The Stalwart

The Repubs Whine About Pelosi

The Republicans are claiming that they would've voted for the deal, but for an "inflammatory" speech from Nancy Pelosi. It's always hard to see how these things play out, but whining never looks good on anyone. Anyway, I thought it sounded pretty familiar. Let's take a time machine back to 1995, when Republicans were still riding high after their huge win in 1994. And we hand it over to CNN:

The speaker said Wednesday that tough terms in the government spending bill President Clinton vetoed Monday night were included partly as the result of pique he and Senate Majority Leader Bob Dole felt on Air Force One during flights with the president to and from Israel for the funeral.

Gingrich and Dole had complained earlier about their lack of discussions with Clinton during the 25 hours of flying time. But Gingrich went a step further Wednesday by saying the incident contributed to the government shutdown.

"This is petty," said Gingrich, indicating his displeasure at the way the two were treated. "You've been on the plane for 25 hours and nobody has talked to you and they ask you to get off the plane by the back ramp. ... You just wonder, where is their sense of manners? Where is their sense of courtesy?"

And everyone knows how well Newt complaining about having to "get off the plane by the back ramp" worked for the Republicans (for those of you too young, it didn't work well). Meanwhile, here's silver-tongued Barney Frank's withering response.

Service Interruption

Not that any of you should really care, but I've been jotting down some of my ongoing thoughts on the election over at my other blog JosephWeisenthal.com. You know: Just in case you were somehow not getting enough politics talk these days.

Supposing They Get A Bailout Passed

The hard part is yet to come Information Processing:

How is Treasury going to buy up CDOs and other mortgage backed securities? What is the price discovery mechanism? I've heard discussion of a reverse auction process, in which the government offers a price and owners of the assets decide whether to accept the bid. But this makes the problem sound much easier than it is. There are no simple or uniform categories for these securities -- no two are exactly alike.

Read the whole thing.

Meet The Newest Prime Number

From the LA Times.

UCLA mathematicians appear to have won a $100,000 prize from the Electronic Frontier Foundation for discovering a 13-million-digit prime number that has long been sought by computer users.

While the prize money is nothing special, the bragging rights for discovering the 46th known Mersenne prime are huge.

"We're delighted," said UCLA's Edson Smith, leader of the effort. "Now we're looking for the next one, despite the odds," which are thought to be about one in 150,000 that any number tested will be a Mersenne prime.

Prime numbers are those, like three, seven and 11, that are divisible only by themselves and one. Mersenne primes, named after the 17th century French mathematician Marin Mersenne, who discovered them, take the form 2P - 1, where P is also a prime number.

McCain's Understanding Of The Crisis

I missed the debate, but virtually everyone I know seemed to think McCain won, so I'll assume he did. That being said, this is the kind of thing that would bug me. Felix Salmon:

Don't ask me who won the debate in terms of persuading formerly undecided voters to fix an allegiance. The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think that the difference actually matters is probably zero. But from a technocratic standpoint, the fact that McCain twice referred to the financial crisis as a "fiscal crisis" is telling.

AIG Might Be A Great Deal for the US Taxpayer

Anyone else feel like the US taxpayer might actually making a decent profit on the AIG deal? Earning LIBOR + 8.5% with an 80% stake in AIG as collateral, if I understand correctly. Sounds pretty good actually in isolation, assuming the US taxpayer doesn't have to bail the company out further.

American International Group said late Tuesday it signed a definitive agreement with the Federal Reserve Bank of New York for a two-year, $85 billion revolving credit facility.

Under the terms of the agreement, interest will accrue at a rate based on 3-month LIBOR plus 8.50%, and the giant insurer also will have to pay commitment fees.

AIG is required to pay back the loan from, among other things, the proceeds of certain asset sales and issues of new debt or equity. ...

If the loan isn't repaid, the U.S. government has the right to take a stake of almost 80% in the company.

A Myth That Won't Go Away Anytime Soon

The BSE-Human connection.

After 12 years, the U.K. Food Standards Agency (FTA) admits there is no connection between BSE and Humans.

This all began, when Conservative MP Stephen Dorrel, said in the House of Commons, London, on March 20 1996 that “there was the possibility of a link between BSE and CJD”. Of course, the media and other nation's governments soon followed in this line of thinking

Read more at Beefmagazine.com.

Excellent Summary of Japan's Financial Crisis vs. the US Now

Unfortunately not much time to comment on it now, but I found this month's Japan Credit Perspectives very useful as a summary of what happened to Japan during its own financial crisis. It also provides analysis and some thoughts on how it relates to the US now.

Japan’s cumulative bad debt totaled an estimated 25–30% of GDP, while the value actually written off by financial institutions amounted to nearly 100 trillion yen (US$910 billion) or 20% of GDP. The large banks alone accounted for 75 trillion yen (US$680 billion) of this total (Chart 10). This exceeds the combined value of their net worth of 20 trillion yen (US$180 billion) and 14 years worth of net operating profits at 50 trillion yen (US$450 billion). ...

Some comparisons vs. the US:

Creditor nation vs. debtor nation: Japan is a creditor nation and does not rely on overseas financing, so its bad debt situation was an internal problem. The U.S. is a debtor nation, which complicates the matter. Also, U.S. housing loans and other securitized products are widely held by overseas investors, so the risk can easily spread to global markets.

Japan’s bad debt problem on a cumulative basis amounted to a whopping 25–30% of the nation’s GDP (Chart 14), whereas the subprime problem is an estimated 5–10% of U.S. GDP.

Read the whole thing here.

Update: Just Curious

I wonder if this would be a good time for Wal-Mart to try getting into banking again. Leaning towards not...

Update: Point of clarification. I definitely think a First Bank of Wal-Mart would be a good thing. I just don't think they'd stand a prayer of getting approved in this climate.

Stand Firm

Politico.

Sen. Patrick Leahy (D-Vt.) says he’s seen this movie before: The Bush administration, citing an unprecedented national threat, puts the hammer on Congress to ram through gargantuan legislation with a minimum of review — and the murkiest of repercussions.

“We will do something this week — but if we learned anything from right after 9/11, it’s that the biggest mistake is to pass anything they ask for just because it’s an emergency,” Leahy says.