller, more specialized and diverse institutions offering a greater variety of learning opportunities, a cloud of ideas, texts, and conversations. More than one in five of the nation's 19 million college students took at least one online class by the fall of 2006, according to a study by the Sloan Consortium, but technology hasn't yet changed the prevailing model or brought down costs in higher education as it has for so many other industries.

Princeton economists William Bowen and William Baumol argued in their 1966 book, Performing Arts: The Economic Dilemma, that modernization, mechanization, and efficiency just plain escape certain areas of human endeavor. If you want a proper Beethoven string quartet, you can't cut the cellist, and you can't squeeze in more performances by playing the music faster. Just as there is no substitute for the concert hall experience, the writers argue, there is no substitute for being in the classroom with a professor. Higher education and health care, as well as the arts, are subject to a "cost disease."

Today, live performance is still vibrant and without rival. However, the music aficionado has opportunities that go far beyond what could have been imagined when Beethoven was composing or even when Baumol and Bowen were writing. My husband's grandparents go to a New York City movie theater to watch a live broadcast of the Metropolitan Opera's Tosca. If I search YouTube for "Beethoven," I can watch 80,800 videos, like of the late Austrian conductor Herbert von Karajan conducting the full "Seventh Symphony in A Major." Contemporary composers can record entire symphonies from their bedrooms. Musicians from around the world can collaborate and perform for an audience of millions without ever meeting each other. The marginal cost of distributing a copy of a musical recording around the world has dropped to pretty much zero.

The same is happening in education. Since 2001, a growing movement -- from the Massachusetts Institute of Technology, Stanford, and hundreds of other universities worldwide to insurgent bloggers and entrepreneurs barely out of school themselves -- is looking to social media to transform higher education. They're releasing educational content for free to the world and enlisting computers as tutors. Google has scanned and digitized 7 million books. Wikipedia users have created the world's largest encyclopedia. YouTube Edu and iTunes U have made video and audio lectures by the best professors in the country available for free.

The face-to-face learning experience, like the live concert experience, remains inimitable. Research shows that, at its best, hybrid learning beats both online-only and classroom-only approaches. Learners can take in and retain more content faster and more easily, form strong mentoring and teamwork relationships, grow into self-directed, creative problem solvers, and publish portfolios of meaningful work that help jobs find them. These innovations hold out the tantalizing possibility of beating the cost disease while meeting the world's demand for higher education.

As exhilarating as this future sounds for students, there is plenty of anxiety about the transition. "Thinking Big in a Crisis" was the title of a summer 2009 higher-education policy summit in Washington, D.C., featuring representatives from the worlds of journalism and architecture sharing war stories about the scary impact of the Web on existing business models. Later that summer, I attended an Open Education conference in Vancouver titled "Crossing the Chasm." The pace of transformation is uneven. Existing institutions don't want to give up their authority, nor faculty their jobs. Even among early adopters, there's a divide over basic issues: Some see an economic opportunity, while others are eager to spread free education; some want the university to absorb the new information technologies, while others see the digital age absorbing the university.

As a print journalist, I'm all too aware that a cardinal way the Internet has disrupted traditional knowledge industries is through disaggregation or unbundling of services. In the case of a daily newspaper, for example, Craigslist replaced the classifieds, Yahoo! Finance the stock listings, ESPN.com the sports scores, bloggers the op-eds. Newspapers are making shaky attempts to profit from their remaining unique strengths in local and investigative reporting.

Higher education is not just an industry. Still, from students' point of view, colleges do provide a bundle of services. You crack a book or go to lecture and learn about the world. You go to labs or write papers and build a skill set. You form relationships with classmates and teachers and learn about yourself. You get a diploma, and the world can learn about you. Content, skills, socialization, and accreditation.

The Web and allied technologies can make each of these services better, cheaper, more accessible, and even free to the student. Content, whether text, video, audio, or game-based, has progressed the furthest along that path. Interactive teaching algorithms can adapt to your learning style on the fly, allowing you to grasp concepts intuitively and at your own pace. And the Internet hasn't just changed the way we consume information. It has altered the way we interact. Social media can help students and teachers form learning communities. Reputation, assessment, and certification are held jealously as a monopoly by existing institutions, but new tools and models are knocking on that door, too.

"If universities can't find the will to innovate and adapt to changes in the world around them," professor David Wiley of Brigham Young University has written on his blog, "universities will be irrelevant by 2020."

Open content -- also known as open courseware, or open educational resources (OER) -- can mean any use of the Web to share the fruits of faculty time, from curricula to lesson plans to texts to original research. As Wikipedia is to a conventional encyclopedia, open content is to a conventional textbook or lecture hall. Both open-source software and Creative Commons, a nonprofit set up in 2001 to create the intellectual and legal framework to share or remix creative work found online, share intellectual DNA with OER. For example, you can search the photo Web site Flickr for CC-licensed images and use them like stock photos, for free, to illustrate a blog post, so long as you live up to the requirements of the CC license, such as crediting the creator or linking back to the original photo on Flickr.

More than a technical innovation, CC has spread to millions of works in all media and become the focus of what thinkers like Harvard law professor Lawrence Lessig, author of the book Remix, term the "copyleft" movement. "What happened was unexpected," says Ahrash Bissell, former director of CCLearn, the educational division of Creative Commons. "We tapped into this social dimension of people who are hungry to be able to stand up and say, 'Yes, I am part of this new and exciting universe of possibility around distributed collaboration and adaptation.'"

Those values -- distributed collaboration and adaptation -- are central to open education. The ball got rolling in 2001 with the OpenCourseWare project at MIT, funded by the Hewlett and Andrew W. Mellon foundations. If you go to MIT's Web site today, you can find the full syllabi, lecture notes, class exercises, tests, and some video and audio for every one of the 1,900 courses MIT offers, from physics to art history. By the end of 2009, some 65 million current students, aspiring students, alumni, professors, and armchair enthusiasts around the world had checked them out.

"Education has a long, long history of a gift economy around knowledge," says Steve Carson, a director of MIT's project, explaining why the university devotes up to $15,000 per course in development costs from its own budget to put each course online to everyone for free. "That ethos underpins both open-source software and educational sharing." Over 200 institutions in over 30 countries have posted courses online at the OpenCourseWare Consortium under CC licensing. Countries from Kenya to the Netherlands have started their own open courseware repositories. China's Ministry of Education has been funding the release of university courses since 2003; over 10,000 courses are now available for free online, many including video.

These materials have been accumulating for several years now, but most colleges have yet to fully take advantage of them. Students spend an average of $1,000 a year on textbooks, and faculty spend countless hours preparing and updating course materials, which prompts the question: What will it take for colleges to realize the power of free and open resources and use them to cut educational costs?

***

Judy Baker is the administrative supervisor of the Community College Consortium for Open Educational Resources. Approximately 140 colleges have signed on to share textbooks that can be downloaded, edited, and used for free. Faculty, she says, have to be led by the hand to the wellspring of resources. "The biggest resistance is intellectual property rights," she says. "Many faculty have a lifelong dream that they will write a textbook. The reality is, particularly in a community college, it's a tiny, tiny proportion of faculty who actually do that, and even fewer who actually make more than minimum wage from it," when you consider the time it takes. So she first asks professors to try out the resources and experience the joy of "free" as users. Then she appeals to their vanity. "'Think about it,' I tell them. 'You've done all of this work, and over the years, maybe a thousand students have seen these great learning materials you've created. If you open-license them, I guarantee you, within six months, you'll have 100,000 page views.'"

And thus a sharer, ripper, and remixer is born.

Baker is sly. She is patient. She has a much broader agenda than just free textbooks. She has a vision of the future of open education and she wants to share it with the world. "I view open educational resources as a catalyst for faculty to leverage all the possibilities that are now available with the Internet. Not many people would state that as the benefit -- that's my personal view. But whether they view it that way or not, that is an outcome."

But education is more than just access to knowledge, and the possibilities Baker alludes to go far beyond content. "If you didn't need human interaction and someone to answer your questions, then the library would never have evolved into the university," Wiley says. "A sufficient infrastructure of freely available content is step one in a much longer endgame that transforms everything we know about higher education." Rather than layering new technologies as bells and whistles onto existing classes, or adding a free textbook to a traditional lecture course, courses need to be completely redesigned using information technology strategically in order to save significant money and improve outcomes at the same time.

Over the past decade, the National Center for Academic Transformation has been doing just that. NCAT has worked with hundreds of public universities to redesign individual courses "to prove that it is possible to improve quality and reduce cost in higher education," says Carol Twigg, NCAT's founder. Twigg had been working in education reform for several years when in 1998 she landed a $9 million grant from the Pew Charitable Trust. "We had a pretty big carrot," she says. "Part of the design included $200,000 apiece for institutions that would step forward and agree to try this." She told universities: "We want you to improve student learning, reduce cost, and use technology. Other than that, it's a blank slate."

Universities in NCAT's Course Redesign program have come up with a wide range of solutions for courses in all disciplines, from psychology to Spanish to math. These course redesigns blend social-media tools and software-based drills with peer-to-peer instruction, tutoring, and traditional classroom settings. They combine tools like online tutoring modules with in-person meetings structured like labs, seminars, office hours, or study groups. For example, the Universities of Alabama and Idaho, Louisiana State University, Ole Miss, the University of Missouri?St. Louis, Virginia Tech, and Wayne State all got rid of lectures in introductory math classes. Instead, they introduced an "emporium model" using self-paced tutoring programs like MyMathLab, published by the textbook company Pearson. Using the program, students spend their time solving problems and get instant feedback, hints, and examples. Students can work from home or in a computer lab staffed, often late into the night, by professors, grad students, and peer tutors who are available for help if they get stuck.

At Alabama, a representative example, the percentage of students who passed the course went up from less than half to just under 70 percent for first-time freshmen. Women and African Americans made even larger average gains, and student satisfaction rates were at an all-time high. The most recent round of NCAT course redesigns at public university campuses across the country cut costs an average of 39 percent -- a few courses cut costs by up to 75 percent. Outcomes improved by almost any measure you choose: test scores, grades, information retention, student persistence, student satisfaction, and graduation rates.

***

Public support of open content could be crucial. Gov. Arnold Schwarzenegger has called for digital textbooks to be adopted in schools across California. Sen. Dick Durbin, with the input of Wiley and others in the OER movement, has introduced The Open College Textbook Act, a law that would mandate all educational materials, including curricula and textbooks, created through federal grants to be released under open license. It would also award special competitive grants specifically for the creation of open textbooks.

In the summer of 2009, the Obama administration announced $500 million in federal funds to create the "Online Skills Laboratory," inviting colleges, publishers, and other institutions to create free and open-source online courses, primarily at the community college level, with an emphasis on vocational topics.

"The coin of the realm is faculty time," as Carson at MIT's OpenCourseWare puts it. An estimated three-quarters of the costs of colleges and universities are personnel costs, so cutting costs means saving faculty and administrative time wherever possible. When faculty can build on existing high-quality course material, rather than reproducing the work from scratch; when systems automate what can be automated -- grading tests and quizzes, providing immediate, standardized feedback and practice; and when students can help teach each other as peers, there are significant savings to be had over a traditional, butts-in-seats classroom model.

Whether hybrid classes, social networks, tutoring programs, games, or open content, technology provides speed skates for students and teachers, not crutches. To save money and improve learning, educational technology has to be well-designed and carefully implemented. The roles of professors will shift, and new jobs will be created in place of the old. "Technology can't make a bad teacher into a good teacher," says Sarah Robbins, an expert on the use of gaming in teaching who goes by the Internet handle Intellagirl. "Students who don't want to learn won't suddenly become great students when you put a gadget in their hands. Learning to teach with technology is less about 'how does it work' and much more about 'why should I use it.'"

Will tools like open courseware and social networking actually equal free education? Both free as in speech and free as in beer, as the old open-source adage goes? And will these new changes doom universities to "irrelevance," as Wiley has written? I tend to believe that there is no free lunch. Still, technology can create real efficiencies. And, crucially, new distribution methods can allow the cost of educational content and teaching to be distributed more equitably based on students' ability to pay.

Over its long history, higher education has been uncommonly resistant to innovation in teaching practices. It's clear we're just beginning to glimpse the full potential of what technology can do to transform education. Increasingly, this is going to be considered part of good teaching practice. Rather than dust off the same old mimeographed course packets year after year, professors these days have no excuse for not bellying up to the buffet of brand-new, free course materials and activities or logging on to the wealth of wikis and portals to find and share best practices. Administrations and state governments that profess to be interested in broadening access to affordable, quality education should be beating a path to the door of organizations like NCAT and open courseware discovery sites like CCLearn's OpenEd.

From this position at the top of the first hill, it's not clear yet which innovations will become mainstays, the chalkboards, textbooks, and diplomas of the future, and which will be marginal applications or mere flashes in the pan. At this point, however, the hybrid, NCAT-style course-redesign models seem most compelling. Not only do they show some of the best learning results, but they're in keeping with the multifaceted history of the university, and they offer the reassurance of familiarity -- a scaffolding, if you will, for the transition to new modes of teaching. tap

***

This article is adapted from her new book DIY U: Edupunks, Edupreneurs, and the Coming Transformation of Higher Education published by Chelsea Green © 2010. Reprinted with permission.

Anya Kamenetz is a staff writer for Fast Company. She has written for the New York Times, the Washington Post, New York Magazine, Salon, Slate, The Nation, and the Village Voice. She is the author of Generation Debt: Why Now is a Terrible Time to be Young (Riverhead Books, 2006).

[Demeter]

16. History of Automobile Industry

http://www.economywatch.com/world-industries/automobile/

In the year 1769, a French engineer by the name of Nicolas J. Cugnot invented the first automobile to run on roads. This automobile, in fact, was a self-powered, three-wheeled, military tractor that made the use of a steam engine. The range of the automobile, however, was very brief and at the most, it could only run at a stretch for fifteen minutes. In addition, these automobiles were not fit for the roads as the steam engines
made them very heavy and large, and required ample starting time. Oliver Evans was the first to design a steam engine driven automobile in the U.S.

A Scotsman, Robert Anderson, was the first to invent an electric carriage between 1832 and 1839. However, Thomas Davenport of the U.S.A. and Scotsman Robert Davidson were amongst the first to invent more applicable automobiles, making use of non-rechargeable electric batteries in 1842. Development of roads made travelling comfortable and as a result, the short ranged, electric battery driven automobiles were no more the best option for travelling over longer distances.

The Automobile Industry finally came of age with Henry Ford in 1914 for the bulk production of cars. This lead to the development of the industry and it first begun in the assembly lines of his car factory. The several methods adopted by Ford, made the new invention (that is, the car) popular amongst the rich as well as the masses.

According the History of Automobile Industry US, dominated the automobile markets around the globe with no notable competitors. However, after the end of the Second World War in 1945, the Automobile Industry of other technologically advanced nations such as Japan and certain European nations gained momentum and within a very short period, beginning in the early 1980s, the U.S Automobile Industry was flooded with foreign automobile companies, especially those of Japan and Germany.

The current trends of the Global Automobile Industry reveal that in the developed countries the Automobile Industries are stagnating as a result of the drooping car markets, whereas the Automobile Industry in the developing nations, such as, India and Brazil, have been consistently registering higher growth rates every passing year for their flourishing domestic automobile markets...

[Demeter]

18. I Know We Did the Beach Boys Last Year, But

http://www.youtube.com/watch?v=mN7Xs9WVNBU

[tclambert]

19. How about a little Fun, Fun, Fun?

http://www.youtube.com/watch?v=wpP7tWXjcnc&feature=related

[Demeter]

22. I'm ready for that!

I've even got Mobius, the Great White Whale!

http://3img.automotive.com/p/0031B5330B701D7DEE8A3B7811A766B74AD188340F12A31C844C8DD3BE848E815F658E1A8D26A61893545D1F6D9763D0124327EBBD3F79581E09AEF4086FFC93FA2C623355FBC2A0AEA3FC926DE13D45F2E655E7A331ACE81DC918C01EDEE526297BE9C1A5C4D2766E4CA9646BF83A6CED11546ECE37172735EC320FB67DE240F22E55+w335+h251+cr1+re0+ar0/2002-chevrolet-impala-base-fort-lauderdale-florida.jpg

Yes, it's an old man's car. Now it's a rapidly aging woman's car. I have to say, my left hip hurts a lot less getting in and out, compared to the Saturn, which is entirely too low slung (and the seat too dilapidated) for easy access.

[tclambert]

23. Oh, here you go, hot rod pics and Commander Cody!

http://www.youtube.com/watch?v=QDbON8udTPo&feature=related

Son, you're gonna drive me to drinkin' if you don't stop drivin' that HOT . . . ROD . . . LINCOLN!

[jotsy]

37. tyvm, it's been years since I heard that! Great visuals too!

[Demeter]

20. G20 nations seeking quick action on Greece

http://www.marketwatch.com/story/g20-nations-want-quick-action-on-greece-2010-04-23?siteid=YAHOOB

The G20 finance ministers and central bank governors remain concerned about Greece's debt crisis and are urging a speedy response to the situation, Canada's finance minister said on Friday.

"There has to be some kind of fiscal resolution. All G20 members are concerned the concern persists," James Flaherty told reporters at a briefing at the end of the all-day closed-door meeting of the group's officials meeting in Washington.

Treasury Secretary Timothy Geithner also called for swift action on the matter.

The G20 was briefed on the Greek crisis by Dominique Strauss Kahn, managing director of the International Monetary Fund.

Earlier Friday, Greece formally asked to tap a European Union-International Monetary Fund aid package worth roughly $60 billion.

Flaherty's comments aside, the G20's official communiqué issued after the group's meeting didn't mention the Greek crisis.

The statement said the global recovery has progressed better than previously anticipated.

G20 officials said the group has made progress toward developing joint regulatory responses to the financial crisis.

The statement also stopped short of endorsing an international tax on banks. The IMF, however, is working on a proposal for a tax on bank liability and another tax on bank profits to present to the G20 leaders summit in Toronto in late June.

"Some countries are in favor of that. Some clearly are not," said Flaherty, who opposes the idea.

It comes down to whether the country's taxpayers had to bailout banks, he said.

South Korean finance minister Jeung Hyun Yoon said that China's peg to the dollar wasn't discussed at the meeting.

He said China's currency would be a topic at the group's June summit. By that time the IMF will make recommendations for actions that countries could take to foster better balance of global growth.

[ozymandius]

54. G-20 Seeks Credible Plans to Cut Stimulus, Curb Debt

Group of 20 finance chiefs called for “credible” plans to withdraw economic stimulus as the recovery strengthens and Greece’s attempt to avert default highlights the risks posed by mounting government debt.

“The global recovery has progressed better than previously anticipated,” the group’s finance ministers and central bankers said in a statement after meeting in Washington yesterday. “We should all elaborate credible exit strategies from extraordinary macroeconomic and financial support measures.”

Underscoring the need to persuade investors that order will be restored to public finances was Greece’s appeal yesterday for emergency loans after a surge in its borrowing costs. The International Monetary Fund this week called rising government debt one of the biggest threats to the world economy. ...

Greece’s fiscal turmoil may serve as a warning to many governments that they will soon need to pare the budget deficits swelled by lower tax revenue and spending during the crisis. The IMF estimates the debt of advanced nations will reach 115 percent of GDP by 2014, up from 80 percent before the financial crisis and close to the postwar record. ....

The G-20 also fleshed out how it will check whether members are working to ensure the next expansion is more balanced and less reliant on extremes such as U.S. consumer spending or Chinese savings. Tasked with overseeing that process, the IMF was told to prepare lists of policies authorities should be pursuing and when to enact them.

http://preview.bloomberg.com/news/2010-04-23/g-20-calls-for-credible-plans-to-exit-stimulus-as-recovery-strengthens.html

[Demeter]

56. They Never Should Have Gotten on that Tiger To Begin With!

Good morning Ozy!

Such good news this weekend! I don't know if I can stand the strain.

[Demeter]

122. 'We Cannot Allow Greece to Turn into a Second Lehman Brothers'

http://www.spiegel.de/international/europe/0,1518,689766,00.html

[Demeter]

128. Morgan Stanley fears German exit from EMU

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7594859/Morgan-Stanley-fears-German-exit-from-EMU.html

Morgan Stanley has warned that the Greek debt crisis is setting off a chain of events that may prompt German withdrawal from the eurozone, with grim implications for investors caught off-guard...

[DemReadingDU]

21. gokarts!

Spouse and son race gokarts.

Here is a short video clip from son's race last year. Spouse and son have red karts. Son was running in 3rd place at time of this video, and eventually won the race. Cars in the wreck on 1st lap were positions 5th and 6th. Spouse is the other red kart, he finished 5th.
Edit - no one was hurt.

http://www.youtube.com/watch?v=-n2umnv9ra4

[DemReadingDU]

28. real race car

From 30 years ago, spouse was really into racing then. But it got too expensive, and kids were growing up, so it's been gokarts ever since.
P.S. No, I do not race anything.

[Demeter]

31. Such Cute Kids!

Yes, the racer is nice, too!

[DemReadingDU]

41. Thanks! Daughter's truck

Daughter had to have this when she was in her 20's!

[Demeter]

24. Lawmakers turn to credit raters, prepare overhaul

http://news.yahoo.com/s/ap/20100423/ap_on_bi_ge/us_meltdown_investigation_credit_raters

Lawmakers rewriting financial regulations took aim Friday at credit rating agencies, whose analysts often gave safe ratings to risky investments that fueled the financial crisis.

Sen. Carl Levin, D-Mich., said the Senate's regulatory overhaul should go further to curb the industry's inherent conflicts of interest: The agencies are paid by the banks whose investments they rate. Banks generally want higher ratings to make the securities they offer more attractive to investors.

At a hearing Levin chaired Friday, former executives acknowledged that competition within the industry often led the agencies' analysts to rate high-risk securities as safe.

Levin suggested the co-dependent relationship between the agencies and the banks is a dangerous flaw in the financial system. He offered an analogy: "It's like one of the parties in court paying the judge's salary."

Levin was chairing a hearing of the Permanent Subcommittee on Investigations, which has been investigating the causes of the financial crisis.

The Senate next week is expected to take up a version of the financial regulatory legislation that would require only a study of the industry's conflicts of interest. A House-passed bill would go further. It would instruct the Securities and Exchange Commission to produce a policy that would either bar the conflicts or require the agencies to disclose their relationships with banks.

Levin wants the Senate bill to move closer to the House approach. He favors an expected amendment to force regulators to address the conflicts of interest.

In a report Thursday, Levin's panel said the agencies kept ratings too high in the run-up to the crisis even though they knew mortgage fraud and subprime loans were leading more homeowners to default.

Between 2002 and 2007, the top three credit rating agencies doubled their revenue, to more than $6 billion a year, the committee said. Most of that growth came from the complex investments that spread trillions of dollars in toxic debt through the financial system.

Banks pooled mortgages of varying degrees of risk and sold securities backed by the pools. The safest securities earned the highest ratings. But when most of the mortgages in a pool went bust, even the safest-rated securities became worthless.

The committee found that the rating agencies knew the investments were losing value but for months delayed downgrading individual securities. The agencies finally began responding in 2006 by downgrading some securities, the report said. The downgrades accelerated in 2007.

Some large investors, such as pension funds, are barred from holding assets below investment grade. The downgrades forced them to dump their holdings onto the markets. That killed demand for the billions in risky mortgage debt that remained on banks' books.

The mass downgrades by the agencies were the single greatest trigger of the financial crisis, Levin said.

Former executives of Moody's and Standard & Poor's testified that pressure from competitors and management pushed their analysts to award safe ratings to risky investments.

There was a "disconnect" between senior managers and the analytical managers responsible for assigning bond ratings, said Frank Raiter, a former managing director for Standard & Poor's. He said this helped lead agencies to award high ratings to risky investments.

Raiter said management placed increasing pressure on analysts to earn fees by attracting business from banks. Many former colleagues had quit after clashing with management, he said.

He said some analysts had tried to persuade management to lower ratings on some securities as the housing market became distressed. But he said those analysts were told "revenues would go down."

Raiter said analysts felt they faced a choice: Keep giving inflated ratings or quit their jobs.

He also blamed weak government regulation, in part, for allowing agencies to inflate their ratings of bank securities.

The SEC's oversight of credit rating agencies is limited under current laws. The agencies have escaped legal liability by claiming their ratings are protected by the First Amendment right to free speech.

Both the House and Senate bills would force credit raters to register with the SEC. Both would allow investors to sue the agencies for assigning recklessly assigning high ratings. And both would require the agencies to share more information about how they determine ratings and how accurate they have proved over time.

The Senate version would be tougher on rating agencies that consistently assign inaccurate ratings. Those with poor track records could lose their SEC registrations.

TEETH! HONEST TO GOD TEETH! HOW LONG UNTIL SOME COMPROMISER PULLS THEM?

[Demeter]

25. Goldman's CEO and board are named in lawsuit

http://news.yahoo.com/s/ap/20100423/ap_on_bi_ge/us_goldman_sachs_lawsuits

Goldman Sachs's CEO and other top officers are accused in a pair of shareholder lawsuits of lax oversight in deals involving risky mortage-backed securities that later went bad.

The lawsuits filed Thursday in New York State Supreme Court name Lloyd Blankfein and the firm's entire board of directors as defendants.

The suits follow civil fraud charges filed last week by the Securities and Exchange Commission over the same investments.

The SEC says Goldman committed fraud by failing to disclose important information about the securities that might have scared off investors.

The two suits, filed by shareholders Robert Rosinek and Morton Spiegel, accuse Blankfein and other officers of "systematic failure" over 3 1/2 years for not properly vetting 23 mortgage-linked deals at the center of the SEC suit. Those deals, called Abacus, led to $1 billion in losses.

A Goldman spokesman declined to comment...

[Demeter]

33. 10 Things You Don’t Know (or were misinformed) About the GS Case Barry Ritholtz

I have been watching with a mixture of awe and dismay some of the really bad analysis, sloppy reporting, and just unsupported commentary about the GS case.

I put together this list based on what I know as a lawyer, a market observer, a quant and someone with contacts within the SEC. (Note: This represents my opinions, and no one else's).

1. This is a Weak Case: Actually, no - it's a very strong case. Based upon what is in the SEC complaint, parts of the case are a slam dunk. The claim Paulson & Co. were long $200 million dollars when they were actually short is a material misrepresentation - that's Rule 10b-5, and it's no brainer. The rest is gravy.

2. Robert Khuzami is a bad ass, no-nonsense, thorough, award winning Prosecutor: This guy is the real deal - he busted terrorist rings, broke up the mob, took down security frauds. He is now the director of SEC enforcement. He is fearless, and was awarded the Attorney General's Exceptional Service Award (1996), for "extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation."

When you prosecute mass murderers who use guns and bombs and threaten your life, and you kick their asses anyway, you ain't afraid of a group of billionaire bankers and their spreadsheets. He is the shit. My advice to anyone on Wall Street in his crosshairs: If you are indicted in a case by Khuzami, do yourself a big favor: Settle.

3. Goldman lost $90 million dollars, hence, they are innocent: This is a civil, not a criminal case. Hence, any mens rea - guilty mind - does not matter. Did they or did they not violate the letter of the law? That is all that matters, regardless of what they were thinking - or their P&L.

4. ACA is a victim in this case: Not exactly, they were an active participant in ratings gaming. Look at the back and forth between Paulson's selection and ACAs management. 55 items in the synthetic CDO were added and removed. Why?

What ACA was doing was gaming the ratings agencies for their investment grade, Triple AAA ratings approval. Their expertise (if you can call it that) was knowing exactly how much junk they could include in the CDO to raise yield, yet still get investment grade from Moody's or S&P. They are hardly an innocent party in this.

5. This was only one incident: The Market sure as hell doesn't think so - it whacked 15% off of Goldman's Market cap. The aggressive SEC posture, the huge reaction from Goldie, and the short term market verdict all suggest there is more coming.

If it were only this one case, and there was nothing else worrisome behind it, GS would have written a check and quietly settled this. Their reaction (some say over-reaction) belies that theory. I suspect this is a tip of the iceberg, with lots more problematic synthetics behind it.

And not just at GS. I suspect the kids over at Deutsche bank, Merrill and Morgan are working furiously to review their various CDOs deals.

6. The Timing of this case is suspect. More coincidental, really. The Wells notice (notification from the SEC they intend to recommend enforcement) was over 8 months ago. The White House is not involved in the timing of the suit itself; it is a lower level staff decision.

7. This is a Complex Case: Again, no. Parts of it are a little more sophisticated than others, but this is a simple case of fraud/misrepresentation. The most difficult part of this case is likely to turn on what is a "material omission." Paulson's role in selecting mortgages may or may not be material - that is an issue of fact for a jury to determine. But complex? Not even close.

8. The case looks thin: What we see in the complaint is the bare minimum the prosecutor has to reveal to make their case. What you don't see are all the emails, depositions, interrogations, phone taps, etc. that the prosecutors know about and GS does not. During the litigation discovery process, this material slowly gets turned over (some is held back if there are other pending investigations into GS).

Going back to who the prosecutor in this case is: His legal reputation shows he is a very thorough, very precise, meticulous litigator. If he decided to recommend bringing a case against the biggest baddest investment house on Wall Street, I assure you he has a major arsenal of additional evidence you don't know about. Yet.

Typically, at a certain point the lawyers will tell their client that the evidence is overwhelming and advise settling. That is around 6-12 months after the suit has begun.

9. This case is Political: I keep hearing that phrase, due to the SEC party vote. It is incorrect. What that means is the case is not political, it means it has been politicized as a defense tactic. There is a huge difference between the two.

10. I'm not a lawyer, but . . . Then you should not be ignorantly commenting on securities litigation. Why don't you pour yourself a tall glass of "Keep Your Mouth Shut" and go sit quietly in the corner.

Bonus: CNBC's Steve Liesman has taken over the role Charlie Gasparino used to occupy - he appears to be the official designated spokesperson/leakee for Goldman. I find this sort of access Journalism contemptible, but that's just me. It also says some negative things about Charlie's career move - Fox Biz may not garner enough ratings to waste a leak there.

I have $1,000 against any and all comers that GS does not win - they settle or lose in court. Any takers? My money is already in escrow - waiting for yours to join it. Winnings go to the charity of the winner's choice.

Barry Ritholtz
for The Daily Reckoning


Barry Ritholtz is author of Bailout Nation (Wiley), publisher and editor of The Big Picture, and CEO and director of equity research at FusionIQ

[Hugin]

42. I'll have what #10 is having, please.

:rofl:

I heed well the words of Smash Mouth in their Kneecracker Ballet.

[Demeter]

62. the link

http://dailyreckoning.com/10-things-you-dont-know-or-were-misinformed-about-the-gs-case/

[ozymandius]

53. Speaking of lawsuits: Lehman gets served.

Lehman Investors Add Ernst & Young to Lawsuit Over Repo 105 Transactions

Lehman Brothers Holdings Inc.’s auditor Ernst & Young LLP was added as a defendant in a lawsuit seeking to recover money from former executives and underwriters for failing to disclose Repo 105 transactions.

The investor lawsuit, amended to add findings contained in a 2,200-page report published March 11 by Lehman bankruptcy examiner Anton Valukus, was filed yesterday on behalf of a group of retirement funds including the Alameda County Employees’ Retirement Association in Oakland, California, and the Government of Guam Retirement Fund. ....

The investors, in their original lawsuit filed in June 2008 in federal court in Manhattan, claimed that New York-based Lehman made false statements about liquidity, failed to take timely write downs of its positions on mortgage-backed securities and overstated their value. The defendants in the case include former Lehman Chief Executive Officer Richard Fuld.

http://preview.bloomberg.com/news/2010-04-23/lehman-investors-add-ernst-young-to-lawsuit-over-repo-105-transactions.html

[Demeter]

63. Eminently Quotable!

Goldman's (few remaining) apologists insist the firm is merely successful. Everyone else assumes the firm is merely criminal. Most likely, the truth lies somewhere in the middle - Goldman is successfully criminal.

Eric Fry, of DailyReckoning.com

[Demeter]

65. More from Eric Fry

It was a very strange day for the immensely successful and widely despised financial firm. Before the market opened for trading, Goldman reported a dazzling earnings result for the first quarter - the second best quarterly result in the firm's 141-year history. And Goldman generated this result in classic Goldman fashion - a smattering of profits from traditional business lines like investment banking, along with a mountain of profits from proprietary trading.

But investors did not cheer the earnings result; they were still too busy booing Goldman's fraudulent conduct...and the grim consequences that might ensue. The various investigations and lawsuits that Goldman will soon endure is bad news. The possibility that disgruntled clients might jump ship is worse. How, for example, could Goldman possibly produce its proprietary trading profits if there were no stooges around to take the other side of its trades?

Goldman needs those stooges...er, clients...to grease the wheels of its profit machine.

Goldman's top brass insists the firm has done no wrong. But many are the critics who insist the firm has done little right...for its clients, that is. This firm knows all about making money. No one doubts that. But the "hows" of that moneymaking are becoming a topic of national interest...and disgust.

One faithful Daily Reckoning reader, who also happens to be a former attorney, provided the following insight:

Goldman Sachs is in a lot of trouble.

It is in far more trouble than most financial commentators seem to realize, for reasons that are deeply embedded in the American system of justice. Since Colonial times, American courts have required witnesses to take a specific oath. This oath has become a part of American folklore. From Perry Mason to Boston Legal, every witness who takes the stand must swear, "to tell the truth, the whole truth and nothing but the truth."

It is the "whole truth" portion of this oath that puts Goldman in such trouble. The law recognizes that you can deceive people without ever saying anything false, just by omitting critical truths.

A real estate ad that said, "This home is in a beautiful neighborhood, is immaculately designed and was at one time owned by a famous celebrity," might be 100% truthful. But it would also be 100% deceptive if the sales agent failed to mention the additional truth that "the walls are insulated with asbestos."

Omitting important truths is a crime...especially in the financial industry. This concept is literally written into the definition of securities fraud. The most important expression of that definition is SEC Rule 10b-5 : Employment of Manipulative and Deceptive Practices.

This rule states that in connection with the selling of securities, it is unlawful for anyone to "make any untrue statement of material fact, or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading."

In other words, you can't just tell someone the truth about the portfolio of collateralized mortgage obligations you are trying to sell, you have to tell them the whole truth.

And this is why Goldman Sachs is in such deep trouble. When Goldman was attempting to sell the portfolio of mortgage obligations to various parties, it never told them:

"We want you to know that we built this portfolio for a hedge fund manager who wants to short the collateralized mortgage market because he believes it is overpriced and may collapse. He could be wrong, of course, but he can't take a short position unless someone else buys the actual securities we have created. Would you like to buy those securities?"

Call me naïve, but I expect that most ordinary Americans, which is to say, people who sit on juries, when they hear that testimony will be thinking to themselves, "Wow! I'm not sure I would have bought those securities if I had known the whole story."

Goldman is in deep trouble if it has to tell its story in a courtroom, where every single employee-witness will have to tell the whole truth - perhaps for the first time.

Here's our question: If Goldman Sachs is truly in trouble, isn't the stock market in even deeper trouble?

Goldman is the largest player in the US stock market, and one of the most influential players in every other major financial market. Therefore, a discredited and enfeebled Goldman Sachs is probably not a bullish event for share prices...

[Demeter]

66. And He Strikes Gold(man) Yet Again!

If you flip a penny 1,000 times, it'll land "heads" about half the time and "tails" about half the time. If you bet on "Even" 1,000 times at a roulette table, you'd win a little less than half the time (thanks to the "0" and "00" slots on the wheel). These probabilities are relatively simple and intuitive.

Stock market probabilities differ somewhat. Insight improves the odds. Lots of insight improves the odds greatly...over a long-term timeframe. But over the short-term, insight provides a very limited and unreliable benefit. "The markets can stay irrational," John Maynard Keynes famously observed, "for much longer than you can stay solvent."

That said, successful stock market traders tend to "win" about 55% to 60% of the time. This win percentage is not so different from that of successful sports bettors. Again, these probabilities make sense. If you possess relevant insights into the "markets" you are trading - be they S&P 500 futures or professional football games - you can improve your odds of success...a little. Chance and pure, dumb luck still play a prominent role...unless you happen to be a trader at Goldman Sachs. For reasons that neither logic nor probabilities can explain, Goldman's trading desk "wins" more than 90% of the time...or at least it did during 2009.

Goldman's Win Percentage

The inexplicably successful Wall Street firm lost money on only 19 trading days last year, which means it made money on 244 days out of 263. And Goldman did not simply make some money, it made lots of money. The firm booked a daily profit of more than $100 million on 131 trading days - that's almost ten times the number of $100 million days it booked in 2004.

Goldman's $100 Million Days

Even during the rough and tumble days of 2008, Goldman still managed to amass an implausible record of success by booking a daily trading profit 63% of the time and racking up $100 million profits on 90 trading days. A cynical observer could easily deduce that: 1) the "level playing field" on which Goldman purports to operate is as crooked as can be and that; 2) Goldman's miraculous trading success in 2009 may have something to do with the disappearance and/or emasculation of former competitors like Bear Stearns, Lehman Bros. and Merrill Lynch.

"Traders are supposed to live by their wits, making judicious bets on the market," observes financial commentator, Sean Paul Kelley. "Good traders who don't have inside information tend to win about 55% of the time and lose money 45% of the time, the difference being their profit resulting from their trading acumen.

"Goldman Sachs doesn't work this way," says Kelley. "They have bright people no doubt, and somewhere on the trading floor these people on occasion make good and bad judgment calls. From what it looks like, however, their traders are benefiting from two advantages: information not available to the market, and muscle. These two things give the firm an edge that almost guarantees substantial 'trading profits' quarter after quarter.

"The information part comes from a variety of sources," Kelley continues. "We've seen the scandal over High Frequency Trading, where Goldman and other firms have computers positioned at the New York Stock Exchange, getting information on trades a millisecond before they are posted publicly. Goldman sees where the market is going second by second, positions itself for very short term profits, and in effect extracts a tax on trading by individual investors and mutual funds. Goldman Sachs is the biggest player in this business... For credit products, mortgage securities, and equity derivatives, Goldman Sachs extracts similar information from its clients interested in buying or selling these products...

"None of these information sources or uses are illegal at this point," Kelley concludes, "but this is hardly the profile of your typical day- trader pitting his wits against the fickleness of the market; this is the profile of a hedge fund with critical information and size advantages, using them to maximize profit."

As Kelley correctly observes, none of Goldman's known trading practices are illegal. On the other hand, legal trading practices have never before generated such a sustained record of improbable success. So just maybe, Goldman's brilliant trading record emerges from something other than gee-whiz computer programs and the brilliant instincts of trading jocks.

Remember, Goldman generates its trading results from the activities of hundreds of traders, operating in dozens of different financial markets. And yet, somehow, the collective activities of this gun- slinging diaspora produce a daily profit 93% of the time. That's either very impressive or very illegal.

The truth will come to light eventually.

[Demeter]

70. BREAKING NEWS: Senate probe finds evidence Goldman profited on collapse

Goldman Sachs made a windfall betting against the mortgage market even though it stated in its 2009 annual report to investors that it “did not generate enormous net revenues by betting against residential related products”, according to initial findings of a Senate investigation into the bank.

Lloyd Blankfein, the chairman and chief executive of Goldman, said in November 2007 email exchange with other top executives that was released: “Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts.”

Read more >>
http://link.ft.com/r/3JFELL/UUGDMX/7ZY85/QFGU4B/ZB6HM5/4O/t

[Demeter]

118. NEW!!! Goldman cancels banking registration of key figure in SEC lawsuit

Goldman cancels banking registration of key figure in SEC lawsuit: Goldman Sachs withdrew the British banking license of Fabrice Tourre, a defendant in the U.S. Securities and Exchange Commission's lawsuit that accuses the bank of fraud in the sale of mortgage-backed securities. The action came hours after the U.K. Financial Services Authority launched its own investigation into Goldman. In a related matter, a Goldman executive said the bank tried to sell its $100 million investment in Abacus 2007-AC1 but couldn't find a buyer.

The Times (London) (21 Apr.) ,
Telegraph (London) (20 Apr.)

[Demeter]

26. Another Opinion--Gloom, Boom & Doom Report mastermind, Dr. Marc Faber

...In other SEC-related news, there is no shortage of controversial opinions surrounding the Commission’s case against Wall Street darling, Goldman Sachs. Speaking from the sidelines of the World MoneyShow in Hong Kong, Gloom, Boom & Doom Report mastermind, Dr. Marc Faber, told CNBC:

“I think Goldman Sachs is a very honest firm. They have a very strict compliance department compared to the others,” he remarked, adding, “they’re like an angel. But targeted Goldman as it stands as a symbol of Wall Street.”

Besides, Dr. Faber says, it’s all just an excuse for the Fed to print more money.

“Obama has lost the trust of the people,” he explained further to Kitco. “His approval rating is worse than Bush’s at this stage in the presidency. When people are dissatisfied in a democracy – you go after a minority to target – in the case of America, you go after Goldman Sachs, because it is the symbol of Wall Street and excessive money creation – and there is also a tone of anti-Semitism there.

“Maybe the intention is not to hurt Goldman Sachs, but just to gain popularity with the middle class and the lower class of America, so they will perceive Mr. Obama to have done something against the evil of Wall Street.”

He added, “Mr. Obama will do everything he can to get re-elected and that may involve some very bad decisions. He is like a roman emperor; he just gives out bread to the mob and produces games and circuses.”

Overall, Faber holds little hope for financial reform in the US. “The US should have less regulation and not more regulation – that is the origin and cause of the crisis.”...

THERE ARE STILL APOLOGISTS OUT THERE!

[Demeter]

48. Another GS Apologist Heard From

http://www.marketwatch.com/story/goldman-case-shows-wall-streets-true-colors-2010-04-24?pagenumber=1

[KoKo]

61. Interesting thing about one of Faber's comments:

“Obama has lost the trust of the people,” he explained further to Kitco. “His approval rating is worse than Bush’s at this stage in the presidency. When people are dissatisfied in a democracy – you go after a minority to target – in the case of America, you go after Goldman Sachs, because it is the symbol of Wall Street and excessive money creation – and there is also a tone of anti-Semetism there.

Crazy Jim Cramer of "Mad Money" on CNBC was trying to put out the "anti-Semetism" meme about Goldman being charged by SEC.

Since we savvy folks here on DU know that these "memes" don't get spread by accident, it's disheartening to see finance people with big followings like Faber/Cramer trying to say that investigating Goldman has a tint of anti-Semetism. Which of course means that anyone who thinks that Goldman is being targeted because of it's name/founders and not it's actions.

I think Goldman is pulling out all the cards if it's resorting to this kind of smear.

[Demeter]

64. Bush was in the Throes of 9/11 Hysteria At this point

not a valid comparison, IMO.

[KoKo]

68. Huh?

What does Faber's comment about Goldman have to do with Bush's 9/11 hysteria? :shrug:

[Demeter]

71. Can't Compare the Hero of 911 to Now

At this point in his term, Bush was riding a wave of false patriotism for all it was worth, while gumming up the information channels with lies and accusations.

Obama is slowly sinking into the quagmire of Wall St. fraud and regulatory negligence and he's on the hook for continuing the bailouts and keeping the Goldman boys in his staff. And the truth is coming out, all by itself, not because of anything proactive from the Administration. The SEC may be saving Obama, but Obama isn't saving the country.

The dynamics and the situations could not be more different, therefore popularities of the two Presidents at this point in their term cannot be compared...

[KoKo]

73. Demeter, please read comment #61....

I have no idea what you are talking about. I was posting in reply to your post of Mark Faber's comments about Goldman-Sachs. For some reason you think I'm talking about Obama and Bush and 9/11?

Where in my post do I talk about Obama and Bush's popularity at this point in their term? :crazy:

[Hugin]

77. I read a piece, which...

I have been unable to re-find or corroborate which said Goldman Sachs had hired none other than *cough*KKKarl Rove's*coff* law firm in the SEC matter.

Know anything about that KoKo?

[Demeter]

29. An Industry Is Born

http://l3d.cs.colorado.edu/systems/agentsheets/New-Vista/automobile/history.html

Starting in the late 1700's, European engineers began tinkering with motor powered vehicles. Steam, combustion, and electrical motors had all been attempted by the mid 1800's. By the 1900's, it was uncertain which type of engine would power the automobile. At first, the electric car was the most popular, but at the time a battery did not exist that would allow a car to move with much speed or over a long distance. Even though some of the earlier speed records were set by electric cars, they did not stay in production past the first decade of the 20th century. The steam-driven automobile lasted into 1920's. However, the price on steam powered engines, either to build or maintain was incomparable to the gas powered engines. Not only was the price a problem, but the risk of a boiler explosion also kept the steam engine from becoming popular. The combustion engine continually beat out the competition, and the early American automobile pioneers like Ransom E. Olds and Henry Ford built reliable combustion engines, rejecting the ideas of steam or electrical power from the start.

Automotive production on a commercial scale started in France in 1890. Commercial production in the United States began at the beginning of the 1900's and was equal to that of Europe's. In those days, the European industry consisted of small independent firms that would turn out a few cars by means of precise engineering and handicraft methods. The American automobile plants were assembly line operations, which meant using parts made by independent suppliers and putting them together at the plant. In the early 1900's, the United States had about 2,000 firms producing one or more cars. By 1920 the number of firms had decreased to about 100 and by 1929 to 44. In 1976 the Motor Vehicle Manufacturers Association had only 11 members. The same situation occurred in Europe and Japan.

The first automobile produced for the masses in the US was the three-horsepower, curved-dash Oldsmobile; 425 of them were sold in 1901 and 5,000 in 1904--this model is still prized by collectors. The firm prospered, and it was noted by others, and, from 1904 to 1908, 241 automobile-manufacturing firms went into business in the United States. One of these was the Ford Motor Company which was organized in June 1903, and sold its first car on the following July 23. The company produced 1,700 cars during its first full year of business. Henry Ford produced the Model T to be an economical car for the average American. By 1920 Ford sold over a million cars.

At the beginning of the century the automobile entered the transportation market as a toy for the rich. However, it became increasingly popular among the general population because it gave travelers the freedom to travel when they wanted to and where they wanted. As a result, in North America and Europe the automobile became cheaper and more accessible to the middle class. This was facilitated by Henry Ford who did two important things. First he priced his car to be as affordable as possible and second, he paid his workers enough to be able to purchase the cars they were manufacturing. This helped push wages and auto sales upward. The convenience of the automobile freed people from the need to live near rail lines or stations; they could choose locations almost anywhere in an urban area, as long as roads were available to connect them to other places. Many states in the US established motor fuel taxes that were used only to build and maintain highways helping the auto highway system become self-supporting.

[Demeter]

30. I'm a Daughter of the Motor City

My Great Grandfather Benny immigrated from Poland and eventually arrived in Detroit and worked the line--I do not know which company--and he only spoke Polish and very little even of that. The mass migration prior to WWI brought masses of Central Europeans to work in the Midwest manufacturing factories. Immigrants did not even have to learn English, as the entire team would be recruited from an ethnic neighborhood. Detroit was 45% Polish, and there were communities that considered English the second language. My grandparents and parents went to Polish-language schools, although the parents did not manage to become fluent, and the grandparents spoke a peculiar form of Polish-English that relatives back in the Old Country found amusing or baffling as many borrowed words were incorporated.

I was quite young when Great Grandpa died, and all the relatives who might have more detail are also gone. He raised pigeons for meat, and grew vegetables and fruits, right in the city. He foraged the woods around the city for mushrooms. He and Grandma Mary celebrated 50 years of marriage before he died.

My grandfather was a tool-and-die maker. These highly skilled workers make the machines that make the machines. There were dozens of tool and die firms in Detroit to supply the Big Three with the means to build each year's new models.

http://en.wikipedia.org/wiki/Tool_and_die_maker

http://www.google.com/search?q=tool+and+die+industry+history&hl=en&client=firefox-a&hs=Q3U&rls=org.mozilla:en-US:official&tbs=tl:1&tbo=u&ei=cE3SS8i-OYOglAeKoL3sDA&sa=X&oi=timeline_result&ct=title&resnum=11&ved=0CD8Q5wIwCg

The tool and die industry has gone to Asia, or been replaced by computer technology; it started to falter in the 70's and may never recover, unless we have a massive technology or implementation loss due to some catastrophe that forces us to rediscover the trade.

My father and mother did NOT work in the auto industry. Nor have their children. But our lives were shaped by the reality of living in a state dominated by the cycle: shutdown to retool in the summer, new models in the fall, Auto Show in the winter, Washington Day sales, strikes and so forth.

[Demeter]

32. The Impact of the Industry

http://l3d.cs.colorado.edu/systems/agentsheets/New-Vista/automobile/history.html

Popularity of the automobile has consistently moved with the state of the economy, growing during the boom period after World War I and dropping abruptly during the Great Depression, when unemployment was high. World War II saw a large increase in mass transit because employment was high and automobiles were scarce. The rapid growth of car owners after World War II, particularly in the United States and Western Europe demonstrated the population's favor towards automobiles. During the war, automobile motors, fuel, and tires were in short supply. There was an unsatisfied demand when the war ended and plenty of production capacity as factories turned off the war machine. Many people had saved money because there was little to buy, beyond necessities, in the war years. Workers relied heavily on mass transportation during the war and longed for the freedom and flexibility of the automobile.

A historian has said that Henry Ford freed common people from the limitations of their geography. The automobile created mobility on a scale never known before, and the total effect on living habits and social customs is endless. In the days of horse-drawn transportation, the practical limit of wagon travel was 10 to 15 miles, so that meant any community or individual farm more than 15 miles from a city, a railroad, or a navigable waterway was isolated from the mainstream of economic and social life. Motor vehicles and paved roads have narrowed the gap between rural and urban life. Farmers can ship easily and economically by truck and can drive to town when it is convenient. In addition, such institutions as regional schools and hospitals are now accessible by bus and car.

Yet, the effect on city life has been, if anything, more prominent than the effect on the farms. The automobile has radically changed city life by accelerating the outward expansion of population into the suburbs. The suburban trend is emphasized by the fact that highway transportation encourages business and industry to move outward to sites where land is cheaper, where access by car and truck is easier than in crowded cities, and where space is available for their one or two story structures. Better roads were constructed, which further increased travel throughout the nation. As with other automobile-related phenomena, the trend is most noticeable in the United States but is rapidly appearing elsewhere in the world.

Before the automobile, people both lived in the city and worked in the city, or lived in the country and worked on a farm. Because of the automobile, the growth of suburbs has allowed people to live on the outskirts of the city and be able to work in the city by commuting. New jobs due to the impact of the automobile such as fast food, city/highway construction, state patrol/police, convenience stores, gas stations, auto repair shops, auto shops, etc. allow more employment for the world's growing population.

[Demeter]

34. Encomium for Car Talk Before Bed

Tom and Ray Magliozzi host Car Talk, a weekly program featured on National Public Radio that covers cars rather in the same style WEE covers the economy.

While they are certifiable, in that way that any siblings are in each other's presence, their program is entertaining and helpful. It even helped me keep sane while watching my world crumble in California...their familiar Boston accents bringing back nostalgic memories of life in New England...but that's another story.

Here is their website, and you can listen to their shows at your leisure:

http://www.cartalk.com/index.html


I think the greatest significance of the auto industry is that it never was primarily a means of manufacturing weapons, which was always the first purpose of technology and large-scale manufacturing. While the auto could certainly aid a war effort, it could equally aid a peaceful one.

The only similarly predominantly peaceful large-scale manufacturing enterprise I can think of was textiles, which we lost to Asia back in the 60's as the Corporations fled from the evil Unions.

As long as a nation permits capital outflow, Corporations will screw over the populations that dare try to equalize the power balance by sending the work overseas. Unfortunately for them and for us, few nations are as idiotic as the US about such things.

[DemReadingDU]

39. 1969 Roadrunner with hemi engine

Not spouse's car, but he had one of these! Vroom, Vroom!

http://www.youtube.com/watch?v=K2F5_jf7f6w

[Hugin]

40. I once had one of the Satellite versions of that car.

Not quite a Roadrunner and no Hemi... But, it was still a force to be reckoned with... It was almost that color, too.

I remember that car was where I learned... I don't do upholstery! My self-imposed moratorium was not because I didn't do
a good job, but, for lack of materials. My fabric inserts only lasted about a year in the sun and then they turned to dust! :o

[Demeter]

45. The Difference Between Management and Engineering--Dilbert, of course

[Demeter]

46. Mark Fiore Takes on Modern Banking Practices

http://www.markfiore.com/political-cartoons/watch-wall-street-bailout-born-to-lose-animation-mark-fiore

[Demeter]

47. Oliphant Sighting!

http://imgsrv.gocomics.com/dim/?fh=d3cb9ec38048025696f7eb6e474b802f&w=750.0

[Demeter]

49. Obama links auto industry woes, financial overhaul

http://news.yahoo.com/s/ap/20100424/ap_on_bi_ge/us_obama_autos

Celebrating signs of a turnaround in the U.S. auto industry, President Barack Obama said Saturday the financial system must be overhauled to prevent a repeat of the economic crisis that pushed carmakers to the brink.

Senate Democrats have set a test vote Monday on a bill that aims to protect the overall economy by imposing tighter regulations on the financial sector.

The auto industry was one of the biggest casualties of a recession fueled by risky lending and speculative trading practices of major financial institutions. But after shedding 400,000 jobs in 2008, bailed-out U.S. automakers are rebounding.

General Motors Co. said this week it will repay $8.1 billion in U.S. and Canadian government loans five years ahead of schedule. Chrysler LLC, now run by an Italian company, said it boosted its cash reserves by $1.5 billion despite a first-quarter loss of almost $200 million.

In his weekly radio and Internet address, Obama said that while the auto industry is on more solid footing, it will take more time for the economy to recover from the loss of 8 million jobs. He blamed the downturn on irresponsible risk-taking by Wall Street firms.

In a speech Thursday in New York in the shadow of Wall Street, Obama argued for new rules to protect consumers and hold financiers accountable. The changes would end taxpayer bailouts, bring complex financial dealings into the open and extend new rights and protections to consumers and shareholders.

"That's how after two very difficult years we'll not only revive the economy, but help to rebuild it stronger than ever before," he said Saturday.

The White House, in a report timed to GM's loan repayment, said the past nine months had produced the auto industry's strongest job growth in nearly a decade, with the addition of 45,000 jobs.

Senate Majority Leader Harry Reid, D-Nev., has set a test vote on the financial overhaul bill for Monday, but conceded that the timetable could slip if bargaining with Republicans proved fruitful. Republicans say they don't agree the bill would end government bailouts and they want to keep negotiating.

Without an agreement with the GOP, Democrats would need 60 votes to move forward in the Senate. They have 59 votes.

In the weekly GOP message, Sen. Kay Bailey Hutchison of Texas said Republicans aren't trying to block the bill but want to make sure it would end taxpayer bailouts.

"It's time for the name-calling to stop," Hutchison said. "Getting our economy back on track is too important to allow political games to sidetrack these efforts. Both parties agree that any financial regulation should do one essential thing: No company should be considered too big to fail. And never again should taxpayers be expected to bail out those who made risky financial bets with other people's money."

STILL CLUELESS AFTER ALL THOSE JOBS LOST AND WEALTH EVAPORATED...

THE AUTO COMPANIES DECIDED THEY WOULD VERTICALLY INTEGRATE AND GET ALL THE PROFITS THAT BANKS STOLE FROM THEM BY PROVIDING FINANCING--AND THEY BECAME PART OF THE SHADOW BANKING SYSTEM. WHEN THAT SYSTEM COLLAPSED, SO TOO DID THE AUTO COMPANIES. THERE'S NO SUCH THING AS A FREE LUNCH, AND TRYING TO PRINT YOUR OWN MONEY IS COUNTERFEITING, BUT IT WORKED WONDERFULLY FOR A WHILE...

[Demeter]

50. Will tough love fix Greece's economic woes?

http://news.yahoo.com/s/ap/20100424/ap_on_bi_ge/us_world_economy

PROBABLY NOT. BOTH THE ARTICLE AND THE COMMENTS ARE ENTERTAINING, BUT NOT TERRIBLY INFORMATIVE.

[Demeter]

51. Pioneer inventors of the Automobile

http://en.wikipedia.org/wiki/History_of_the_automobile

German engineer Karl Benz, inventor of numerous car-related technologies, is generally regarded as the inventor of the modern automobile. The four-stroke petrol (gasoline) internal combustion engine that constitutes the most prevalent form of modern automotive propulsion is a creation of German inventor Nikolaus Otto. The similar four-stroke diesel engine was also invented by a German, Rudolf Diesel. The hydrogen fuel cell, one of the technologies hailed as a replacement for gasoline as an energy source for cars, was discovered in principle by yet another German, Christian Friedrich Schönbein, in 1838. The battery electric car owes its beginnings to Hungarian Ányos Jedlik, one of the inventors of the electric motor, and Gaston Planté, who invented the lead-acid battery in 1859...

It is generally acknowledged that the first really practical automobiles with petrol/gasoline-powered internal combustion engines were completed almost simultaneously by several German inventors working independently: Karl Benz built his first automobile in 1885 in Mannheim. Benz was granted a patent for his automobile on 29 January 1886, and began the first production of automobiles in 1888, after Bertha Benz, his wife, had proved with the first long-distance trip in August 1888 - from Mannheim to Pforzheim and back - that the horseless coach was absolutely suitable for daily use. Since 2008 a Bertha Benz Memorial Route commemorates this event.

Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed a vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an engine. They also are usually credited as inventors of the first motorcycle in 1886, but Italy's Enrico Bernardi, of the University of Padua, in 1882, patented a 0.024 horsepower (17.9 W) 122 cc (7.4 cu in) one-cylinder petrol motor, fitting it into his son's tricycle, making it at least a candidate for the first automobile, and first motorcycle;.<7>:p.26 Bernardi enlarged the tricycle in 1892 to carry two adults.<7>:p.26

One of the first four-wheeled petrol-driven automobiles in Britain was built in Birmingham in 1895 by Frederick William Lanchester, who also patented the disc brake and the first electric starter, was installed on an Arnold, in a copy of the Benz Velo, built between 1895 and 1898.<7>:p.25

In all the turmoil, many early pioneers are nearly forgotten. In 1891, John William Lambert built a three-wheeler in Ohio City, Ohio, which was destroyed in a fire the same year, while Henry Nadig constructed a four-wheeler in Allentown, Pennsylvania. It is likely they were not the only ones....

The French 1898 Renault Voiturette

The first production of automobiles was by Karl Benz in 1888 in Germany and, under licence from Benz, in France by Emile Roger. There were numerous others, including tricycle builders Rudolf Egg, Edward Butler, and Léon Bollée.<7>:p.20-23 Bollée, using a 650 cc (40 cu in) engine of his own design, enabled his driver, Jamin, to average 45 kilometres per hour (28.0 mph) in the 1897 Paris-Tourville rally.<7>:p.23 By 1900, mass production of automobiles had begun in France and the United States. The first company formed exclusively to build automobiles was Panhard et Levassor in France, which also introduced the first four-cylinder engine.<7>:p.22 Formed in 1889, Panhard was quickly followed by Peugeot two years later. By the start of the 20th century, the automobile industry was beginning to take off in western Europe, especially in France, where 30,204 were produced in 1903, representing 48.8% of world automobile production that year.
The first automobile in Japan, a French Panhard-Levassor, in 1898
1903 World's Work Article

In the United States, brothers Charles and Frank Duryea founded the Duryea Motor Wagon Company in 1893, becoming the first American automobile manufacturing company. However, it was Ransom E. Olds and his Olds Motor Vehicle Company (later known as Oldsmobile) who would dominate this era of automobile production. Its large scale production line was running in 1902. Within a year, Cadillac (formed from the Henry Ford Company), Winton, and Ford were producing cars in the thousands.

Within a few years, a dizzying assortment of technologies were being produced by hundreds of producers all over the western world. Steam, electricity and petrol/gasoline-powered automobiles competed for decades, with petrol/gasoline internal combustion engines achieving dominance in the 1910s. Dual- and even quad-engine cars were designed, and engine displacement ranged to more than a dozen litres. Many modern advances, including gas/electric hybrids, multi-valve engines, overhead camshafts, and four-wheel drive, were attempted, and discarded at this time. In 1898, Louis Renault had a De Dion-Bouton modified, with fixed drive shaft and ring and pinion gear, making "perhaps the first hot rod in history" and bringing Renault and his brothers into the car industry.<12> Innovation was rapid and rampant, with no clear standards for basic vehicle architectures, body styles, construction materials, or controls. Many veteran cars use a tiller, rather than a wheel for steering, for example, and most operated at a single speed. Chain drive was dominant over the drive shaft, and closed bodies were extremely rare. Drum brakes were introduced by Renault in 1902.<13> The next year, Dutch designer Jacobus Spijker built the first four-wheel drive racing car;<14> it never competed, and would have to wait until 1965 and the Jensen FF to be used on a production car.<15>

Innovation was not limited to the vehicles themselves, either. Increasing numbers of cars propelled the growth of the petroleum industry,<16> as well as the development of technology to produce gasoline (replacing kerosene and coal oil) and of improvements in heat-tolerant mineral oil lubricants (replacing vegetable and animal oils)...

[Demeter]

52. Remember that the Automobile Replaces the Horse

Horses are noble beasts and very useful for short distances, but the maintenance and operation of horses is tremendously detailed and time-consuming and expensive. With limited range and durability, horses were better than nothing.

Airplanes and trains can cover continental distances, but for hauling people and cargo about town, trains and buses leave a great deal to be desired.

The excesses of the automotive culture are no reason to throw out the transportation baby with the bath water...they are instead a challenge to both the technically gifted to improve the auto, and the socially adept to draw up social codes and arrangements to maximize the value and minimize the negative impacts of mass tranportation.

The auto was the gateway to technology, opening generations to the ultimate question: WHAT IF?

Would we have space travel without the pioneering land transportation? Probably not. The percolation of knowledge, skills, imagination, capital, and growing social and economic equality would be lacking without it.

[Demeter]

55. Don’t Cry for Wall Street By PAUL KRUGMAN

http://www.nytimes.com/2010/04/23/opinion/23krugman.html?hp



On Thursday, President Obama went to Manhattan, where he urged an audience drawn largely from Wall Street to back financial reform. “I believe,” he declared, “that these reforms are, in the end, not only in the best interest of our country, but in the best interest of the financial sector.”

Well, I wish he hadn’t said that — and not just because he really needs, as a political matter, to take a populist stance, to put some public distance between himself and the bankers. The fact is that Mr. Obama should be trying to do what’s right for the country — full stop. If doing so hurts the bankers, that’s O.K.

More than that, reform actually should hurt the bankers. A growing body of analysis suggests that an oversized financial industry is hurting the broader economy. Shrinking that oversized industry won’t make Wall Street happy, but what’s bad for Wall Street would be good for America.

Now, the reforms currently on the table — which I support — might end up being good for the financial industry as well as for the rest of us. But that’s because they only deal with part of the problem: they would make finance safer, but they might not make it smaller.

What’s the matter with finance? Start with the fact that the modern financial industry generates huge profits and paychecks, yet delivers few tangible benefits.

Remember the 1987 movie “Wall Street,” in which Gordon Gekko declared: Greed is good? By today’s standards, Gekko was a piker. In the years leading up to the 2008 crisis, the financial industry accounted for a third of total domestic profits — about twice its share two decades earlier.

These profits were justified, we were told, because the industry was doing great things for the economy. It was channeling capital to productive uses; it was spreading risk; it was enhancing financial stability. None of those were true. Capital was channeled not to job-creating innovators, but into an unsustainable housing bubble; risk was concentrated, not spread; and when the housing bubble burst, the supposedly stable financial system imploded, with the worst global slump since the Great Depression as collateral damage.

So why were bankers raking it in? My take, reflecting the efforts of financial economists to make sense of the catastrophe, is that it was mainly about gambling with other people’s money. The financial industry took big, risky bets with borrowed funds — bets that paid high returns until they went bad — but was able to borrow cheaply because investors didn’t understand how fragile the industry was.

And what about the much-touted benefits of financial innovation? I’m with the economists Andrei Shleifer and Robert Vishny, who argue in a recent paper that a lot of that innovation was about creating the illusion of safety, providing investors with “false substitutes” for old-fashioned assets like bank deposits. Eventually the illusion failed — and the result was a disastrous financial crisis.

In his Thursday speech, by the way, Mr. Obama insisted — twice — that financial reform won’t stifle innovation. Too bad.

And here’s the thing: after taking a big hit in the immediate aftermath of the crisis, financial-industry profits are soaring again. It seems all too likely that the industry will soon go back to playing the same games that got us into this mess in the first place.

So what should be done? As I said, I support the reform proposals of the Obama administration and its Congressional allies. Among other things, it would be a shame to see the anti-reform campaign by Republican leaders — a campaign marked by breathtaking dishonesty and hypocrisy — succeed.

But these reforms should be only the first step. We also need to cut finance down to size.

And it’s not just critical outsiders saying this (not that there’s anything wrong with critical outsiders, who have been much more right than supposedly knowledgeable insiders; see Greenspan, Alan). An intriguing proposal is about to be unveiled from, of all places, the International Monetary Fund. In a leaked paper prepared for a meeting this weekend, the fund calls for a Financial Activity Tax — yes, FAT — levied on financial-industry profits and remuneration.

Such a tax, the fund argues, could “mitigate excessive risk-taking.” It could also “tend to reduce the size of the financial sector,” which the fund presents as a good thing.

Now, the I.M.F. proposal is actually quite mild. Nonetheless, if it moves toward reality, Wall Street will howl.

But the fact is that we’ve been devoting far too large a share of our wealth, far too much of the nation’s talent, to the business of devising and peddling complex financial schemes — schemes that have a tendency to blow up the economy. Ending this state of affairs will hurt the financial industry. So?

I'M IN FAVOR OF REPARATIONS FROM WALL STREET ON THE SCALE OF THE TREATY OF VERSAILLES, MYSELF...

[Demeter]

57. Now for the war on volcanoes Dana Milbank

The enemy struck without warning. It blackened the skies. It grounded our airplanes. It is believed to have 57 sleeper operations in the United States capable of exploding at any moment....

THAT OUGHT TO WIPE BOBBY JINDAL RIGHT OFF THE POLITICAL MAP...BET THE GOP WILL BE ADVOCATING THE SACRIFICE OF VIRGINS TO APPEASE THE VOLCANO GODS--WHAT ARE THE ODDS OF FINDING A REPUBLICAN VIRGIN, ANYWAY?

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/21/AR2010042104718.html

If you can't read the whole thing, PM me and I'll copy you.

[Demeter]

58. Professor Pants-on-Fire (LARRY SUMMERS) By William Greider

WHO WOULD HAVE PREDICTED THAT APRIL FOOL'S DAY WOULD LAST ALL MONTH?

http://www.thenation.com/doc/20100510/greider2

How can I say this nicely? Larry Summers is a clumsy public liar. His noxious, condescending manner helps explain why he failed as president of Harvard. But it is the crude mendacity that ought to bother people now. The man is President Obama's top economic adviser....

COULDN'T OBAMA AT LEAST HAVE HIRED SOMEONE BETTER AT LYING?

[Demeter]

59. Automobile History The History of Cars and Engines

http://inventors.about.com/od/cstartinventions/a/Car_History.htm

By definition an automobile or car is a wheeled vehicle that carries its own motor and transports passengers. The automobile as we know it was not invented in a single day by a single inventor. The history of the automobile reflects an evolution that took place worldwide.

It is estimated that over 100,000 patents created the modern automobile. You can point to the many firsts that occurred along the way to producing the modern car; and with that goal in mind, highlighted below are articles, biographies, timelines, and photo galleries related to the history of the automobile and its many inventors...

A VERITABLY ENCYLOPEDIC WEBSITE

[Demeter]

60. How Good Is Blanche Lincoln's Derivatives Bill?

http://www.prospect.org/csnc/blogs/tapped_archive?month=04&year=2010&base_name=how_good_is_blanche_lincolns_d

I DON'T KNOW. BUT IT'S CERTAINLY INTRIGUING...

[Demeter]

67. I'm beginning to get a crush on Eric Fry!

http://dailyreckoning.com/the-goldman-sachs-phenomenon/

This isn't complex stuff, folks. If the Treasury Secretary sincerely wished to clean up and re-regulate the banking system, his new regulations would only require about 50 words:

1. No officer of any publicly traded financial institution may receive more than $10 million per year in total compensation.
2. No financial institution may borrow more than $10 for every one dollar of readily marketable assets (i.e. "Level I" assets) on its balance sheet.
3. No financial institution may incur any liabilities "off-balance sheet."
4. No exceptions.

Implement these regulations and you would have forever eradicated the DNA of financial catastrophe from the American financial system.

But what would critics say about such "draconian" new regulations? (We'll call these regulations the "Level Playing Field Act of 2008.") After choking on their foie gras, they would probably protest, "That's not nearly enough compensation for top officers! You'd lose the top talent!" Then they would protest: "What! No off-balance sheet financing? Are you crazy? That's where all the juice is! You would lose the ability to ramp up return on equity!"

To which we would reply: "Hallelujah!" and "Amen!"... Finally, we could purge the financial system of all the "talent" that has delivered America's most severe credit crisis since the Great Depression. Finally we could purge the system of the "creative" leverage that the "talent" has amassed over the last several years. Finally, we'd have a banking system that would operate like one - a banking system that would provide capital to entrepreneurial endeavors, rather than to catastrophic speculations.

The American financial system does not need "talent" and "creativity." It needs prudence and perspicacity. It does not need creative bankers. It needs dull bankers.


Why? Because the American financial system needs to safeguard its capacity to finance creative and talented entrepreneurs. It needs to safeguard its capacity to preserve the purchasing power of our currency and to safeguard the legendary America capacity to create wealth from the bottom-up, not to destroy wealth from the top-down.

But the American financial system still possesses too much talent and creativity to operate prudently. In fact, Ben Bernanke and Hank Paulson may be the most creative finance officials in American history.

Consider yourselves forewarned!

Eric J. Fry

[DemReadingDU]

79. A ride down San Francisco's Market Street, September 1905...

The film is appx 13 minutes

The vertical hold on this archive footage is damaged for the first five minutes and at the end, and especially between 0:20 and 1:20. Despite this, it remains compelling.

You may like to note a street sweeper (0:20); people only just escaping being run over (6:02; 7:44; 8:37); a galloping horse (6:44); a farm wagon and shire horse; (8:43) a very near crash between the cable car and a motor car (9:30); a woman in an elaborate hat (9:58); a man in a cape (10:15); and the closing frames of children.

http://www.howtobearetronaut.com/2010/04/a-ride-down-san-franciscos-market-street-september-1905/



Here is a side-by-side comparison of two filmed journeys down Market Street shot in April of 1906 sourced from the Prelinger Archives at http://www.archive.org . The video on the left has enjoyed wide circulation online, but has often been incorrectly dated to 1905. Subsequent research by Historian David Kiehn of the Niles Essanay Silent Film Museum, has determined that the footage was actually shot by Harry and Herbert Miles on April 14th, 1906, only 4 days before the catastrophic event and subsequent fires leveled much of the city, resulting in conditions depicted in the video on the right, and of which the initial production source is unknown.

http://www.youtube.com/watch?v=6TaxcXfSwdE appx 7 minutes



4/24/10 From Charles Hugh Smith - A 13-minute film of a cable car/trolley ride down Market Street in 1905 San Francisco.

My friend G.F.B. sent me this link to a fascinating 13-minute film from 1905 (or 1906) shot from the front of a cable car traveling down Market Street to the Ferry Building. If you've visited San Francisco, you know the Ferry Building is still with us, despite the 1906 earthquake/fire which leveled most of central San Francisco.

The population of San Francisco in 1905 was roughly 400,000--the 1900 Census pegged the number at 343,000. Thus the population was about half the modern total. But we should recall that much of modern-day San Francisco ("the Avenues", etc.) was still sand dunes in 1905.
more...
http://www.oftwominds.com/blogapr10/1905-San-Francisco04-10.html

[Po_d Mainiac]

81. this needs a kick

:hi:

[tclambert]

82. Here's a video of the best driving you've ever seen.

I gar-on-tee it.

http://www.youtube.com/watch?v=BkNzkutTiGs

Ken Block doing gymkhana. DO NOT ride a Segway near this man!

[Demeter]

85. My tires hurt, just watching that.

[DemReadingDU]

95. ditto

[Demeter]

86. All Goldman, All the Time: Goldman Sachs reportedly preps detailed defense

GUESS THEY DIDN'T BELIEVE RITZHOLT

http://www.marketwatch.com/story/goldman-sachs-reportedly-preps-detailed-defense-2010-04-24?siteid=YAHOOB

Goldman Sachs is circling the wagons, armed with its most detailed defense yet against the allegations that it intentionally misled clients in its mortgage securities business, according to a media report.

In an internal document prepared for senior executives, Goldman /quotes/comstock/13*!gs/quotes/nls/gs (GS 157.40, -1.65, -1.04%) addresses claims that the bank invested its own money to benefit from a drop in the housing market while at the same time telling clients to make bets in the other direction, according to the Washington Post.

Goldman Sachs Chief Executive Lloyd Blankfein is scheduled to testify Tuesday before a Senate committee. Reuters
Goldman Sachs Chief Executive Lloyd Blankfein is scheduled to testify Tuesday before a Senate committee.

The 11-page document will serve as the basis for testimony that CEO Lloyd Blankfein is scheduled to deliver Tuesday in front of the Senate Permanent Subcommittee on Investigations, the newspaper reported Saturday.

The document details discussions among Goldman's top brass in 2006 and 2007 over whether the bank should invest based on the bullish outlook for mortgage market.

Ultimately, per the document, executives exchanged emails and held meetings with the aim to cut the company's exposure, primarily in subprime loans, by making new investments to pay off if housing prices fell, the Washington Post reported.

The bank previously seemed to give the impression that it had lost money on mortgage-related investments during the crisis, but the Senate Permanent Subcommittee on Investigations released emails Saturday that paint a different picture.

"Of course we didn't dodge the mortgage mess," Blankfein wrote in an email from November 2007. "We lost money, then made more than we lost because of shorts."

Sen. Carl Levin, D-Mich., who chairs the committee, blamed the banking giant for its role in the housing meltdown.

"Investment banks such as Goldman Sachs were not simply market-makers, they were self-interested promoters of risky and complicated financial schemes that helped trigger the crisis," Levin claimed.

Last week, the Securities and Exchange Commission filed a suit against Goldman, alleging the bank didn't tell investors in a collateralized debt obligation that hedge-fund firm Paulson & Co. helped structure the deal and was planning to bet against it.

Goldman at the time said the SEC's charges "are completely unfounded in law and fact" and that they would be "vigorously" defended.

Paulson & Co. wasn't charged by the SEC because the hedge fund firm wasn't obligated to tell investors about the CDO.

[Demeter]

87. Goldman e-mails show how crash turned into cash

http://news.yahoo.com/s/ap/20100425/ap_on_bi_ge/us_goldman_sachs

As the U.S. housing turned downward in January 2007, a Goldman Sachs trader wrote in e-mails to a woman he apparently was courting that investments he had sold were "like Frankenstein turning against his own inventor."

"I'm trading a product which a month ago was worth $100 and today is only worth $93," wrote Fabrice Tourre, who was charged along with the bank in a civil complaint filed this month by the Securities and Exchange Commission. "That doesn't seem like a lot but when you take into account ... (the investments) are worth billions, well it adds up to a lot of money."

Tourre was talking about investment products like the one at the heart of a federal complaint against his firm. For Tourre, the investments were like an invention gone awry: He had started arranging them when the market was on the upswing. But he continued selling them after the market turned — now with Goldman betting against them, in one case allegedly misleading investors about a deal's origin.

Goldman Sachs Group Inc. released that e-mail and 25 other internal documents Saturday in response to a Senate panel's release of messages in which Goldman executives boast about money they were making as the market imploded later in 2007.

When credit rating agencies downgraded many billions of dollars of mortgage-backed investments in October 2007, Goldman executive Donald Mullen was unabashedly pleased.

"Sounds like we will make serious money," Mullen wrote to Michael Swenson, another executive, in one of the e-mails released by the Senate Permanent Subcommittee on Investigations.

Goldman has argued vehemently that it did not profit from the mortgage meltdown.

Swenson and Tourre, along with Goldman CEO Lloyd Blankfein, will face a public grilling on Capitol Hill Tuesday from the subcommittee.

Also this week, the full Senate will take up a proposed overhaul of financial regulation intended to toughen oversight of Wall Street and make the financial system more transparent. Republican leaders oppose the measures.

And Goldman has been in the glare of a particularly unforgiving spotlight since the SEC filed civil fraud charges this month over the investments Tourre was selling and discussing in his e-mail.

The SEC alleges Goldman misled two investors — IKB Deutsche Industriebank AG, a German bank, and ACA Management LLC, a U.S. bond insurance company — who bought complex mortgage-related products crafted in part by Paulson & Co., a New York hedge fund led by billionaire John Paulson. Paulson was betting the market would collapse. The SEC says Goldman didn't tell the investors that Paulson was involved in choosing the investments or that he was betting they would fail.

Goldman has denied wrongdoing and says it will fight the charges. It has said it lost money on the particular deal of Tourre's that the SEC charges address.

The SEC complaint contains excerpts from the same Tourre e-mail chains that Goldman released in full Saturday. The firm's move puts on full display the personal life of the trader, who had boasted that the market would implode, leaving only him standing. And it does so days before he makes his public debut.

"Obviously, the content of the e-mails is highly embarrassing, but we've found no evidence of wrongdoing," Goldman spokesman Samuel Robinson said.

Goldman's relative strength during the financial crisis and the prominence of many former Goldman executives have made the firm a lightning-rod for public anger over Wall Street's greed and recklessness. Even before the SEC charges were filed, the long-secretive bank was fighting accusations that its bets helped trigger and fuel the financial crisis.

Goldman also has become a useful symbol for Democrats in the escalating debate over the financial overhaul. In fact, Republicans charge that Democrats in the Senate and on the SEC are using the public's anger toward Goldman to build support for their plan.

The subcommittee will brief reporters about the Goldman hearing on Monday, the same day the Senate will have its first test vote on the Obama administration's financial package. The panel is expected to release documents that will be covered Monday evening online and in Tuesday's papers next to reports on the overhaul vote.

The SEC's inspector general confirmed Friday that he will look into the timing of the charges and possible leaks by the commission.

The internal e-mails among Goldman executives were released by subcommittee chair Sen. Carl Levin, D-Mich. In a statement, Levin called banks like Goldman "self-interested promoters of risky and complicated financial schemes that helped trigger the crisis."

In a statement Saturday, Goldman spokesman Lucas Van Praag said the bank lost $1.2 billion in the residential mortgage market during 2007 and 2008.

"As a firm, we obviously could not have been significantly net short since we lost money in a declining housing market," Van Praag said in a statement.

Van Praag is among the executives who wrote the e-mails the Senate committee released. He said the panel "cherry-picked" four threads out of 20 million pages Goldman provided.

"Of course we didn't dodge the mortgage mess," CEO Lloyd Blankfein wrote in a message dated Nov. 18, 2007. "We lost money, then made more than we lost because of shorts."

Short positions are bets that the market will go down. When the market went bust, people with short positions cleaned up.

Earlier in 2007, Goldman Chief Financial Officer David Viniar showed in one of the e-mail threads that the firm made more than $50 million in one day on bets the housing market would founder.

Viniar, also scheduled to testify Tuesday, summed up the contrast between Goldman's gains and the situation of investors who had not bet against the market:

"Tells you what might be happening to people who don't have the big short."

[Demeter]

88. Goldman director might have told Galleon of Berkshire deal

U.S. investigators suspect a Goldman Sachs director gave confidential information about a planned investment in the bank by Warren Buffett's Berkshire Hathaway to hedge fund manager Raj Rajaratnam, a source said. As a part of its investigation into Rajaratnam and Galleon Group, the government has been looking into whether Goldman director Rajat Gupta provided information before it was made public, according to The Wall Street Journal.

http://online.wsj.com/article/SB10001424052748703876404575200423282391104.html?mod=dist_smartbrief

[Demeter]

89. BayernLB says felt compelled to cut ties to Goldman

http://www.reuters.com/article/idUSWEB125220100422?type=marketsNews

German landesbank BayernLB felt compelled to cut ties with Goldman Sachs (GS.N) as the U.S. stock regulator's accusations against the Wall Street bank were "so severe", a letter seen by Reuters shows.

The letter, written by BayernLB Chief Executive Gerd Haeusler, says: "Hereby we terminate the mandate from 28.11. 2008 with immediate effect."

BayernLB's action comes days after the Securities and Exchange Commission (SEC) accused Goldman Sachs of defrauding investors by failing to say that a prominent hedge fund manager bet against a Goldman subprime debt product that he helped design. Haeusler said in the letter that the fraud charges brought against Goldman Sachs were the reason BayernLB was cutting its ties with the bank.

BayernLB had hired Goldman as an advisor to help bolster its capital position as part of a restructuring in the wake of a state bailout.

"Even if (SEC) proceedings are still underway, in which the presumption of innocence must prevail, the accusations levelled against your institution are so severe that the Bavarian landesbank, which is itself under close scrutiny and needs to adhere to the highest ethical standards, feels compelled to take this step," the letter said.

"In our deliberations it also played a role, that if the accusations made by the U.S. stock exchange regulator are true, the German taxpayer would have been substantially harmed," the letter said.

Germany has been among the worst hit countries from the credit crisis with No. 2 lender Commerzbank (CBKG.DE), Duesseldorf-based IKB (IKBG.DE) as well as public sector banks WestLB , HSH Nordbank and BayernLB suffering writedowns and requiring bailouts.

BayernLB did not account for a substantial amount of Goldman's business in Germany. Germany accounted for 6 percent, or $995.5 million, of the total $16.27 billion investment banking fees generated by Goldman between 2005 and 2009, according to Thomson Reuters data.

[Hugin]

93. Interesting move...

Which in the long run will probably have a minor impact on BayernLB. They seem to realize that there are plenty of "Banks" out
there willing to charge you to tell you how to spend your money. Now, maybe they can get back to Investing.

[Demeter]

90. Analysis: Goldman condemned itself to the fate it faces

Regardless of what becomes of a lawsuit brought by the U.S. Securities and Exchange Commission against Goldman Sachs, the bank will continue to take a beating from the public -- and that might be the proper outcome, according to The Economist. "No firm has combined such red-blooded dedication to profit and high pay with so little appreciation of the state's generosity, in saving it from following Lehman and in propping up finance with subsidies and guarantees," The Economist notes.

http://www.economist.com/opinion/displayStory.cfm?story_id=15951777&source=hptextfeature

"...Many at the firm might wish it could go private again and recover its capitalist vim. But after a decade of huge success it is now too big to do that. It is also so dedicated to trading that it cannot go back to being a normal, boring bank. Greed and success, let alone a guilty verdict, have already pushed Goldman Sachs into a kind of prison."

[Demeter]

98. AIG eyes action on Goldman over CDOs

AIG, the US government-controlled insurer, is considering pursuing Goldman Sachs over losses incurred on $6bn of insurance deals on mortgage-backed securities similar to the one that led to fraud charges against the US bank.
Read more >>
http://link.ft.com/r/J0VG55/YH0ZOB/CWSVD/S38JZS/FXDVZP/FW/t

[Demeter]

100. Blankfein fights back on SEC case

Lloyd Blankfein on Wednesday attacked the Securities & Exchange Commission’s fraud charges in telephone calls to ­clients as Goldman escalated its campaign to stem the damage to the firm’s reputation.

One person who received a call from the Goldman chief said he was told the regulator’s case against the bank was politically motivated and would ultimately “hurt America”.
Read more >>
http://link.ft.com/r/19JYUU/UUG77P/B49CK/PRBJSZ/S3U9IH/AZ/t

[Demeter]

102. Angry Goldman lambasts fraud charges

Documents throw new light on the rocky relationship between Goldman Sachs and the SEC during the 20-month probe that led to the US watchdog’s fraud charges against the Wall Street bank
Read more >>
http://link.ft.com/r/ZE9K33/GK9N0G/ULCJB/26MHPQ/5C2TZC/36/t

[Demeter]

101. Goldman scrambles to contain damage

Goldman Sachs, which is expected to release bumper first-quarter earnings, is putting one of its senior legal officers on a call with analysts and investors in a bid to stem mounting damage from the civil fraud lawsuit filed by US regulators
Read more >>
http://link.ft.com/r/ZE9K33/GK9N0G/ULCJB/26MHPQ/KE95S4/36/t

[Demeter]

110. Brown in attack on Goldman Sachs

Pressure on Goldman Saches mounted as UK prime minister Gordon Brown attacked the ‘moral bankruptcy’ revealed by the Securities and Exchange Commission’s fraud charges
Read more >>
http://link.ft.com/r/KC2844/ZBC29V/7ZY85/1871AA/OJFWNR/T3/t

[Demeter]

112. Goldman roles in Lloyds deal in spotlight

Goldman Sachs was both an underwriter and an investor in Lloyds Banking Group’s vast refinancing deal late last year, the FT has learned, highlighting the potential conflicts of interest at the heart of the investment bank’s business model
Read more >>
http://link.ft.com/r/M2ZOXX/D4ITGV/06MUC/UU0LCR/NSREUH/ZH/t

[Demeter]

113. Goldman first-quarter profits soar

Goldman Sachs, the embattled US bank, said on Tuesday that its first-quarter profits nearly doubled, as the strength of its fixed-income business lifted earnings.

Net income rose by 91 per cent to $3.46bn, or $5.59 a share, up from $1.8bn, or $3.39 a share in the same quarter a year ago. Wall Street analysts predicted Goldman would earn $4.02 a share.
Read more >>
http://link.ft.com/r/ZE9K33/A7KSOT/VTVRG/WLCP76/S3UQKP/JY/t

[Demeter]

117. European politicians want governments to cut ties with Goldman

Politicians in Britain and Germany are publicly calling for their governments to stop turning to Goldman Sachs for financial advice. U.K. Prime Minister Gordon Brown called Goldman morally bankrupt, while his electoral opponent Nick Clegg, a Liberal Democrat, wants the bank suspended as a government adviser. Frank Schaffler, a lawmaker from Germany's Free Democratic Party, said the country should stop doing business with Goldman until fraud accusations against the bank are resolved. The Wall Street Journal (21 Apr.)

[Demeter]

91. Stick 'em up The IMF’s proposals to tax the banks will be popular, but are incomplete

http://www.economist.com/opinion/displaystory.cfm?story_id=15951767

THE IMF used to be accused of clobbering little people in order to protect Big Finance. Now it is devising ways to squeeze the banks in order to defend society. Its proposals for taxing the world’s financial firms will be debated by the G20 in June. Any banker who assumes they are another bit of theoretical wonkery should think again. Many hard-up Western governments now have a recipe for raising levies that are lucrative, wildly popular and come with the imprimatur of capitalism’s policeman. Surely it can’t get better than that?

Actually, it could. As a central part of the world’s response to the problem of too-big-to-fail finance, the proposals get only a B-plus. They include one good idea (arrived at for fuzzy reasons), one bad idea and one missed opportunity.

The good idea is to tax part of financial firms’ liabilities—crudely put, their debt. When banks are deemed too big to fail, they can borrow abnormally cheaply. This funding subsidy is at the root of many evils. It is why bankers’ fat bonuses, paid from profits boosted by cheap funding, are unfair. It gives banks a potentially dangerous incentive to get bigger and riskier. And it is why badly run firms can still command market confidence. Where such a subsidy exists, taxing it back to tackle these perverse incentives is both just and essential.

The IMF proposes just such a tax, but it is rather vague about why. It wants banks to pre-pay for the next crisis, which it reckons might cost 2-4% of each country’s GDP, with the levy probably going into a bail-out kitty. A tax specifically designed to recapture the subsidy might actually be higher than this. And there is some quirky fine print. By casting the net widely, the IMF seems to include insurance companies, even though their main liabilities are reserves for payments to customers, something no one should have a problem with. And though its desire to tweak the tax to reflect firms’ risk to the system is understandable, it risks duplicating new rules on bank capital.
Treating the symptoms, not the cause

The bad idea within the proposals is that banks should have to pay a further tax on their profits before pay. It is not clear why. If the idea is to get banks to pay for their funding subsidy, then the IMF’s first proposal already does that, and should simply be made bigger. If society’s tolerance for high pay is the problem, then personal tax rates should be the tool. And if the authorities want to try to discriminate between firms, then it is a bad idea to tax those banks that are consistently profitable. Over the past three years they have mainly been traditional, deposit-taking firms, often in emerging economies. Finally, if there is a broader desire to tackle excess profits that banks may make from colluding with each other or confusing customers, then the answer is to try to address those problems directly, through antitrust or consumer-protection regulation, rather than simply skimming the cream of the cash made.

That last argument, of course, also applies to the funding subsidy banks get. Why not try to eliminate it, rather than recoup it? The IMF proposals rightly highlight the importance of a resolution authority that would allow banks to fail in an orderly way. But this is the missed opportunity. Everybody who looks at the “too big to fail” problem grapples with the idea of a bankruptcy body for banks; but no one has truly resolved the Catch-22 at the heart of it. As things stand, no resolution authority can push losses onto creditors, rather than taxpayers, without sparking a run as counterparties flee in expectation of pain. The state will then be forced to make huge loans to dodgy firms, as was the case with AIG and Royal Bank of Scotland. What is needed is not just an agreed system for dealing with failing banks but also an agreed line between creditors that would still be protected (the bulk of them, including most trade counterparties) and those who would not—and whose debts might be turned instantly into equity in the failing entity.

The IMF was not asked to look at this, but it has missed a chance to prod the G20 in the right direction. Now it will have to make the case for its taxes. A few rich-world dissenters, such as Canada, along with most emerging countries, are reluctant to clobber banking systems that have done well. The result of the IMF’s plans could well be a global tax of symbolic value, set at a very low rate. That will still leave banks that cannot fail, but by then the world may have moved on to an even trickier question: what should the bail-out kitty invest in? Mortgage securities, perhaps, triple-A rated and arranged by Wall Street’s finest. What could possibly go wrong?

[Ghost Dog]

92. There's a kind of ode to car-free, pedestrian-friendly cities included in this nicely-written

first-hand account entitled "The New Grand Tour: Greetings from twenty-first-century Europe, where new ideas, new technologies, and better ways of living are flourishing", by Chris Turner, from the May 2010 issue of The Walrus:

... The day after our arrival, we passed a long, lazy morning at the playground. The jet-lagged preschooler, however, is a capricious creature, even by the formidable standards of four-year-olds in general, and the question of how to make it through the afternoon loomed over the proceedings. I didn’t want to travel far, for fear of agitating my daughter with monotony, and I didn’t want to pay a Scandinavian-priced admission fee for anything one or the other of us would be too tired to see through. We were without toys or comprehensible TV. What to do? Copenhagen’s livability, I knew, was predicated in part on it being one of the most pedestrian-friendly metropolises on the planet. So we simply walked. And it was magic.

Livability, it turns out, is a broad, car-free plaza in front of city hall, crowded on this day, serendipitously, by singing, dancing Chilean soccer fans. (My daughter was reasonably sure this was a show being staged for her benefit.) Livability is the movable feast of the Strøget, central Copenhagen’s high street, which first cleared its cobblestones of automobiles in 1962, in time becoming the backbone of a network of pedestrian-only avenues and lanes billed as Europe’s most extensive. Livability is a passing parade of street performers and ice cream vendors, tidy squares every few hundred metres with a fountain to climb on or a broad expanse to chase pigeons across. Livability is the temporary exhibition (yet more serendipity) set up in one of those squares, an assortment of multicoloured shipping containers retrofitted as miniature performance spaces. Livability is your four-year-old sitting for fifteen minutes in preternaturally still concentration inside one of these spaces, listening to a Danish guitar virtuoso play some enchanting baroque composition. (Free of charge. With considerable flair.) Livability is a great old ship’s anchor that doubles effortlessly as a climbing gym — this mounted at the head of Nyhavn, the row of cafés housed in old candy-hued warehouses along Copenhagen’s waterfront, which serves as the exclamation point at the Strøget’s terminus.

Livability is a jet-lagged parent in the heart of a busy foreign city, able to relax entirely even as the preschooler darts deliriously ahead, because it is a gentle, sunny afternoon, and there are no fast-moving, thousand-pound steel boxes to watch out for. Livability, yes, is the space to effortlessly create a yawning afternoon’s worth of serendipity.

“It’s hardly a coincidence that the number one amendment to the American Constitution emphasizes the right to free speech and to peaceful gathering with your fellow citizens. That is one of the strongest expressions of the importance of the public space.” This was Jan Gehl, professor at the Royal Danish Academy of Fine Arts and chief disseminator of the Copenhagen approach to urban design worldwide, speaking with me the following week. If Hermann Scheer is the Green Enlightenment’s Rousseau, then Gehl is its genial, Danish Voltaire, his consulting firm hired by cities worldwide — from Barcelona to Oslo, from Melbourne to New York — to teach them how to escape the antiquated shackles of modernist city planning and car-centred urban design and become more like Copenhagen ...

/Much More: http://www.walrusmagazine.com/articles/2010.05-environment-the-new-grand-tour/1/

[Demeter]

94. I'd Like to See Them Try that In New York

[DemReadingDU]

96. TV One’s “Washington Watch” features Sen. Ted Kaufman (D-Del.)

Read what Kaufman said...

In his pre-taped interview, Kaufman swipes at Wall Street, saying he would caution friends not to put their cash in the market now. “If I had a friend that had a 401(K) right now? Don’t invest in Wall Street. Get in a bank. Get in Treasury bills … get in something safe, because we just don’t know where this … thing’s going to go,” he said. “There’s nothing in God’s universe that says there has to be a Wall Street and that there has to be a market up there.”

http://www.politico.com/news/stories/0410/36285.html


How do I find TVOne? Is that on Cable?


edit - here's a video, appx 2 minutes
http://tvoneblogs.com/roland/washington-watch-with-roland-martin/news-roland-talks-finance-reform-1628.htm

[DemReadingDU]

97. 57 chevy

An American classic

[Demeter]

99. Now that The Banksters Are the Objects of Hot Pursuit--It's Time For

http://www.youtube.com/watch?v=2-iIkmt-eco

[Demeter]

103. Fuld defends Lehman’s use of ‘Repo 105’

Richard Fuld, the former chief executive of Lehman Brothers, will reject criticism for his role in the collapse of the bank and argue ‘Repo 105’, a controversial accounting technique, was legal
Read more >>
http://link.ft.com/r/ZE9K33/GK9N0G/ULCJB/26MHPQ/C5W0KN/36/t

[ozymandius]

124. Whenever I hear Fuld speak, I imagine him in the path of a steamroller.

Speaking of which... here's a rare Steve Martin classic from the '70s: "Don't take the steamroller! You'll kill yourself!"

[Demeter]

104. Regulation bill to hit Senate floor this week

A long-awaited US financial regulation bill is expected to hit the Senate floor as the fight for Barack Obama’s legislative priority enters its final stage
Read more >>
http://link.ft.com/r/ZE9K33/GK9N0G/ULCJB/26MHPQ/NSRXN1/36/t

[Demeter]

105. Credit Suisse recovery falls short

The Swiss bank’s shares fell almost 5 per cent after it fails to meet investor expectations, in spite of announcing higher net group profits of SFr2.06bn
Read more >>
http://link.ft.com/r/M2ZOXX/D4ITGV/06MUC/UU0LCR/M9JIPB/ZH/t

[Demeter]

106. Citigroup earns $4.4bn in first quarter

Citigroup says it has ‘turned the corner’ after reporting its best quarterly results in more than two years before damping hopes of a strong economic recovery in the US
Read more >>
http://link.ft.com/r/ZE9K33/GK9N0G/ULCJB/26MHPQ/6VAH77/36/t

[Demeter]

107. Morgan Stanley swings to profit

Morgan Stanley opened the James Gorman era with quarterly results that beat analysts’ expectations and began to erase doubts that the bank would regain its footing in crucial trading businesses
Read more >>
http://link.ft.com/r/0QSDPP/A7KN5B/Q38E1/A7E7X9/5C2GVG/ID/t

[Demeter]

108. Fiat to spin off non-car divisions

Fiat is to demerge its non-automotive divisions from its core carmaking business, the Italian industrial group announced during the unveiling of a five-year strategy
Read more >>
http://link.ft.com/r/0QSDPP/A7KN5B/Q38E1/A7E7X9/260TCV/ID/t

[Demeter]

109. GM repays US government loans

General Motors sought to win back support from American taxpayers and car buyers by repaying its government loans and announcing expansions at two US car plants
Read more >>
http://link.ft.com/r/0QSDPP/A7KN5B/Q38E1/A7E7X9/V1TFTI/ID/t

[Demeter]

111. Bank dividend payments reach record low

Bank dividends across Europe are running at their lowest level on record, as the continent’s recovering financial groups opt instead to retain earnings to boost capital, under pressure from regulators
Read more >>
http://link.ft.com/r/KC2844/ZBC29V/7ZY85/1871AA/TP1IUF/T3/t

[Demeter]

114. The Ultimate Word: Fight On, Goldman Sachs! By FRANK RICH

http://www.nytimes.com/2010/04/25/opinion/25rich.html?ref=global

....At Cooper Union on Thursday, the president, while far from fiery, was no longer likening the calamity to a natural disaster beyond anyone’s control. He chastised those in the financial sector who saw the free market as “a free license to take whatever you can get, however you can get it.” He was no longer describing Blankfein, sitting before him, as a “very savvy” businessman — a compliment he had bestowed on him and Jamie Dimon of JPMorgan Chase just 10 weeks earlier.

Still, the Republicans had half a point when they indicted the White House for being too close to Goldman and its brethren. The truth is that both parties are too often in hock to the financial sector, and both parties bear responsibility for the meltdown. In response to a question from Jake Tapper of ABC News last weekend, Bill Clinton was right to say that he and two of his Treasury secretaries, Rubin and Lawrence Summers, “were wrong” to leave derivatives unregulated. They deserve regulation, Clinton said, because “sometimes people with a lot of money make stupid decisions and make it without transparency.”

Those same people also make smart decisions without transparency — smart for them, if not the country. Even if the reform bill does bring stringent regulation to derivatives — a big if — that won’t rectify capitalism’s worst “innovation” in our own Gilded Age: the advent of exotic, speculative “investments” that have no redeeming social value and are instead concocted to facilitate gambling for its own sake. Such are the Goldman instruments of mass financial destruction that paid off for John Paulson. In 2007 alone, according to Gregory Zuckerman in his book “The Greatest Trade Ever,” Paulson’s personal take amounted to over $10 million a day, “more than the earnings of J. K. Rowling, Oprah Winfrey and Tiger Woods put together.” That “financial alchemy,” as Zuckerman calls it, explains why the finance sector’s share of domestic corporate profits, never higher than 16 percent until 1986, hit 41 percent in the last decade.

As many have said — though not many politicians in either party — something is fundamentally amiss in a financial culture that thrives on “products” that create nothing and produce nothing except new ways to make bigger bets and stack the deck in favor of the house. “At least in an actual casino, the damage is contained to gamblers,” wrote the financial journalist Roger Lowenstein in The Times Magazine last month. This catastrophe cost the economy eight million jobs...

[Demeter]

115. Hedge funds decide it's "game on" for profit from Greek bailout

With yields on Greek debt edging past 8%, Pentagram Partners President F. Mark Turner said it seems to be "game on" for investors who want to play a Greek bailout. European governments created the biggest moral hazard since Fannie Mae with their rescue plan for Greece, Turner said.
Barron's (free content) (21 Apr.) ,
The Wall Street Journal (22 Apr.) ,
Financial Times (tiered subscription model) (21 Apr.)

[Demeter]

116. Investors continue shifting from sovereign to corporate bonds

Investors' move from government bonds to corporate bonds is set to continue, UBS analysts said. "Double A/A-plus rated companies such as AstraZeneca, Deutsche Bahn, Roche , Novartis, Sanofi-Aventis have far lower, if any, funding needs," said Tommy Leung, a strategist at UBS. Many of these companies earn more than 50% of their revenue outside Europe, making them "less exposed to the volatility in the European sovereign market," Leung said.

Financial Times (tiered subscription model) (21 Apr.)

[Demeter]

119. IF YOU HAVE A FEW MINUTES

http://www.npr.org/templates/story/story.php?storyId=35

LISTEN TO "WAIT, WAIT, DON'T TELL ME", AS THEY DISCUSS THE "POULTRY FOR HEALTHCARE" PROPOSAL FROM "CHICKEN SUE" OF NEBRASKA. IT WILL HAVE YOU CACKLING WITH LAUGHTER....

[Demeter]

120. Rifts Imperil Overhaul of Global Banking Rules

http://online.wsj.com/article/SB10001424052748703404004575198420596206274.html?mod=dist_smartbrief

The globally coordinated response to the financial crisis has given way to nationalistic bickering, imperiling hopes that governments around the world can come up with a fix for outdated international-banking rules.

Government and industry officials say the disputes focus on how much money, and what type, banks should keep on hand as a cushion against losses, one of the most fundamental aspects of banking. Countries involved in the negotiations agree banks should maintain larger capital reserves, but disagree on key details, including definitions of core terms. Officials are instead moving to protect the interests of their own banking industries while penalizing others elsewhere.

In the U.S., government and industry officials say the global talks could have a greater impact on financial markets than the current Capitol Hill debate over new rules for Wall Street. The disputes could come to the fore this weekend at a meeting of U.S. and foreign finance ministers and central bankers in Washington, D.C. The gathering will pose a test of whether policy makers will be able to hammer out a complex overhaul of global financial rules to address flaws exposed by the financial crisis.

"This move toward Fortress U.K., Fortress U.S. and Fortress Europe is looming large on the horizon as the worst possible outcome of the crisis," said Bob Penn, a London-based partner at law firm Allen & Overy LLP who advises some giant banks...

LET'S HOPE SO! HIS CLIENTS NEED A LITTLE HUMILIATION AND HANDCUFFS

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121. SEC suspected Allen Stanford of Ponzi scheme a decade ago, report says

THE TRUTH WILL OUT--BUT IT WON'T HIT U.S. PAPERS, OH, NO. WE HAVE TO GO TO ENGLAND TO FIND OUT WHAT'S BEEN GOING ON IN OUR OWN GOVERNMENT....

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7103091.ece

ONE OF W'S DRINKING BUDDY GOOD OLE BOYS, I'LL BETCHA!


A former leading lawyer for the US Securities and Exchange Commission blocked several investigations of Allen Stanford, the financier charged with defrauding investors of $7 billion (£4.5 billion), before going on to work for him, according to investigators.

Spencer Barasch, the former head of enforcement for the SEC in Fort Worth, Texas, “repeatedly attempted to represent Mr Stanford in connection with the investigation he had blocked for seven years”, a report by the SEC’s inspector-general says.

The report has revealed a damning picture of failure and inertia at the SEC, despite widely held suspicions within the agency dating back to 1997 that Mr Stanford was running a Ponzi, or pyramid, scheme. He was not charged until last year.

It has found that the SEC’s Fort Worth examination group conducted investigations of Mr Stanford in 1997, 1998, 2002 and 2004, concluding in each case that he was likely to be operating a Ponzi scheme or something similar. As early as 1997, one official said that the purported above-market returns on the certificates of deposit sold by Stanford companies were “absolutely ludicrous”.

The report has exposed divisions within the SEC’s Fort Worth office between the examinations team, which strongly suspected Mr Stanford of wrongdoing, and the enforcement division, which repeatedly failed to take any action against him until a final investigation opened in 2005.

According to the inspector-general, Fort Worth officials perceived that they were being judged on the numbers of cases that they won. “As a result, cases like Stanford, which were not considered ‘quick-hit’ or ‘slam-dunk’ cases, were not encouraged,” the report says.

In addition it states that Mr Barasch “played a significant role in multiple decisions over the years to quash investigations of Stanford”. After leaving in April 2005 Mr Barasch asked the SEC on three occasions if he could represent Mr Stanford, but permission was denied each time on the ground that it would be a conflict of interest. In 2006 Mr Barasch briefly represented Mr Stanford before being reminded by the SEC Ethics Office that it was improper to do so.

According to the report, when asked by the inspector-general why he was so insistent on representing him, Mr Barasch replied: “Every lawyer in Texas and beyond is going to get rich over this case. Okay? And I hated being on the sidelines.”

Mr Barasch, who now works for the law firm Andrews Kurth, could not be reached for comment. Bob Jewell, the firm’s managing partner, said that the firm disagreed with the allegations in the report. Mr Barasch “served the SEC with honour, integrity and distinction ... We believe he acted properly during his contacts with the Stanford Financial Group and the Securities and Exchange Commission. He did not violate conflicts of interest.”

Mr Stanford, once considered one of the richest men in the United States, with an estimated net worth of more than $2 billion, is best known in Britain for organising a Twenty20 cricket match in 2008 between England and a West Indian team called the “Stanford Superstars”. Each player on the winning team received $1 million.

Mr Stanford has denied the charges and said last year: “I would die and go to Hell if it’s a Ponzi scheme.” He is awaiting trial in Texas.

The inspector-general’s report into the SEC’s handling of the Stanford investigation was released last Friday, the same day that the agency brought fraud charges against Goldman Sachs, prompting accusations that the SEC was trying to cover up the findings.

WHY DOES THIS LAWYER STILL HAVE STANDING AT THE BAR? FORGET KANSAS, WHAT'S THE MATTER WITH TEXAS?

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123. Toyota agrees to pay fine for delaying disclosure of gas pedal defects

http://www.latimes.com/business/la-fi-toyota19-2010apr19,0,4894418.story

It's not clear whether the penalty includes an admission by Toyota that it violated the law.

By Ralph Vartabedian and Ken Bensinger

April 19, 2010

Reporting from Washington

Toyota will agree to pay a record $16.4-million fine for hiding safety defects related to sudden acceleration in 2.3 million vehicles but will stop short of accepting full legal responsibility for purposely withholding safety information, federal safety regulators said late Sunday.

Toyota failed to notify the National Highway Traffic Safety Administration for at least four months after learning that the accelerator pedals in some of its vehicles could stick and cause unwanted acceleration, regulators say. Under federal law, automakers are required to disclose defects within five business days.

NHTSA announced April 5 that it would seek the fine. Final details of the written agreement with Toyota were still unresolved Sunday night, although the agency said it expected Toyota to pay the maximum amount that NHTSA is allowed by law to levy.

"By paying the full civil penalty, Toyota is accepting responsibility for hiding safety defects from NHTSA in violation of the law," a senior Transportation Department official said.

Toyota officials could not be reached for comment late Sunday.

Toyota was given until Monday to pay the fine or contest it. Even as late as Sunday night, it was not clear whether the written agreement that governs the fine would include an admission by Toyota that it violated the law.

Such an admission would be important because Toyota faces scores of personal-injury and class-action lawsuits alleging that safety defects in its vehicles have caused crashes, injuries and fatalities.

Even if Toyota does not formally admit guilt, federal officials said, paying the sizable fine would indicate that the automaker broke the law.

Plaintiff attorneys have said they plan to use the fine as evidence in litigation.

The Japanese automaker issued a recall for the sticky-pedal problem in late January, acknowledging that the accelerator pedal assembly on some models could fail to return to the idle position in certain circumstances.

Several months before that, Toyota announced its largest-ever recall to address the risk that floor mats in some models could entrap the gas pedal and cause unwanted acceleration. That recall now includes 5.4 million vehicles. In addition, Toyota has launched recalls of several other models in recent months for safety issues related to braking and rust. In total, the automaker has issued roughly 10.5 million recall notices worldwide in the last seven months.

Toyota sent instructions to its European operations in September that explained how to fix accelerator pedals that could stick but decided not to similarly notify U.S. dealers and government regulators, according to an April 5 letter from NHTSA attorneys to Toyota.

The NHTSA letter indicated that Toyota may have known about the defect for at least three years.

It was not until Jan. 19 that Toyota notified NHTSA about the defect and then two days later issued its massive recall. Five days after that, Toyota halted sales and production of eight models because of the defect.

NHTSA said in its April 5 letter that it may seek additional fines related to the sticky-pedal recall.

Meanwhile, the agency has acknowledged it is investigating other Toyota disclosure practices that may have violated federal law and could result in further fines.

To date, the largest federal penalty paid by an automaker was $1 million, levied against General Motors in 2004 for delaying a windshield wiper recall.

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125. BEEP! BEEP!

http://www.youtube.com/watch?v=o1c4QZGQw5o&feature=related

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126. Someday soon, We're Going to Have to Feature Weird Al

http://www.youtube.com/watch?v=eJGNBj09_VA&feature=related

But next week is Mark Twain--Centennial of his death was Wednesday.

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127. Moody’s Lifts Up 34 States; Rater Kicks Off Its Recalibrations

http://www.bondbuyer.com/issues/119_323/moodys_recalibration-1011076-1.html

Moody’s Investors Service kicked off a wide-scale “upward shift” in municipal credit ratings yesterday, assigning stronger grades to 34 states and Puerto Rico.

This is just the first salvo in what is likely to be a four-week blizzard of ratings “recalibrations” among most of the 18,000 states and localities whose debt Moody’s rates.

Last month, the New York-based rating agency unveiled a plan to hoist the ratings on most of the universe of state and local government debt.

Moody’s has long held municipalities to a higher rating standard than sovereign governments, corporations, or structured products.

The municipal scale represented a ranking of municipal credit quality based on “distance to distress” rather than default probability.

This generally meant municipalities have been stuck with lower ratings than other types of issuers despite what in many cases were stronger histories of repayment.

Last month, the agency said it was going to recalibrate its municipal ratings scale to align it with the scales assessing the creditworthiness of other types of issuers.

Moody’s plans to standardize the scales so that all borrowers are assessed on the same criteria, and a rating means the same thing regardless of whether the issuer is a city, a sovereign nation, or a retail chain.

The rating agency initiated these changes yesterday by applying the recalibration to states.

California and Puerto Rico were the biggest gainers under the Moody’s recalibration.

Each was bumped three notches — the maximum ratings ascension under the recalibration.

California is now rated A1. Puerto Rico is rated A3.

Five states — Indiana, Tennessee, Texas, New Mexico, and Iowa — are newly rated Aaa.

Of the 16 states not assigned a higher rating, nine could not go any higher because they are already rated Aaa.

Four — Florida, Minnesota, Kansas, and Washington — are rated Aa1, which the recalibration algorithm Moody’s published last month did not necessarily bump to a higher rating. The outlooks for all four states were raised to stable from negative.

Moody’s does not assign ratings to Nebraska, South Dakota, and Wyoming. Moody’s also adjusted its ratings on the District of Columbia and certain other local governments in six states.

Fitch Ratings earlier this month began enacting a recalibration on similar grounds, lifting ratings on tens of thousands of municipal bonds.

Moody’s still plans to recalibrate ratings for local governments and housing and enterprise issuers.

Municipal analysts are still trying to gauge how investors are going to respond to these recalibrations.

Some have said they expect the market to make its own distinctions, meaning a newly minted triple-A like Indiana would trade at a spread to a holdover triple-A like Maryland.

Phil Villaluz, head of municipal strategy at Advisors Asset Management, is in this camp.

“I think it’ll be a minimal effect, if any, in terms of prices and spreads,” he said.

As Moody’s and Fitch have stressed, the recalibrations do not signal any improvement in credit quality. The new ratings are a different way to express the same credit opinion. That opinion is already reflected in bond prices, Villaluz said.

Others have said yields sooner or later will conform to the new ratings....

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129. Dubai World creditors reject 1% interest -sources

http://www.reuters.com/article/idUSLDE6350Q320100415?type=marketsNews

Dubai World offered creditors a 1 percent interest rate on two new tranches of debt as part of its restructuring plan, but they rejected it as too low, two sources close to the discussions told Reuters...

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130. LOOK TIMMY'S TRYING TO PULL HIMSELF OUT OF THE WELL!

Geithner Letter Could Steer Derivatives Debate Away From Ban on Banks

http://online.wsj.com/article/SB10001424052702304510004575186813257960540.html?mod=dist_smartbrief

Treasury Secretary Timothy Geithner said Thursday in a letter that tight restrictions on derivatives is "at the core" of a sweeping overhaul of financial rules but didn't call for the outright ban on trading by banks that some Democrats are pushing.

Mr. Geithner, in a letter to Senate Agriculture Committee Chairman Blanche Lincoln (D., Ark.), said new financial rules must create restrictions on how over-the-counter derivatives are traded "in order to curb abuses that were at the very center of the financial crisis." But he notably stopped short of endorsing a proposal from Ms. Lincoln to force large banks to spin off derivatives trading businesses entirely.

His letter is the latest in a forceful push by the Obama administration to counter a lobbying effort by financial companies to scale back the derivatives rules.

Mr. Geithner's two-page letter also could be an attempt to steer Ms. Lincoln's bill away from one of its most controversial elements – a requirement that large U.S. banks completely spin off their derivatives trading businesses. While he doesn't address this requirement in his letter, he does specify the exact requirements White House officials believe would accomplish tighter derivatives trading requirements. That could give Democrats cover to scale back her proposal while still toughening rules....