Monday Open Thread: Gutter edition

Welcome to the mud. Go ahead, wallow around , get comfortable , there's plenty to go around , and more on the way. What a fantastic month we have to look forward to!

Submitted by Brendan on Mon, 2008-10-06 07:38

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Open Thread

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I understand that the McCain campaign

feels they have no choice but to go down this road, given the current polls, and that the Obama campaign is coming out swinging rather than sitting back, and that the media is cheerfully taking all this as a greenlight to start doing the "reporting" on smears that they so enjoy.

It was probably inevitable.

Doesn't mean I have to like it. Especially given the current precarious financial situation, the American people deserve to have the issues addressed.

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 07:42 …………

Another version of the gutter

It's where stocks look to be headed today. Even after the bailout passed Congress and was signed into law by Bush -- this is a reflection of turmoil in foreign markets.

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 07:53 …………

The turmoil

is very very bad.

I don't think anyone knows what to do. The leverages from this mess are so huge that the banks are looking at a black hole of debt, if all the chips are called in for redemption.

When people talk about shorts, they are talking about hedge funders.

Ed Koch says the Feds should state a new rule forcing banks to lend to each other.

I'm only half stupid

by: missliberties - 2008-10-06 07:58 ………… parent •

Speaking of the gutter...

That where the DOW seems headed. It just dipped below 10,000!

This just *sucks* the big one.

I'm only half stupid

by: missliberties - 2008-10-06 09:26 …………

Can you say buying opportunity! :)

If I only had cash. :(

I'm the Bugs Bunny of Swords Crossed!
-4 Strongly Disagree - 0 Meh - Strongly Agree +4

by: GoRight - 2008-10-06 11:58 ………… parent •

You don't need cash if you've got leverage!

Yes, you too can invest 40x your assets in risky and poorly understood securities!

No worries -- if it goes bad, we'll just bail you out.

Oh wait, those rules don't apply to the rest of us?

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 12:19 ………… parent •

These appear to be my specialty!

... risky and poorly understood securities!

I'm the Bugs Bunny of Swords Crossed!
-4 Strongly Disagree - 0 Meh - Strongly Agree +4

by: GoRight - 2008-10-06 12:27 ………… parent •

I appear to have poorly understood my risky securities :-(

In real life as well as the game :-( :-( :-( I was doing okay until the past week, but I totally misread the reaction to the bailout passing... got aggressive at the exact wrong time.

I've got some extra cash that will hit my ameritrade account tomorrow... i'm too scared to buy any more than I've got now, but I've got to believe that there's going to be money to be made coming out of this mess.

Till then, time to stock up on batteries and canned goods!

skymutt: accept no substitutes!

by: skymutt - 2008-10-06 12:53 ………… parent •

Technical note on liveblogs

I received this email from coveritlive:

Hello,

My name is Keith McSpurren. I am the President of CoveritLive.

We have put the necessary upgrades in place to ensure that 100% of your readers will be able to enjoy/participate in your live blogs of the upcoming Presidential debate on Tuesday and beyond.

As some of you may have noticed, as a precaution during last weeks’ Vice Presidential debate, we held back any new readers at different times so that we could ensure the tens of thousands of readers and the writers using CoveritLive could stay online without interruption. Although blunt, it appeared to do the job. Based on our information, the systemwide readership could have been higher by another 30% had we not had this limitation. Of course, that number would vary depending on when your event started and when your readers wanted to join. We hope the times we need to use this technique are few and far between.

To be clear, this was a system wide capacity notification. No one, even our largest users, has ever approached reader limitations during one of their events. The issue was primarily due to: a) the incredible interest in the debate; and, b) the thousands of new users who have begun using CoveritLive in the past three months.

We always try to keep our available capacity at 3X our previous largest day which up until that date had served us well. We will continue to do our best to stay well ahead of our usage but will keep this safeguard ready to ensure that if this type of anomaly happens again, the impact will be marginal.

Please feel free to contact me directly with any additional feedback or questions.

Special thanks to the many of you who wrote in with supportive/constructive emails over the past week.

Keith McSpurren

President, CoveritLive

keithm@coveritlive.com

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 10:39 …………

Will they become Chemical engineers, and architects...

...even when Obama loses?

Underlying all arguments against the free market is a lack of belief in freedom itself. ~M. Friedman

by: Red_Wing - 2008-10-06 14:21 …………

What's your point?

If you think that it would be a good thing if more black kids bought into the idea of pursuing education aimed towards professions in chemistry, architecture, etc., wouldn't Barack Obama make a great role model, based on the fact that he's gotten to where he is largely by way of his outstanding academic achievement in pursuit of a professional career? In a country it seems like a lot of black male kids are taking their cues from rather thuggish elements in pop culture, wouldn't you rather that some of those kids be looking up to a black President who graduated at the top of his class from Harvard Law School? What kind of message do you think it would send to impressionable black kids if we rejected such a high achiever in favor of a white man who finished in the bottom 1% of his class when he went to school?

skymutt: accept no substitutes!

by: skymutt - 2008-10-06 16:24 ………… parent •

Yeah....I saw that the other day...

creepy. simply creepy.

by: John - 2008-10-06 19:36 ………… parent •

What is so creepy about it?

The camouflage pants? The military coordination of movements, perhaps conjuring up images of Nazi youth or some such? That they maybe put Obama on a pedestal just a bit? I'm just trying to figure out what's supposed to be so disturbing about it. 100,000 kids doing anything military-like = alarming. 9 or so kids doing something in unison = like high school drill team.

skymutt: accept no substitutes!

by: skymutt - 2008-10-06 22:32 ………… parent •

All of the above

and then some...along with the underlying attitude.

by: John - 2008-10-06 22:38 ………… parent •

Why creepy? Because "tomorrow belongs to me"

by: Bird Dog - 2008-10-07 13:23 ………… parent •

the video has been removed: here's a news article

http://elections.foxnews.com/2008/10/06/middle-school-teacher-suspended-...

Is this the right video?

In my expert opinion, you should do what I tell you to do.

by: adam ricketson - 2008-10-07 08:36 ………… parent •

creeepy songs for Obama

Little kids singing about how Obama's gonna change the world;

Creepy as all get out. It's gotten a lot of flack , so much that it has apparently been removed from YouTube.

In my expert opinion, you should do what I tell you to do.

by: adam ricketson - 2008-10-07 08:44 ………… parent •

I'm not going to lie, that's kind of scary. n/t

In our society, people are rewarded for pretending to be certain about things they're clearly not certain about. -- Sam Harris,

by: Brutus14 - 2008-10-07 10:00 ………… parent •

I find this entire thread interesting ...

do you and the others really find these videos disturbing or are you being sarcastic as in "what's all the flap about?" I really can't tell.

I'm not sure how I feel about them. I am quite ambivalent and I'm at a loss as to articulate exactly why. Here are a few of my thoughts and initial reactions to these videos and the entire topic:

Positive Reactions:

I thought the singing one was well produced and in general I don't object to the underlying message of hope and change for the better. We all agree with the need to seek that, I think.
If I set my ideological perspectives aside for the moment, I actually found it refreshing to see a group of kids singing about hope and a better tomorrow rather than being sucked into the violence and negativism that is out society today. Whether I support Obama or not, I can appreciate anyone wanting to spread a positive message for once.
To the extent that this can be viewed as an experience for these kids which encourages them to be active participants and positive influences in society today, I have absolutely no problem with these types of things.

Negative Reactions:

This most certainly is not a spontaneous gathering of children coming together to preach a message of hope as this is obviously being billed. In that sense it is clearly a piece of propaganda for the Obama camp. This was obviously put together by a group of adults who have an agenda and are merely using these children as propaganda tools. I find THAT disturbing.
To the extent that these things may have been prompted/promoted by the teachers involved, I find it objectionable that they include their students in something that is so obviously partisan. Having kids speak out on the need for change and hope in the world? That's OK. Turning them into campaign tools? Not so much.
To some level I object to the objections to these types of things on one level because I think that choosing to be a teacher does not obligate you to throw away your right to free speach, but on the other hand I do object to them exploiting their pupils as a tool of expressing their views. Whether it is intended or not, an experience such as these is likely to have a formative result on the children involved and as such it could have an effect that could be legitimately termed indoctrination. I would object to anything being promoted in the public schools which takes a political stand either way, which this obviously does.

So I guess I don't know what to think here. Overall I object to the politicization of our schools and most importantly the children so based on that I guess I have to object to these videos as being "bad".

Where are you all coming down on these issues?

I'm the Bugs Bunny of Swords Crossed!
-4 Strongly Disagree - 0 Meh - Strongly Agree +4

by: GoRight - 2008-10-07 11:32 ………… parent •

I agree with all that

Stop the presses!

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-07 12:40 ………… parent •

"Obama Camp"

I'm not a big fan of indoctrinating children into certain ideologies that will very well lead the kids to blame the other party for all the problems before the kids have any real basis for their "opinions." Visions of Hitler Youth and kids turning in their parents run through my head.

Negative Reactions:

1. This most certainly is not a spontaneous gathering of children coming together to preach a message of hope as this is obviously being billed. In that sense it is clearly a piece of propaganda for the Obama camp. This was obviously put together by a group of adults who have an agenda and are merely using these children as propaganda tools. I find THAT disturbing.

That is the scary part, the parents using the kids.

In our society, people are rewarded for pretending to be certain about things they're clearly not certain about. -- Sam Harris,

by: Brutus14 - 2008-10-07 14:30 ………… parent •

The point is why don't these...

...kids get encouragement to aspire because they live in the greatest country on earth, a country that has done more to advance African American achievement than any where else on the planet!

instead it is some cult of personality?

Underlying all arguments against the free market is a lack of belief in freedom itself. ~M. Friedman

by: Red_Wing - 2008-10-07 18:03 ………… parent •

More background on the CFMA

is here :

It should surprise nobody that Phil’s Law, like the gift that keeps on giving, specifically exempts Credit Default Swaps from regulation. Creating two financial disasters with one law has to be some kind of record, but that is exactly, by letting OTC swaps go completely unregulated for the past 8 years, what the CFMA has done.

And Enron is small potatoes compared to the CDS market. With a nominal value around $62 trillion dollars, four times the size of the total US stock market, CDS is a monster, all of it unregulated, most of it uncollateralized (because unregulated), and it has been at the core of the credit market meltdown.

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 14:36 …………

Question for our financial types

My apologies if this has already been covered, but in regards to the mortgage defaults underway, what role is private mortgage insurance (PMI) playing?

Here's my thought....aren't subprime loans normally required to carry PMI, and if so, why isn't it "doing its job"? Or is it, and I'm missing something big?

Thanks ;}

by: Purpleface - 2008-10-06 16:49 …………

I actually looked into this

Here's my understanding: PMI claims are being paid by the insurers and is doing it's job... but PM really isn't designed to make lenders 100% whole in a foreclosure situation in a price slump like we're having. PMI policies typically cover up to 15% to 30% of the mortgage balance, more towards the 30% if the downpayment is very small, as most of them are nowadays. So, for a house that was purchased for $410,000, and has a mortgage for $400,000, the policy will cover up to $120,000. So you might think that the bank would be in good shape as long as they could sell the house for over $280,000, since $280,000+$120,000 = $400,000. But really, they will take a big loss if they sell for $280,000, since they have costs to foreclose the home, interest and maintenance costs while they wait for the house to sell, insurance on a vacant house, and a sales commission to the realtor. On average, these misceallaneous costs add up to about 15% of the sales price of the house in foreclosure. So if a $410,000 house is sold for $280,000 in foreclosure and it had PMI, you might expect that the lender still had to take a $280,000 x 15% = $42,000 loss.

Then of course there's the fact that a lot of loans don't have PMI that probably should. There's this gimmick called a "piggyback loan" where there's a first mortgage for 80% of the sales price, a second, high interest loan for 10% or 15% of the sales price, and a 10% or 5% downpayment. Fannie and Freddie bought a lot of the 80% first mortgages on these piggyback setups without requiring PMI, just as if the person had paid a whole 20% downpayment out of pocket. Naturally, these loans are defaulting at a much higher rate than loans which came along with the traiditional 20% down payment.

The frequently excellent Tanta at Calculated Risk was a very useful source on this subject... if you follow that link, you can read more about PMI than you probably care to :-)

skymutt: accept no substitutes!

by: skymutt - 2008-10-06 18:56 ………… parent •

Thank you, Skymutt

Most helpful!

by: Purpleface - 2008-10-06 20:57 ………… parent •

This is descending into farce

but it's not particularly funny. McCain today :

McCain drew loud cheers when he said the Democrat has written two memoirs but "he's not exactly an open book."

[...] Obama, McCain said, sidesteps questions and instead criticizes anyone who challenges him. "Whatever the question, whatever the issue, there's always a back story with Sen. Obama. All people want to know is: What has this man ever actually accomplished in government? What does he plan for America?" McCain said. "But ask such questions and all you get in response is another angry barrage of insults."

Gosh, if only there were some way to find out what Obama has accomplished , what his positions are, and what he plans for America.

It's almost seems like McCain isn't sincerely interested in what Obama's accomplished and what his plans are, given how easily accessible the information is. I mean you'd have to be pretty effing incompetent to not have any idea of the background of the guy you're running against for President, right? So this must just be rhetorical posturing. Which raises the question -- why would McCain say that "There are essential things that we don't know about Sen. Obama or the record he brings to this campaign"?

Is McCain really claiming that Obama responds with an "angry barrage of insults" to requests for information? Why would he say such a thing?

Come, my friends. 'Tis not too late to seek a newer world -- Tennyson

by: Brendan - 2008-10-06 18:52 …………

the contention itself is nonsense:

All people want to know is: What has this man ever actually accomplished in government?

Who cares? If you really break that apart and examine it, it's a non sequitir with no importance at all in virtually any way.

by: John - 2008-10-06 19:42 ………… parent •

True but McCain & Palin going off on Obama as they have

makes the news every time. This evening on my way home NPR replayed both McCain's & Palin's campaign speechs repeatedly and never once "fact checked" the claims. I expect that from the cable news' but NPR?

by: kindness - 2008-10-06 20:27 ………… parent •

Then do what I do:

Don't watch the news.

I know it's sounds coy and silly but there's little value in watching the news. Whenever I happen upon CNN or Fox or whatever, I smirk at how stupid and pointless the discussions are and change the channel. What's more, I'm beginning to appreciate that most people in America...voters and all...don't watch the news and hence I'm trying to get a feel for things through their eyes and minds:

A headline here, a soundbyte there.

I keep abreast on what's happening through internet sources:

A balanced combination of academic blogs, editorials and commentary...Left and Right...and a scan of the headlines through my google reader.

But back to the topic at hand: my point is, the day to day droning and campaigning through news outlets are not going to affect the election. They matter to junkies but that's it. The people noticing this stuff are not in play in this election. Most people's minds are made up without even watching the news based simply on partisan affiliation or some sense of what matters to them and the stereotypes they understand in politics and the few that aren't made up are not watching the news to make their decision. They don't follow politics. They talk with friends and family if it comes up, overhear conversations and catch a glance of headlines at the mini-mart on newspaper rack when they're buying their coffee.

It really believe it's that simple. All the talk on TV and on the Radio is for the junkies. Little do most realize, but they truly are the only ones paying attention to this day to day crap. Nobody else cares.

by: John - 2008-10-06 20:43 ………… parent •

The Office of WHAT!?!?

This truly does frighten me . It really, really does. I'm not kidding...all hyperbole aside.

"We learned today that 35 year old Neel Kashkari will head the new Office of Financial Stability created by the bailout bill. Press reports suggest Kashkari is the main architect of the bailout plan.

That alone got me to "GULP". It's not the age of Kashkari that bothers....it's the office itself. Terribly stupid, arrogant and dangerous. I feel like I'm watching the description of SkyNet becoming self-aware in Terminator Lore.

This is bad.

It's also like this (how eerily Orellian)