What Calfornia does have

A play in three acts:

I.


II.


III.


I wouldn't worry, they're fine.

maybe it's the rivalry?

i'm beginning to turn into a one-trick pony. i can't help but be drawn to the news of california's demise. william gibson, cyberpunk jesus, based many of his novels around a dystopian california of the future, one rent in twain by unspecified events and populated almost exclusively by people in leather jackets. i guess i've always wondered if that could turn out to be true. these days, though, i doubt anyone could even afford the jackets.

so what's the latest in this fecal monsoon? it's foreclosure data--but that's not all. it's california's foreclosure data framed in a certain light: the light of national monthly new home sales. more specifically, it's the mindboggling news that in june of this year, california, with 45,691 notices of default, took more homes (36,000) from people than were sold in the entire united states of america.

let's list what we know so far, then:

1. california does not have a budget (this is old news).

2. california has a $26.3 billion budget deficit. to put this in perspective, projections for 2009 revenues are $87.5 billion, and that is with several accounting tricks thrown into the mix. much of california's payment obligations to employees and creditors has been moved over the 2009 budget-year deadline, meaning that they won't appear until 2010.

3. californians do not have homes.

4. california processes unemployment claims on the equivalent of a toaster oven strapped to a casio keyboard.

i think i am going to keep a running list of all the staggeringly crazy things i learn about compton the state. if you'd like to contribute, please, do not hesitate. anybody got anything on some of the state's pension systems?

David Brooks in Xanadu's Pleasure Dome

David Brooks was up late last night. Tearing through a chest of drawers, he finds Samuel, a brown tub of industrial glue. He cannot suppress the facial tick and good God, why is there so much blood drying beneath his finger nails? The moon is bright and David is thirsty and aroused. The back of his head itches but, of course, it has become a sun-bleached melon. In the distance, a clap of thunder rattles the synapses of his brain. A can of tuna sits alone on the floor, sinister and conspiring. David is called to the hyperventalating typewriter:

What would happen if a freak solar event sterilized the people on the half of the earth that happened to be facing the sun.

Sniff. Sniff. The beetles are getting rowdy again. They've always underestimated David's abilities.

Some people might try to perpetuate their society by recruiting people from the fertile half of the earth. But that wouldn’t work. Immigration is the painful process of leaving behind one culture and way of living so that your children and children’s children can enjoy a different future. No one would be willing to undertake that traumatic process in order to move from a society that was reproducing to a society that was fading. There wouldn’t be the generations required to assimilate immigrants. A sterile culture could not thrive and, thus, could not inspire assimilation.

And then the horizon explodes. David sobs uncontrolably and throws away his condescending umbrella, but god dammit, they've thought of everything; gravity has been turned back on just to spite him.

But no, it is just the rising sun. The jittering slows and the all the furniture resume their former positions. David protectively clutches his genitals but in his heart of hearts, he knows that everything is going to be alright.

But, of course, that’s the beauty of this odd question. There are no sterilizing sunspots. Instead, we are blessed with the disciplining power of our posterity. We rely on this strong, invisible and unacknowledged force — these millions of unborn people we will never meet but who give us the gift of our way of life.

David puts on the kettle and returns to the living room. Sighing contentedly, he settles back into his recliner and lights his pipe. "Ah, to depart on occasion from the quotidian frim-fram of political machinations," he muses contentedly. "The Philosophe is truly the soul of the representative democratic system." And then, beckoned by the whistle, David returns to the kitchen for his Earl Grey while contemplating a reasonable moderation on the abortion debate.

On disasters, self-inflicted and unavoidable

Under the heading 'Analysis: July has been disaster for Obama, Hill Dems':

The Obama administration, which was flying high a month ago after pushing through a climate change bill in the House, has since been dealt a series of setbacks and is struggling to regain its footing.

After the climate bill passed 219-212 on the afternoon of June 26, there was a feeling that the White House could get much of its agenda through Congress in 2009.

A month later, there are doubts that President Obama will even achieve his number one priority of healthcare reform, much less cap-and-trade, immigration reform and a regulatory revamp of the financial sector.

Elsewhere, we get this:

After a week of major setbacks on health reform, White House officials and House Speaker Nancy Pelosi did their best to sound upbeat Sunday, with new deadlines looming to move bills out of key committees before the August recess.

White House senior adviser David Axelrod insisted most of the work is already done, with just 20 percent left to go. Pelosi said again Sunday that she has the votes to get a bill passed on the House floor. “This will happen,” she said firmly.

But things look a lot different for some members and senators — some of whom said Sunday they don’t think a quick resolution in either chamber is guaranteed right now, no matter how much President Barack Obama wants it.

The most downbeat forecast came from Sen. Kent Conrad (D-N.D.), one of three Democrats and three Republicans negotiating the bill in the Senate Finance Committee. He couldn’t say for sure that the committee would vote on a bill before the Senate recess — despite assurances Sen. Max Baucus (D-Mont.) has given to the White House.

The diverging assessments show what a tough sell Obama-style health reform is proving to be for some in Congress — particularly among moderates and fiscal conservatives in Obama’s own party. Last week, Obama was still pushing for both the full House and Senate to move bills before going on summer vacation. Now, reform advocates are down to hoping for committee action in each house, and even that isn’t certain.

Now, it is certainly true that this has been a tough month for the Democratic party, for a number of in and out-of-Washington reasons: there's been a spate of coverage on vulnerable Democratic senatorial and gubernatorial positions (Corzine, Dodd, the open Virginia seat, even Deval Patrick in Massachusetts), the economy isn't moving the way a governing party would like it to, and, just for good measure, the last few day's worth of media oxygen has been sucked up by this Gates nonsense - an essentially unwinnable situation, in my opinion, for Obama, and a huge detriment to his efforts to keep the spotlight on health care reform.

That said, I'm not really sure how the last month of politicking could have played out any differently. The White House set an August recess deadline, which they are now retroactively suggesting was just a gentle, non-binding suggestion, to get this thing passed, and that kind of deadline is a wondrous gift to slow-rolling Republicans. The deadline guaranteed that a) the media narrative will focus on the deadline, rather than the contents of the bill, as the relevant measure of success and b) Republicans just have to throw up enough legislative smoke-screens to slow an already laborious process to a standstill, and they win. The Republican party has zero interest (nor should they, from a strategic perspective) in cooperating with Obama, Pelosi, and Reid here, and they've managed to put some serious pressure on the Democrats by doing absolutely nothing. While I appreciate the argument coming out of the White House now that a deadline was necessary to just get things moving, putting one out there was at the very least an unavoidable self-inflicted error, the kind of line in the sand that is impossible to defend or maintain.

Beyond that, this is a very confusing chunk of legislation. I realize that isn't a very revelatory statement, but it is. I've spent my time reading about it and looking at Canadian health care stuff as a point of comparison, and I'm still stumped on a lot of it. Because it is so confusing, media coverage has concentrated more on the legislative back-and-forth surrounding the bill than its contents, only stopping to highlight a few easy-to-understand bits of information - the infamous $1 trillion CBO figure, for example - and how those things will help or hinder its movement. You can find criticism of this phenomenon on practically every blog, left or right, that political journalism is biased towards covering partisan fighting over legislative substance, but here's the thing: without a solid bill on the table, what is there to write about? Every single piece of the reform, from the public option to the IMAC board to the final cost, is still being debated, and until it passes through reconciliation we have no idea what it will look like. Again, while some have pointed out that this is a result of Obama's hands-off approach, in my opinion it's an inevitable, unavoidable cost of trying to pass comprehensive reform. In other words, media coverage was always going to veer towards the battle surrounding the bill, and I'd think Obama and his advisers are smart enough to have predicted this.

Add these two factors to the immense power of health-care lobbyists in Washington and the well-known sausage-making process that is part of every legislative push, and it seems, to me at least, that we aren't seeing anything at the moment we weren't going to see anyway. Huge reforms demand political capital, and they're also slow - there was never going to be a quick, easy, non-punitive way for Obama to fix the system. Just something to keep in mind as we sit through a long, grueling August of health care ads and par-for-the-course Republican hyperbole.

economic forensics

once i realized somewhere around the month of may that the controversy over whether or not employment situation in the united states was improving was moot, i stopped following the data as closely, turning instead to the task of licking my own (un)employment situation. i'm surprised to learn that many months later there are still some lonely--but loud--voices who are busy hawking rose-colored glasses with every BLS report. there's been some talk, for instance, of the fact that continuing claims on unemployment insurance fell by 88,000 in the first two weeks of july, and that new claims fell by 95,000 during the same period. zero hedge has a good counter-argument to this talk, and though not my own hard-hitting investigative journalism, still i thought i'd deliver what we've all come to know and love here at the chorography: a stale paraphrasing stuffed with my own glaring bias and stomach-turning vitriol.

to the second assertion, that concerning new claims, zero hedge posits BLS number-fudging. i've pointed out several times in the past occasions where very suspicious moves were made on the bureau's part when faced with abysmal data. seasonal adjustment is this time the culprit; zero hedge says that non-seasonally adjusted figures show a 108,000-claim increase over the past two weeks. their evidence for tampering, or at least for a very inappropriate burst of forecasting elan, is drawn from a comparison with the same period (july 1st-15th) last year. it turns out that a non-seasonally adjusted decrease of 115,000 claims fell to 19,000 when seasonally adjusted. there does seem to be a discrepancy in the way the numbers were treated between the two years. i noted, in an earlier post, a similar difference between the firm birth/death adjustment for april made last year and that made this year, the difference being that this april firm birth was much stronger than the year before. given the lousy performance of just about every economic indicator on god's green earth then and now, this seemed a bold claim to make. still, it is no less a claim that zero hedge is making, and so until the BLS confesses to being freemasons or international zionist-bolsheviks, on this point ambiguity will continue to reign.

on the subject of continuing claims, however, the picture is clearer. that drop of 88,000 seems great, until you sit it next to the 170,000-claim increase in the emergency claims and extended benefits program. what the drop in continuing claims really means is that for a huge number of americans, unemployment insurance is beginning to run out. the emergency programs are meant to pad the amount of time one can be succored by the federal government. zero hedge says that the benefit exhaustion rate has hit 50%. that means that millions are now going to be pushed into these emergency programs, which can, by their very nature, only provide short-term relief. the question is what, if anything, the federal government will do. with new claims still accelerating (despite questions over a possible slowdown), it's likely that the system is going to be severely strained as the year wears on. i remember reading in this times article--from there came the inspiration for my last post, on the fuckotry that is the state of california--that sixteen states were already borrowing to pay unemployment, their funds having dried up through inattention and asinine mismanagement. the times predicted that the number of delinquent states was also expected to grow, and, given what i've said so far, why not? with so many people moving into emergency programs, it's clear that the unemployment picture for most workers is frighteningly long-term. the states will be expected to shell out for some time to come, then.

california, by the way, is one of the states that is blowing credit markets like the dickens to feed its unemployment habit. u6 (unemployment and underemployment) is also 20% there. i don't know what else to say except that, frankly, sir, i am shocked and appalled.

Berlusconi Fucking Dead People Too

http://www.dailymail.co.uk/news/worldnews/article-1201885/Italians-finally-talking-Berlusconis-sex-tapes-sex-bit-talks-30-ancient-tombs-estate.html (Also enjoy the Daily Mail's liberal use of pictures of Italian models in a story that is only tangentially related to them)

OK, not really. But continuing from Dave's post about Italy, I'll put this up too. Unfortunately I'm massively hung over so I won't be typing too much. Basically, some archaeologists in Italy are takin' it to Berlusconi for having not reported that his ginormous (or should I say va-ginormous? Hi-yo!) Sardinian estate was built upon unreported Punic (Carthaginian) tombs, which, if you're into such things, is very bad because anything Carthaginian outside Tunisia is extremely rare.

But I guess the archaeology isn't really the important thing here; what's important is that left-wing Italians are grasping at any straws they can to get people to care about his horrible corruption (not to mention his many other fine qualities.) The thing is, as one blogger points out, "in Italy, who doesn't live over something 'old'?" And it's true. The Italian farmer's worst nightmare is that something big and old pops up from the dirt while they're plowing, because it means the archaeologists swoop in, dig up their field, and deny them their livelihood for a season (though they are compensated, of course). So it doesn't seem to that, despite what the Daily Mail says, regular Italians will care much (the only people quoted in the article are directly involved with the left-controlled Ministry of Culture). But, regardless, this just goes to show that the man is horrible, at least in my eyes.

Bixi Bikes: First Thoughts

So after almost three weeks back on the Newer side of the Atlantic, and most of that time spent in Montreal, I finally broke down and got on a Bixi, the new public bike rental thing. I don't think is news to anyone who actually reads this blog (cue tumbleweeds), but I've been pondering the whole system over the last couple days, trying to make sense of how I feel about it.

First off, I am definitely a fan of efforts to a) reduce car traffic and b) get people biking around town. As Lion and I found out on our way to Atwater and back on Tuesday, renting a Bixi is actually slightly cheaper than buying two tickets on the Metro, and I think the bikes will get heavy use from people leaving bars around closing time looking for a way to get home that isn't a cab. Beyond that, the tourists that are usually, in better economic times, flooding our fair city will find these things immensely useful. However, I'm not sure who, beyond tourists and broke drunks, the Bixi system is being marketed to. For one thing, most people in this city who want to bike everywhere already own one, and so they won't be using it. The yearly usage fee is 78 dollars, which is probably more than someone would spend on owning and repairing a crappy city bike for the same amount of time. The monthly Bixi membership makes a little more sense to me, as it is theoretically aimed at people moving into the downtown core of Montreal for a month or two (students, whatever) and needing a way around, but even then buying a used bike seems smarter.

Compounding on this problem is the payment scheme, which increases the fees you incur the longer you take the bike out. I just just found this out the hard way today, when I looked at my Visa account and noticed that Bixi charged me 25.50 (!) for the very brief periods of time I used their services over Tuesday and Wednesday. It looks like, and this is my fault, I had not properly locked the bike in, and around 3 am that night someone came along and did it for me. I called and they politely fixed the charge for me, but the lesson is that you can't really use Bixi bikes for longer than half an hour at time or you're spending a lot of cash. So the Bixi system works best for people who don't have a bike but like to bike, and who don't have very far to go. A little limited, although maybe I'm misreading this.

The biggest criticism I have, though, is the current distribution of the Bixi stands themselves. It's still early, so I don't expect them to stay the way they are right now, but I've seen the exact same thing happen every day that I've gone to campus since I got back: in the morning, all the stands around McGill are full, meaning that if you come a little late, you're going to have to bike around a bit looking for a space. In the afternoon, all the stands are empty, so you'll be spending more time looking for a bike to take. These stands hold maybe 8-10 bikes max, so even if only a small portion of the population of Montreal are using these things, if 8-10 of them are doing what you're doing everyday you're going to get very frustrated very quickly. This is yet another thing that limits the practicality of the Bixi system: if you, like many other people, are looking to bike from your house down to work and then back in the evening, Bixi probably won't save you much time or effort. This is a confusing thing to see happen just because I'd think that some basic research had been done on traffic flows in Montreal before they set the stands up, but maybe they're still experimenting.

Anyway, this isn't me saying that I hate the idea - I like it a lot. I just think that there are some real big kinks that need to be worked out before Bixi can move from a novelty urban design experiment to a major fixture of public transport in Montreal.

mindrape

as if this article on the atrocious state of unemployment systems in america wasn't bad enough, take a look at this little tidbit on everyone's favorite social, economic and political catastrophe, california:

Perhaps no state is as troubled as California, which has not met timeliness standards for nine years. As in most other states, its 30-year-old computer runs on Cobol, a language so obsolete the state must summon retirees to make changes.

Yet a major overhaul in California has been delayed for five years, with $66 million in federal funds still waiting to be spent. In part, the shelved project was meant to upgrade the call centers, which were “completely swamped” last winter, a legislative analyst wrote, with “desperate unemployed Californians dialing and redialing for hours.”

Cobol. COBOL? I want to make some kind of history of computing-related joke, but I'm completely at a loss. The kind of guys who programmed in Cobol were already senile when movies about computer programming, movies like "Weird Science," first became popular. When everybody else found out what computers were, these guys were shitting into bags. Ben, you should ask what system they use to process criminal background checks. I've got a feeling that we might end up finding what really happened to the Pony Express.

Good News is the New Bad News

Last week looked pretty good if you happened to own shares or hold an upper-management position in one of America's largest financial institutions, so presumably that broader economic recovery we've all been waiting for is just around the corner. Here's a Washington Post article that talks all about it:

The huge profits reported this week by some of the nation's largest banks showed that the government is succeeding in its rescue of the financial industry...

Well, that's good enough for me. I guess I'll just end the post here. Congratulations America! The days of the plenty are back in a big way. Now let me see if the Post still carries a comics section. And if by chance my eyes should stray, skimming the rest of the above paragraph, I am certain that its contents will only confirm my earnest belief in the fairness of American capitalism.

...but the details of those earnings reports made it clear that the broader economy is not seeing the benefits.

If you're as shocked as me or Lucille Ball in the chronic disparity between the welfare of Main Street and excess and seemingly unjustifiable wealth of Wall Street, take comfort in the fact that these profits, much like those of the last five years, are almost entirely unsustainable, illusory or made-up. What a relief.

Citigroup, a banking giant scrambling to survive the financial crisis, reported a $4.3 billion second-quarter profit thanks to gains on its Smith Barney deal, though its primary banking businesses continue to suffer from rising credit losses. (NYT)

And according to a report by M. Ramsey Securities, the same story can be told of Bank of America's recent profit report. That bank sold a major chunk of itself (that's the technical term I'm using in lieu of specifics) to a Chinese investment bank. In other words, both Citi and BofA were able to turn profits by selling their organs. I wouldn't say that these were necessarily distress sales--after all, they were able to turn profits--but they were one-off deals. And at least for Citi, the "primary banking businesses"--that is, all that stuff that they claim to do when they aren't being bailed out by the government--is still stuck in the doldrums with the rest of us.

But then again, I don't think anyone expects more from Citi or BofA at this point. Goldman Sachs and J.P. Morgan, on the other hand, are different financial animals altogether. Specifically, vampire squids, if your following Matt Taibbi. Both banks have already paid back their TARP funds (and shed off any pesky regulatory strings that may have come attached). And both banks are back to making serious money in a seriously predictable way. According to the King Report:

Speculation via levered trading, inside info and electronic advantage, as well as mark-to-model/fantasy accounting allows a select few banks to greatly profit at the expense of the rest of the country.

On the issue of "fantasy accounting," this is in reference to the change in the "mark-to-market" regulation. Before January 2009, a bank (or any other similarly classified financial entity) was required to value the assets on its balance books according to how much those assets could fetch in the market at that given point in time. How are these asset valued if not by the market? Good question, though I would guess quite profitably. However, I don't think this the main source of the bloat in these bloated profits. Assuming all the pre-mark-to-market-suspension assets were already "revalued" at the time of the regulation change, new significant profit would only come from assets acquired since January. Which could be a lot. But probably not this much.

The other issue that the report brings up is the so-called "electronic advantage," which is a reference to high-frequency trading programs employed by these major banks. These programs, very sophisticated and very quick pieces of software, conduct a disproportionate amount of the trading activity for these banks (and therefore, in the world). According the blog Zero Hedge, which I believe gathered this information from a State Street report, "recent data indicates high frequency trading now accounts for over 70% of US volume"(ZH). This issue has recieved some attention lately, after a former Goldman employ (a Russian no less!) was arrested for stealing the codes to one of that banks' trading programs.

Unlike the issue of accounting tricks, the profits generated by these algorithmic trading programs are not fake. But they are potentially destablizing. Where so much of the daily trading activity is being conducted by a select few computers in a select few banks, a) prices aren't necessarily trustworthy since one party can exert undue influence by placing a series of massive buy or sell order and b) the so-called "liquidity" that these traders to contribute to the market is, as some people are calling it, a mirage. Right now, it might look like there is plenty of trading occuring on the NYSE and so, if prices were to suddenly turn around, one might expect that those who wish to sell off would be able to do so without too much trouble. But that is probably not the case. When a market is dominated by a few very fickle actors (fickle, that is, speculative, by design given that these computers are designed to take positions for micro-seconds at a time) a down turn in the market could lead a few of these programs to stop trading or all start trading one way and any unlucky human trying to sell of his position will have a very hard time finding a buyer. And until he or she does, the price will keep falling. That's volatility.

And in the meantime, I've read reports that suggest Goldman is once again leveraging the hell out of itself to get their numbers up while JP Morgan has returned to the credit derivative market with a vengence. And given the continued fragility of the credit markets, those are very precarioius places to be. But don't worry, our government is on it.

On interesting symbolism

I figured I'd mark my return to the low-traffic blogging world with a piece of Italiana I wanted to show you all:



The text, which is partially covered, reads "...stop the invasion". This is a poster put up by the Lega Nord, a right-wing Italian political party that has opinions on immigration that I don't really have to spell out for you. I never got a chance to take a picture of the other Lega Nord poster that had been put up in Finale Ligure for the June European Parliament elections, which features a picture of a Native American in full headdress with some accompanying text decrying the imminent threat of culture loss at the hands of an encroaching imperial power. The interesting thing is, the power in question is Rome.

From the 80s on, Lega Nord has been hard at work developing a fairly strange political narrative in which Padania, a throwback name for Northern Italy, have been repeatedly assaulted by the imperial demands of a foreign power just to the south. Considering the fact that the impetus for the 19th century unification of Italy came mostly from the North, in Milan and Torino and elsewhere, this requires some interesting logical side-steps, but the underlying argument appears to be (according to the various Italians I spoke to) that Lega Nord considers Padanians (Lombards) to be much more Germanic than their Southern counterparts. Italy already has a fairly significant North-South cultural divide that kind of mirrors American North-South stereotypes, and so I guess the Lega Nord has done good business in Veneto and Liguria tying the grievances a slice of voters have towards their taxes flowing towards developing the South by wrapping it in a cloak of quasi-Aryan pride. Of course, most Italians are quite proud of their cultural history and northern Italy is far from wanting to break away from the peninsula, but Lega Nord apparently gets something like 15% of the vote in the regions they're working in (30% in Veneto, which is pretty scary).

Like most hard-right grievance-based parties, they do their best in tough times, and so they did quite well for themselves last month. While I was there, there were also a few protests in Milan and elsewhere that, as best as I could tell, were loosely affiliated with Lega Nord and featured some dudes wearing old fascist uniforms. While I found all of this pretty funny, the Italians I talked to (all left-wing, as most prehistoric archaeologists are) weren't so amused, and intimated that because Italy has never really been a destination for immigrants until very recently, hostility towards them is very real and very exploitable politically. The Roman imperialism stuff is one (extremely weird) thing, a low-level ethnic counter-narrative that probably won't gain much more traction than it already has, but the anti-immigrant ranting is another thing with a whole lot of growth potential, as it were.

Good Fun Friday

A round-up of articles, videos and graphs that may be worth looking at:

Videos:

"Breaking the Bank" (Frontline)

An hour-long documentary on Bank of America's purchase of Merrill Lynch. It goes a little easy Ken Lewis, in my opinion, but then again my opinion is relatively uninformed.

Jonathan Jarvis' "The Crisis of Credit Visualized"

Eight months too late maybe, but even if might find a primer on the credit crisis a little redundant at this point, this is fantastically entertaining.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

Videos Plus Graphs:

Brad Setser's "The Crisis Guide: The Global Economy," Chapter III (Council of Foreign Relations)

Not as exciting as the last video, but interactive graphs are always fun.

Articles:

Michael Lewis' "The Man Who Crashed the World" (Vanity Fair)

Crash Lewis Vf

Matt Taibbi's "The Great American Bubble Machine" (Rolling Stone)

The Great American Bubble Machine -Goldman-Sachs and the crash