Friday, July 22, 2011
Friday Book Club - Will You Please Be Quiet, Please?
by Geoffry Wolfe
In most of these 22 short fictions, the objects of Raymond Carver's close attention are men and women out of work, or between jobs, at loose ends, confused and often terrified. If they are kids, they play hooky. Husbands and wives lie beside each other in bed, touch cautiously, retreat, feign sleep, lie, each bewildered by what has just happened and by what might happen next. The stories themselves are not at all confused; they have been carefully shaped, shorn of ornamentation and directed away from anything that might mislead. They are brief stories but by no means stark: they imply complexities of action and motive and they are especially artful in their suggestion of repressed violence.
No human blood is shed in any of these stories, yet almost all of them hold a promise of mayhem, of some final, awful breaking out from confines, and breaking through to liberty. In the title story a man extracts from his wife the confession that years earlier, following a drunken party, she betrayed him with a friend. The husband goes on a bender, returns to his house and stands above his sleeping wife. He is capable now of anything: "How should a man act, given these circumstances? He understood things had been done. He did not understand what things now were to be done. The house was very quiet."
In the event, he and his wife make love. Such turmoils are, as in all of these stories, elliptically revealed, and potent with division as well as coupling. They are menacing, as are the spells of quiet and tensed apprehension that characterize Mr. Carver's method. His prose, for all its simplicity, carries his mark everywhere: I would like to believe that having read these stories I could identify him on the evidence of a paragraph, or at most two. His effect, which suggests but does not in any way duplicate the effect of Harold Pinter, is a function of accumulation. No single sentence lodges in the memory, but, taken together, Mr. Carver's locutions, exact and suggestive as they are, insinuate themselves into a reader's imagination and provoke startling, even shameful, expectations.
In his choice of plots and materials Mr. Carver is in the modernist train of Kafka. Odd and threatening messages come as though by magic through the mails or by telephone. Strangers invade one another's lives and offer preposterous challenges to one another. In the customary literary execution of such procedures, identities shift, characters are misled into taking enemies as friends, conspiracies develop or are, at the least, apprehended. Mr. Carver, by contrast, anchors his men and women, his children, even his dogs and cats, in stable identities. With a speed common to all his stories he fixes the special tic or manner he wishes to develop: "I was out of work," says the narrator of "Collectors" in the story's first sentence. "But any day I expected to hear from up north. I lay on the sofa and listened to the rain. Now and then I'd lift up and look through the curtain for the mailman."
That rain and lassitude, the dangerous quality of expectation and delay, is "Collectors'" signature. A vacuum-cleaner salesman invades the house, moves busily through it and occupies it. The salesman's disjunction is revealed by a few phrases and gestures. He wears slippers: "He saw me staring at the slippers and said, W.H. Auden wore slippers all through China on his first visit there. Never took them off. Corns." In its context, the observation is comical, but for some entirely magical reason, having to do with Mr. Carver's control, it is also terrifying, and in this conjunction of the comical and the ominous these fictions resemble Thomas Pynchon's.
Except that Mr. Carver is more sparing in his reliance on the surreal; once only, in "What's in Alaska?", conventional causalities are upset: "Carl set the glass on the coffee table, but the coffee table smacked it off..." And in this comic turn, drugs have disrupted the predictable flow of action and consequence, as they have jumbled language and correspondence of every kind. And once again Mr. Carver's tact and precision are marvelous: he indulges in no psychedelic effects, no light shows or undersea swims, no anti-gravitational hocus-pocus, but rather a clean shearing off of sequence.
Mt favorites among these stories are "Why, Honey?" (notice how often the titles form questions), about a governor who may have been a murderer as a child and whose mother fears for her life so long as her son knows where to find her, and "Nobody Said Anything," a perfectly realized story about a kid faking sickness to give the slip to school and spend a day fishing. This story has in its few pages two wholly realized characters, a suggestion of potential murder, accurately adolescent dialogue and one of the best erotic sequences (unrealized sexuality, as usual here) that I have ever read. Also it has an ending that is both astonishing and just. But the essential Carver curtain-close is that in "Ducks": a husband tries to awaken his wife beside him in bed: "She kept on sleeping. 'Wake up,' he whispered. 'I hear something outside.'" What he hears, what it means, what will happen next, is for you to imagine. Mr. Carver's work here is done, and wonderfully.
via:
In most of these 22 short fictions, the objects of Raymond Carver's close attention are men and women out of work, or between jobs, at loose ends, confused and often terrified. If they are kids, they play hooky. Husbands and wives lie beside each other in bed, touch cautiously, retreat, feign sleep, lie, each bewildered by what has just happened and by what might happen next. The stories themselves are not at all confused; they have been carefully shaped, shorn of ornamentation and directed away from anything that might mislead. They are brief stories but by no means stark: they imply complexities of action and motive and they are especially artful in their suggestion of repressed violence.
No human blood is shed in any of these stories, yet almost all of them hold a promise of mayhem, of some final, awful breaking out from confines, and breaking through to liberty. In the title story a man extracts from his wife the confession that years earlier, following a drunken party, she betrayed him with a friend. The husband goes on a bender, returns to his house and stands above his sleeping wife. He is capable now of anything: "How should a man act, given these circumstances? He understood things had been done. He did not understand what things now were to be done. The house was very quiet."In the event, he and his wife make love. Such turmoils are, as in all of these stories, elliptically revealed, and potent with division as well as coupling. They are menacing, as are the spells of quiet and tensed apprehension that characterize Mr. Carver's method. His prose, for all its simplicity, carries his mark everywhere: I would like to believe that having read these stories I could identify him on the evidence of a paragraph, or at most two. His effect, which suggests but does not in any way duplicate the effect of Harold Pinter, is a function of accumulation. No single sentence lodges in the memory, but, taken together, Mr. Carver's locutions, exact and suggestive as they are, insinuate themselves into a reader's imagination and provoke startling, even shameful, expectations.
In his choice of plots and materials Mr. Carver is in the modernist train of Kafka. Odd and threatening messages come as though by magic through the mails or by telephone. Strangers invade one another's lives and offer preposterous challenges to one another. In the customary literary execution of such procedures, identities shift, characters are misled into taking enemies as friends, conspiracies develop or are, at the least, apprehended. Mr. Carver, by contrast, anchors his men and women, his children, even his dogs and cats, in stable identities. With a speed common to all his stories he fixes the special tic or manner he wishes to develop: "I was out of work," says the narrator of "Collectors" in the story's first sentence. "But any day I expected to hear from up north. I lay on the sofa and listened to the rain. Now and then I'd lift up and look through the curtain for the mailman."
That rain and lassitude, the dangerous quality of expectation and delay, is "Collectors'" signature. A vacuum-cleaner salesman invades the house, moves busily through it and occupies it. The salesman's disjunction is revealed by a few phrases and gestures. He wears slippers: "He saw me staring at the slippers and said, W.H. Auden wore slippers all through China on his first visit there. Never took them off. Corns." In its context, the observation is comical, but for some entirely magical reason, having to do with Mr. Carver's control, it is also terrifying, and in this conjunction of the comical and the ominous these fictions resemble Thomas Pynchon's.
Except that Mr. Carver is more sparing in his reliance on the surreal; once only, in "What's in Alaska?", conventional causalities are upset: "Carl set the glass on the coffee table, but the coffee table smacked it off..." And in this comic turn, drugs have disrupted the predictable flow of action and consequence, as they have jumbled language and correspondence of every kind. And once again Mr. Carver's tact and precision are marvelous: he indulges in no psychedelic effects, no light shows or undersea swims, no anti-gravitational hocus-pocus, but rather a clean shearing off of sequence.
Mt favorites among these stories are "Why, Honey?" (notice how often the titles form questions), about a governor who may have been a murderer as a child and whose mother fears for her life so long as her son knows where to find her, and "Nobody Said Anything," a perfectly realized story about a kid faking sickness to give the slip to school and spend a day fishing. This story has in its few pages two wholly realized characters, a suggestion of potential murder, accurately adolescent dialogue and one of the best erotic sequences (unrealized sexuality, as usual here) that I have ever read. Also it has an ending that is both astonishing and just. But the essential Carver curtain-close is that in "Ducks": a husband tries to awaken his wife beside him in bed: "She kept on sleeping. 'Wake up,' he whispered. 'I hear something outside.'" What he hears, what it means, what will happen next, is for you to imagine. Mr. Carver's work here is done, and wonderfully.
via:
In Rural Alaska, a Promise Unfulfilled
By Robert O'Harrow Jr.
[ed. An extensive four-part report on Alaska Native Corporations' special SBA 8(a) contracting exemption.]
[ed. An extensive four-part report on Alaska Native Corporations' special SBA 8(a) contracting exemption.]
They came by their holdings in the Sitnasuak Native Corp. as a birthright, when Congress established more than 200 Alaska native corporations, or ANCs, 40 years ago to provide land and money for indigenous people who had long been mired in deprivation and dislocation.
Each of the 75,000 original Alaska native shareholders received a stake in one of the new corporations, which held out the promise of economic development and a better life. The corporations have received extraordinary exemptions that have enabled them to receive $29 billion in federal contracts in the past decade.
But the original promise remains largely unfulfilled.
Native shareholders have gotten relatively little of the contracting largess. In many cases, the bulk of the money and jobs has gone to nonnative executives, managers, employees and traditional federal contractors in the lower 48 states, a Washington Post examination has found.
Under pressure to spend quickly after the terrorist attacks of Sept. 11, 2001, the Pentagon and other federal agencies took unprecedented advantage of the special contracting privileges given to the ANC-owned firms, including the ability to receive contracts of any size without competition. The result was one of the largest contracting booms for a minority group in U.S. history.
The Defense Department and civilian agencies have used the Alaska corporations as a shortcut for a dizzying array of work: intelligence analysis, base security, satellite support, janitorial services, bioterrorism research, computer systems, water tanks in Iraq, support for the drug war in Colombia.
Few addressed the obvious question: How could small, inexperienced native companies handle giant government contracts? The answer was to hire nonnative executives and workers and partner with established firms, including major Pentagon contractors. ANC-owned firms won contracts and passed on much of the work and revenue to the nonnatives and major contractors, audits and other records show.
Child’s Play, Grown-Up Cash
[ed. Words fail. Slideshow here.]
by Kate Murphy
Apart from the open bar by the swimming pool, the main attraction at parties held at the Houston home of John Schiller, an oil company executive, and his wife, Kristi, a Playboy model turned blogger, is the $50,000 playhouse the couple had custom-built two years ago for their daughter, Sinclair, now 4.
Cocktails in hand, guests duck to enter through the 4 ½-foot door. Once inside, they could be forgiven for feeling as if they’ve fallen down the rabbit hole.
Built in the same Cape Cod style as the Schillers’ expansive main house, the two-story 170-square-foot playhouse has vaulted ceilings that rise from five to eight feet tall, furnishings scaled down to two-thirds of normal size, hardwood floors and a faux fireplace with a fanciful mosaic mantel.
The little stainless-steel sink in the kitchen has running water, and the matching stainless-steel mini fridge and freezer are stocked with juice boxes and Popsicles. Upstairs is a sitting area with a child-size sofa and chairs for watching DVDs on the 32-inch flat-screen TV. The windows, which all open, have screens to keep out mosquitoes, and there are begonias in the window boxes. And, of course, the playhouse is air-conditioned. This is Texas, after all.
“I think of it as bling for the yard,” said Ms. Schiller, 40.
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by Kate Murphy
Apart from the open bar by the swimming pool, the main attraction at parties held at the Houston home of John Schiller, an oil company executive, and his wife, Kristi, a Playboy model turned blogger, is the $50,000 playhouse the couple had custom-built two years ago for their daughter, Sinclair, now 4.
Cocktails in hand, guests duck to enter through the 4 ½-foot door. Once inside, they could be forgiven for feeling as if they’ve fallen down the rabbit hole. Built in the same Cape Cod style as the Schillers’ expansive main house, the two-story 170-square-foot playhouse has vaulted ceilings that rise from five to eight feet tall, furnishings scaled down to two-thirds of normal size, hardwood floors and a faux fireplace with a fanciful mosaic mantel.
The little stainless-steel sink in the kitchen has running water, and the matching stainless-steel mini fridge and freezer are stocked with juice boxes and Popsicles. Upstairs is a sitting area with a child-size sofa and chairs for watching DVDs on the 32-inch flat-screen TV. The windows, which all open, have screens to keep out mosquitoes, and there are begonias in the window boxes. And, of course, the playhouse is air-conditioned. This is Texas, after all.
“I think of it as bling for the yard,” said Ms. Schiller, 40.
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Antimicrobial Wipes and Soaps May Be Making You (and Society) Sick
A few weeks ago as I was walking out of a Harris Teeter grocery store in Raleigh, North Carolina, I saw a man face a moment of crisis. You could see it in the acrobatic contortions of his face. He had pulled a cart out of the area where carts congregate, only to find that its handle was sticky with an unidentifiable substance. He paused and looked at the handle, as if to imagine the nature of the offense. Gum? Meat juice? Chewed marshmallows? So many vulgar possibilities. Forlorn, he reached for an antibiotic wipe conveniently placed by the door. He scrubbed his hands VERY diligently and then pushed the cart back for someone else to rediscover [1].
Scenarios like this one are playing out all over America. There is an epidemic of sticky, dirty and otherwise gross handles on shopping carts. But it isn't just carts. Disgusting doorknobs have also been found, as have cryptically damp table-tops in restaurants and even, sad as it is, slimy back rests on the weight machines in gyms! Increasingly, the world seems to be rife with contamination. Fortunately, all of the main companies producing hygiene products have offered a solution--sanitary, antibacterial, antimicrobial, antibiotic, wipes, and soaps to kill anything that dares to creep into our wholesome lives. These salves will cure us of the demons that dare to grow near us.
The really intriguing news--a kind of breakthrough--is that the main compounds in antibiotic wipes, creams and soaps, triclosan and/or the chemically similar triclocarban, have also been sprinkled around our lives more generally. A recent study notes that triclosan is now used to "impregnate surfaces and has been added to chopping boards, refrigerators, plastic lunchboxes, mattresses as well as being used in industrial settings, such as food processing plants where walls, floors and exposed machinery have all been treated with triclosan in order to reduce microbial load." You can now go home, wipe your world down and live a happier life, surrounded by an antibiotic force field. Be especially sure to wipe your children down. Children are just about the grimiest thing in the world.Yet, although I hesitate to digress or cause trouble, the devil on my shoulder, that voice of so-called reason, is urging me to avail myself of more than the vague suspicion that everything around me is contaminated. Maybe, the devil says, we should glance, just for a second, at what scientists like to call--in their nasally ivory-tower voices--"the evidence." I do not mean anything too fancy… Let's just take a moment to look at a study here and there that might be relevant as we go about coating our lives--from underpants to kitchen pans--in antibiotic wonder.
For example, what if we just considered whether people who wipe down the world around them with antibiotic soap or wipes are less likely to be sick. Of course, they must be. The world is gross and they are, God bless them, clean, but let's just check.
OK, we shouldn't have checked. There are some problems. One is the actual evidence, or just as often, lack thereof. Case in point: along with her colleagues, Allison Aiello, a professor at the University of Michigan, recently surveyed all of the experimental or quasi-experimental studies published in English between 1980 and 2006 on the effectiveness of different hand washing strategies [2]. Aiello focused on studies that compared different strategies, for example the use of normal soap versus the use of antibiotic soap, in terms of their effect on the probability of developing gastrointestinal or respiratory illness. Our intuition is that antibiotic soaps and wipes should make everyone healthier. Aiello's results were something else entirely.
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Fore!
by Larry Dorman
Tiger Woods has always demanded loyalty from employees and associates as a prerequisite for continued employment or association. His caddie, Steve Williams, was always the embodiment of the loyal employee, going to whatever lengths he deemed necessary to protect Woods on the golf course and off it.
And after Woods publicly announced the firing of Williams, his longtime caddie, friend and confidant, on his Web site, using the usual corporate niceties to put some positive spin on it, he might be wondering what happened to the nondisparagement clause in Williams’s contract.
This is quickly taking on the makings of a very ugly divorce.
Unhappy with the breakup, Williams fired back at Woods. On his personal Web site, after weeks of denying firing rumors that had popped up on other Web sites and on Australian television, Williams confirmed that Woods had let him go after the AT&T National tournament three weeks ago at Aronimink.
Then he wrote: “After 13 years of loyal service needless to say this came as a shock. Given the circumstances of the past 18 months working through Tiger’s scandal, a new coach and with it a major swing change and Tiger battling through injuries I am very disappointed to end our very successful partnership at this time.”
When he took to the airwaves, Williams ratcheted up the rhetoric on 3 News in New Zealand. This one may have started Woods wondering if the lawyers left the nondisclosure part out of the standard player-caddie contract, if there was a contract.
“You know, when I write my book, it’ll be the time I decide what I write,” Williams said. “It’ll just be one of those interesting chapters in the book.”
He is not talking about a yardage book or a record book, either. Woods might have been able to obviate some of this had he learned one other thing about Jack Nicklaus, whose major-championship victory record of 18 is still four ahead of Woods. He could have asked him how to fire a famous caddie.
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Carmageddon’s Big Surprise
by Timothy Egan So, they shut down a 10-mile stretch of one of the world’s busiest freeways for repair last weekend, in the nation’s most driver-stressed metropolis, and gave it a scary name — Carmageddon. Predictions were that Los Angeles would look like Mike Huckabee’s arteries before he lost a hundred pounds, and that chaos and road rage would reign under the tired sunlight of the Southland.
Lo, the weekend came and went, and a miracle was proclaimed — “a historic moment” in traffic history, as Los Angeles County Supervisor Zev Yaroslavsky called it. The 405 freeway opened 17 hours ahead of schedule. Pollution and smog levels dropped. A trio of pedestrians even dined on linen in the middle of the empty road. Ya-a-a-ay for L.A.!
“They loved it,” said Yaroslavsky in an interview. “It was Carmaheaven. My e-mails and Facebook comments have been not just 95 percent positive, but effusive. People who live near the freeway heard birds chirping for the first time. They heard the sound of kids playing.”
As a nonevent, Carmageddon ranks with Y2K, the much feared global computer collapse at the millennium’s dawn. But as an urban epiphany, the weekend when Los Angeles became a small town was no small thing. It disproved some of the most worn-out clichés about the city, while offering students of urban behavior some tantalizing glimpses of a better future.
To cyclists, the peace and harmony of the weekend was proof that people can get around on two wheels instead of four. And yes, Los Angeles was a green dream for the 36 hours of the actual shutdown, but not necessarily because pedal power replaced internal combustion.
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Thursday, July 21, 2011
Financial Crisis: Final Essay Exam
by Barry Ritholtz
Good morning class.
This past academic year, we have studied the many causes of the financial crisis. We’ve looked at how this stock market collapse compared to others, the impact of bank bailouts on competition, and of course, the Great Recession. There are lots of moving parts in this saga, and understanding them all is our goal.
Your final examination is in essay form. Answer each of the following 10 questions, using specific data and facts to buttress your arguments. Note you will be penalized for unsupported assumptions and unproven theories. Ideological arguments that lack a factual basis will also penalize you.
You have 3 hours (~15 minutes per question).
Good luck.
Final Examination
1. Following the dotcom implosion and 2000 market crash, the Federal Reserve lowered rates to 2% for 3 years, including a then unprecedented level of 1% for more than a year. Discuss the impact this had on various asset classes, including Real Estate, Fixed Income, Oil and Gold. What difference might a more traditional interest rate regime have made for these assets?
Bonus Question: Imagine you were FOMC Chair. Where would you have set rates in the 1990s? After the 2000 crash? Today?
2. The rating agencies — Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings — originally had business that were funded by bond investors, who paid for the NRSRO’s research. This changed in the 1990s to a Syndicators & Underwriter purchased ratings model. How did this business model change impact a) the performance of ratings agencies; b) the underwriting quality of syndicators?
Bonus question: Does finance still require NRSROs to evaluate complex financial products? What alternatives could replace these entities?
3. The Commodity Futures Modernization Act of 2000 was an unusual piece of deregulatory legislation, creating a new world of uniquely self-regulated financial instruments — the derivative. What was the impact of this on risk management, leverage, and mortgage underwriting?
Bonus: What did a lack of reserve requirements for underwriting derivatives mean for AIG, Bear Stearns and Lehman Brothers?
4. More than 50% of subprime loans were made by nonbank mortgage underwriters not subject to comprehensive federal supervision; another 30% were made by thrifts also not subject to routine supervision or examinations. What did this do to the supply/demand curve in the housing and mortgage markets?
Bonus: What was the role of changing credit standards in prior bubbles and financial crises?
5. In 2004, the SEC issued the “Bear Stearns exemption” — replacing Net Capitalization Rule’s 12 to 1 leverage limit to with essentially unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. Given that none of these companies exist today in the same structure as prior to the rule change, discuss the impact of this rule change on these companies.
Bonus: Changing broad legislation for only 5 companies is very unusual. What does this say about regulatory capture, democracy and the impact of lobbying on American society?
6A. Mortgage underwriting standards changed rapidly in the 2000s .Many lenders stopped verifying income, payment history, and credit scores.
6B. Traditional loan metrics also changed: Loan to value (LTV) went from 80% (20% down payment) to 100% (No Money Down) to even 120% (Piggyback mortgages).
6C. The loans themselves changed: “Innovative” new mortgage products were developed and marketed in the 2000s: 2/28 ARMs, I/O s, Neg Ams
Q: Discuss the correlation this had on a) home prices; b) new inventory build; and c) foreclosures.
7. Banks developed automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible. What was the impact of this on the RE market? How did this impact default ratios and foreclosures?
Bonus: Real estate agents and mortgage brokers were known to repeatedly use the same corrupt appraisers to facilitate loans approval. Did this correlate with AU? Discuss how and why.
8. Collateralized debt obligation (CDO/CMOs) managers who created trillions of dollars in mortgage backed securities and the institutional investors (pensions, insurance firms, banks, etc.) who purchased these appear to have failed to engage in effective due diligence prior to underwriting or purchasing of these products. Reconcile this in terms of the Efficient Market Hypothesis
Bonus: What does this mean for self regulation of the financial industry? Is it desirable? Even possible?
9. The Depression era Glass Steagall legislation was repealed in 1998. What impact did this have on the size of banking institutions? What did this do to the competitive landscape of financial services industry? Did this impact bank risk taking? Discuss.
10. Numerous states had anti-predatory lending laws which in 2005 were “Federally Pre-empted” by order of John Dugan, head of the Office of the Comptroller of the Currency (OCC). What impact did this have on states with anti-predatory lending laws default and foreclosure levels, pre- and post- pre-emption?
11. In 2006, more than 84% of subprime mortgages were issued by private lending institutions not covered by government regulations (McClatchy). Discuss what this means in terms of profit motive, government policy, and GSEs.
12. The Bank Bailouts “rescued” the system, but may have created additional issues int he future. Discuss the Moral Hazard of bailouts, what they mean in terms of competitive landscape and concentration of assets in the financial services industry.
Bonus: What impact might the Consumer Financial Protection Bureau on lending and future credit bubbles?
via:
Good morning class.
This past academic year, we have studied the many causes of the financial crisis. We’ve looked at how this stock market collapse compared to others, the impact of bank bailouts on competition, and of course, the Great Recession. There are lots of moving parts in this saga, and understanding them all is our goal.
Your final examination is in essay form. Answer each of the following 10 questions, using specific data and facts to buttress your arguments. Note you will be penalized for unsupported assumptions and unproven theories. Ideological arguments that lack a factual basis will also penalize you.
You have 3 hours (~15 minutes per question).
Good luck.
Final Examination
1. Following the dotcom implosion and 2000 market crash, the Federal Reserve lowered rates to 2% for 3 years, including a then unprecedented level of 1% for more than a year. Discuss the impact this had on various asset classes, including Real Estate, Fixed Income, Oil and Gold. What difference might a more traditional interest rate regime have made for these assets?
Bonus Question: Imagine you were FOMC Chair. Where would you have set rates in the 1990s? After the 2000 crash? Today?
2. The rating agencies — Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings — originally had business that were funded by bond investors, who paid for the NRSRO’s research. This changed in the 1990s to a Syndicators & Underwriter purchased ratings model. How did this business model change impact a) the performance of ratings agencies; b) the underwriting quality of syndicators?
Bonus question: Does finance still require NRSROs to evaluate complex financial products? What alternatives could replace these entities?
3. The Commodity Futures Modernization Act of 2000 was an unusual piece of deregulatory legislation, creating a new world of uniquely self-regulated financial instruments — the derivative. What was the impact of this on risk management, leverage, and mortgage underwriting?
Bonus: What did a lack of reserve requirements for underwriting derivatives mean for AIG, Bear Stearns and Lehman Brothers?
4. More than 50% of subprime loans were made by nonbank mortgage underwriters not subject to comprehensive federal supervision; another 30% were made by thrifts also not subject to routine supervision or examinations. What did this do to the supply/demand curve in the housing and mortgage markets?
Bonus: What was the role of changing credit standards in prior bubbles and financial crises?
5. In 2004, the SEC issued the “Bear Stearns exemption” — replacing Net Capitalization Rule’s 12 to 1 leverage limit to with essentially unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. Given that none of these companies exist today in the same structure as prior to the rule change, discuss the impact of this rule change on these companies.
Bonus: Changing broad legislation for only 5 companies is very unusual. What does this say about regulatory capture, democracy and the impact of lobbying on American society?
6A. Mortgage underwriting standards changed rapidly in the 2000s .Many lenders stopped verifying income, payment history, and credit scores.
6B. Traditional loan metrics also changed: Loan to value (LTV) went from 80% (20% down payment) to 100% (No Money Down) to even 120% (Piggyback mortgages).
6C. The loans themselves changed: “Innovative” new mortgage products were developed and marketed in the 2000s: 2/28 ARMs, I/O s, Neg Ams
Q: Discuss the correlation this had on a) home prices; b) new inventory build; and c) foreclosures.
7. Banks developed automated underwriting (AU) systems that emphasized speed rather than accuracy in order to process the greatest number of mortgage apps as quickly as possible. What was the impact of this on the RE market? How did this impact default ratios and foreclosures?
Bonus: Real estate agents and mortgage brokers were known to repeatedly use the same corrupt appraisers to facilitate loans approval. Did this correlate with AU? Discuss how and why.
8. Collateralized debt obligation (CDO/CMOs) managers who created trillions of dollars in mortgage backed securities and the institutional investors (pensions, insurance firms, banks, etc.) who purchased these appear to have failed to engage in effective due diligence prior to underwriting or purchasing of these products. Reconcile this in terms of the Efficient Market Hypothesis
Bonus: What does this mean for self regulation of the financial industry? Is it desirable? Even possible?
9. The Depression era Glass Steagall legislation was repealed in 1998. What impact did this have on the size of banking institutions? What did this do to the competitive landscape of financial services industry? Did this impact bank risk taking? Discuss.
10. Numerous states had anti-predatory lending laws which in 2005 were “Federally Pre-empted” by order of John Dugan, head of the Office of the Comptroller of the Currency (OCC). What impact did this have on states with anti-predatory lending laws default and foreclosure levels, pre- and post- pre-emption?
11. In 2006, more than 84% of subprime mortgages were issued by private lending institutions not covered by government regulations (McClatchy). Discuss what this means in terms of profit motive, government policy, and GSEs.
12. The Bank Bailouts “rescued” the system, but may have created additional issues int he future. Discuss the Moral Hazard of bailouts, what they mean in terms of competitive landscape and concentration of assets in the financial services industry.
Bonus: What impact might the Consumer Financial Protection Bureau on lending and future credit bubbles?
via:
The Value of Patents
Patents rarely make headlines, but they did this month when Nortel Networks Corp., the defunct Canadian telecommunications giant, auctioned off its patent portfolio and drew an astonishing winning bid of $4.5 billion from a group of companies that includes both Apple Inc. (AAPL) and Microsoft Corp. (MSFT)
The sale marks a watershed in the maturity of intellectual property markets and a dramatic shift in strategy for technology companies. Suddenly these companies are acknowledging that patents are a strategic asset worth billions.
Here’s an inside look at what happened -- and what’s at stake -- and remember, as you read this, that my company buys and licenses high-tech patents.
Most big tech companies inhabit winner-take-most markets, in which any company that gets out in front can develop an enormous lead. This is how Microsoft came to dominate in software, Intel Corp. in processors, Google Inc. (GOOG) in web search, Oracle Corp. in databases, Amazon.com Inc. in web retail, and so on.
As a result, the tech world has seen a series of mad scrambles by companies wanting to be king of the hill. In the late 1980s, the battle was for dominance of spreadsheet and word-processing software. In the late 1990s, it was about e- commerce on the emerging Internet. The latest whatever-it-takes struggle has been over social networks, with enough drama to script a Hollywood movie.
In each case, the recipe for success was to bring to market, at a furious pace, products that incorporate new features. Along the way, inconvenient intellectual property rights were ignored.
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Utah Liquor Laws, as Mixed Up as Some Drinks
by Michael Cooper
DRAPER, Utah — When Vuz Restaurant and Vuda Bar opened here a couple of months ago, the idea was to bring a dash of dining chic to this corner of the Salt Lake Valley.
Diners can watch white-jacketed chefs prepare their risotto in the glass-enclosed kitchen. The lounge area is down a hall dominated by a glass wine cellar. Its centerpiece was to be a shiny bar, with high-end bottles arrayed on circular steel shelves bathed in red, blue and purple lights.
Then the concept ran into Utah’s famously strict liquor laws, which remain unusual even after they were relaxed in 2009 to bring the state more into line with the rest of the nation. Unable to get one of the state’s closely held licenses for its bar, Vuda is now run as a restaurant, which means under current Utah law that drinks can be served but not seen — at least until the customers get them.
So the wine cellar, upon closer inspection, is stacked with empty bottles.
Stools still line the shiny bar in the lounge, but they look straight at a wall of clouded white glass that rises from the middle of the counter, obscuring the bottles and bartenders on the other side.
“Without that license, the patrons cannot see the alcohol and they cannot see the bartenders,” explained James Ables, the restaurant’s manager. “Hence the ‘Zion Curtain.”
It is no longer true that you cannot get a drink in Utah, despite the shot glasses sold in souvenir shops that say “Eat, drink & be merry — tomorrow you may be in Utah.” But the state’s liquor laws — heavily influenced by the Mormon Church, which has its headquarters here and which frowns upon alcohol — are still among the most complex in the country.
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The Rape of Men
[ed. Harrowing account of one of war's most secret atrocities. Caution advised.]
by Will Storr
Of all the secrets of war, there is one that is so well kept that it exists mostly as a rumour. It is usually denied by the perpetrator and his victim. Governments, aid agencies and human rights defenders at the UN barely acknowledge its possibility. Yet every now and then someone gathers the courage to tell of it. This is just what happened on an ordinary afternoon in the office of a kind and careful counsellor in Kampala, Uganda. For four years Eunice Owiny had been employed by Makerere University's Refugee Law Project (RLP) to help displaced people from all over Africa work through their traumas. This particular case, though, was a puzzle. A female client was having marital difficulties. "My husband can't have sex," she complained. "He feels very bad about this. I'm sure there's something he's keeping from me."
Owiny invited the husband in. For a while they got nowhere. Then Owiny asked the wife to leave. The man then murmured cryptically: "It happened to me." Owiny frowned. He reached into his pocket and pulled out an old sanitary pad. "Mama Eunice," he said. "I am in pain. I have to use this."
Laying the pus-covered pad on the desk in front of him, he gave up his secret. During his escape from the civil war in neighbouring Congo, he had been separated from his wife and taken by rebels. His captors raped him, three times a day, every day for three years. And he wasn't the only one. He watched as man after man was taken and raped. The wounds of one were so grievous that he died in the cell in front of him.
"That was hard for me to take," Owiny tells me today. "There are certain things you just don't believe can happen to a man, you get me? But I know now that sexual violence against men is a huge problem. Everybody has heard the women's stories. But nobody has heard the men's."
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by Will Storr
Of all the secrets of war, there is one that is so well kept that it exists mostly as a rumour. It is usually denied by the perpetrator and his victim. Governments, aid agencies and human rights defenders at the UN barely acknowledge its possibility. Yet every now and then someone gathers the courage to tell of it. This is just what happened on an ordinary afternoon in the office of a kind and careful counsellor in Kampala, Uganda. For four years Eunice Owiny had been employed by Makerere University's Refugee Law Project (RLP) to help displaced people from all over Africa work through their traumas. This particular case, though, was a puzzle. A female client was having marital difficulties. "My husband can't have sex," she complained. "He feels very bad about this. I'm sure there's something he's keeping from me."
Owiny invited the husband in. For a while they got nowhere. Then Owiny asked the wife to leave. The man then murmured cryptically: "It happened to me." Owiny frowned. He reached into his pocket and pulled out an old sanitary pad. "Mama Eunice," he said. "I am in pain. I have to use this."
Laying the pus-covered pad on the desk in front of him, he gave up his secret. During his escape from the civil war in neighbouring Congo, he had been separated from his wife and taken by rebels. His captors raped him, three times a day, every day for three years. And he wasn't the only one. He watched as man after man was taken and raped. The wounds of one were so grievous that he died in the cell in front of him.
"That was hard for me to take," Owiny tells me today. "There are certain things you just don't believe can happen to a man, you get me? But I know now that sexual violence against men is a huge problem. Everybody has heard the women's stories. But nobody has heard the men's."
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