August 2012 archive

Leaving a sinking ship-

As Libor Fault-Finding Grows, It Is Now Every Bank for Itself

By AZAM AHMED and BEN PROTESS, The New York Times

August 5, 2012

Major banks, which often band together when facing government scrutiny, are now turning on one another as an international investigation into the manipulation of interest rates gains momentum.

With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities, according to government and bank officials with knowledge of the matter.

…

Authorities around the world are investigating more than 10 big banks for their roles in setting global interest rates like the London interbank offered rate, or Libor. Such benchmarks underpin trillions of dollars of financial products, including mortgages and student loans.

Regulators are examining whether banks colluded to move the rates up or down to get extra profits and limit losses on their trading positions. Some banks are also under investigation for reporting artificially low rates to make themselves appear financially healthier.

When banks first started conducting internal investigations at the behest of regulators two years ago, they figured the potential penalties would be manageable, according to bank officials.

But the size of the Barclays settlement and the growing public outcry have left banks scrambling to limit their culpability as the threat of criminal actions increases. Part of the banks’ problem is that their internal investigations have created a road map that authorities are using to pursue criminal and civil cases.

…

The financial industry often tries to negotiate a common deal to avoid getting singled out for bad behavior. This year, five banks collectively struck a multibillion-dollar agreement with federal authorities to address foreclosure abuses.

With the rate investigation, institutions are not sharing information or even discussing the case with rivals, according to lawyers involved in the matter. In part, they do not want to appear to have close ties with their rivals, since such cozy relationships are part of the government’s inquiry.

…

The Justice Department is aiming to file criminal actions against two banks before the end of the year and is preparing to arrest former traders at Barclays and other banks, according to government officials. In addition, state attorneys general and local district attorneys have approached the Justice Department in recent weeks, seeking a role in the case.

Coming home to roost-

Banks face valuation losses

Reuters

August 6, 2012

Global banks are delaying what will be an inevitable shift to valuing unsecured derivative positions at market rates because it could hit their bottom lines, but new global prudential regulations next year are set to force their hands.

Traders and accountants have known for some time what is only becoming apparent to the public now – the London Interbank Offered Rate or Libor, the interbank funding rate now at the centre of a rigging scandal, is not the appropriate price to value most derivative deals on banks’ books.

…

As of now, no one’s quite sure how entities with huge discrepancies in funding costs will arrive at a market standard for pricing unsecured trades.

FVA, or funding valuation adjustment, is a bitter pill to swallow. In the simplest terms, it means traders have to absorb the rise in borrowing costs over the past four years into the way they price a swap, pay for an option or discount future cash flows from long-term derivatives.

…

All that’s clear is the absence of collateral makes these trades riskier, and the economic case for revised valuations is strong.

The Basel III reforms, which kick in from next year, prescribe capital requirements for unfunded deals. The amount of margin banks will have to post with their clearing agents will likewise build as interest rate swaps, currency forwards and other over-the-counter derivatives are mandatorily cleared on exchanges.

I’ve been disappointed so often it’s hard to get enthusiastic, but facts are stubborn things and the current corrupt Merchantilist system is not going to be able to satisfy even its own ‘beneficiaries’.  It wasn’t the peasants who demanded the Magna Carta, it was the Barons.

Adam Smith, The Wealth of Nations, Book 4 Chapter 8–

But in the system of laws which has been established for the management of our American and West Indian colonies, the interest of the home-consumer has been sacrificed to that of the producer with a more extravagant profusion than in all our other commercial regulations. A great empire has been established for the sole purpose of raising up a nation of customers who should be obliged to buy from the shops of our different producers all the goods with which these could supply them. For the sake of that little enhancement of price which this monopoly might afford our producers, the home-consumers have been burdened with the whole expence of maintaining and defending that empire. For this purpose, and for this purpose only, in the two last wars, more than two hundred millions have been spent, and a new debt of more than a hundred and seventy millions has been contracted over and above all that had been expended for the same purpose in former wars. The interest of this debt alone is not only greater than the whole extraordinary profit which it ever could be pretended was made by the monopoly of the colony trade, but than the whole value of that trade, or than the whole value of the goods which at an average have been annually exported to the colonies.

It cannot be very difficult to determine who have been the contrivers of this whole mercantile system; not the consumers, we may believe, whose interest has been entirely neglected; but the producers, whose interest has been so carefully attended to; and among this latter class our merchants and manufacturers have been by far the principal architects. In the mercantile regulations, which have been taken notice of in this chapter, the interest of our manufacturers has been most peculiarly attended to; and the interest, not so much of the consumers, as that of some other sets of producers, has been sacrificed to it.

Our regular featured content-

• On This Day In History August 5 by TheMomCat

These featured articles-

• There’s Something About Wardak by Garrett
• Nuns on a Bus by ek hornbeck

our weekly features-

• My Little Town 20120801: The Gang by Translator
• Six In The Morning: On Sunday by mishima
• Punting the Pundits: Sunday Preview Edition by TheMomCat
• Rant of the Week: Jon Stewart by TheMomCat

This Special feature-

• XXX Olympiad- Day 12 by ek hornbeck

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This is an Open Thread

So tonight at 1:30 am-ish the new Mars Rover, Curiosity, will, if all things go as planned, land gently on the surface near Gale Crater close to the Martian equator.

If I sound a little tentative it’s because there’s a lot that could go badly.

For one thing this whole separate rocket descender concept is a bit complicated.  The idea is that you don’t need the motors and fuel once you’re on the ground so you’re better off ditching them.  I think that stringing your mission critical cargo beneath another chunk of untested junk that could go spectacularly, amusingly, and expensively wrong is a mite…

ambitious.

But hey, I’m not a rocket scientist.

As I write NASA has already forgone their last course correction and is debating a final update to the data that the computers will use.  The rover has to land independent of radio control because light is slow and on a round trip to Mars takes just a little under half an hour.  If you’ve ever gamed over a sucky connection or are a high frequency trader you know what I’m talking about.

But people aren’t talking about that very real problem and are instead focused on the “Seven Minutes of Terror” that uses conventional atmospheric braking and includes a radio blackout from the plasma which will only be 50% or less (one way) of the regular everyday lag.

No one has a really good record at landing intact probes on Mars, though the United States has the best.  This is why last time out we sent both Opportunity AND Spirit in the expectation something would probably fail.

Instead they were both incredibly successful, far exceeding their designed objectives.

This time we have only 1 lander and it’s the size of an SUV, not a Golf Cart.  The mission is not to find life, but to determine if conditions on Mars could have supported the development of life.  I consider this a pretty settled question, but you can never know too much and actual results often lead to unexpected discoveries.

We will probably not know tonight, or even for the next week, whether things have gone as planned.  If the lander is even partly functional we can get some data, if not it would be 8 months to get there if we launched tomorrow.

However once down and functional Curiosity should prove much more capable than its predecessors.  It has nuclear power for one thing so we’ll be a lot less dependent on favorable storms.

And if you are a Deficit Hawk who likes to pretend money matters I invite you to compare the $2.5 Billion for the Curiosity program to the $23.7 Trillion we gave to the Banksters.  Even a non-rocket scientist can use a calculator to figure out that’s just barely over .0001%.

And because no frontier is final without Tiberius-

Here are some places you can stream the video commentary-

• PCMag- How to Watch the Mars Curiosity Rover Landing
• Los Angeles Times- Where you can watch Curiosity Mars landing coverage

Cross posted from The Stars Hollow Gazette

Age, heart conditions, and traumatic events were no deterrents to achieving their goals of reaching this Summer’s Olympics games in London and for some it has earned them gold.

Swimmer Dana Vollmer overcame a heart condition to win Olympic Gold and set a couple of world records

At the age of 15, already an elite swimmer, Ms. Vollmer, from Granbury, Tex., was taken to a local doctor after experiencing dizzy spells while training. Doctors discovered she had an abnormal heartbeat and set up a procedure to correct it. But they then discovered she had a genetic cardiac electrical disorder called long QT syndrome, which could lead at any moment to sudden cardiac arrest.

The diagnosis was sobering. According to the American Academy of Pediatrics, each year about 2,000 people under the age of 25 die of sudden cardiac arrest in the United States, most because of long QT syndrome and other electrical and structural defects in the heart. While sudden cardiac arrest can strike those who are sedentary, the risk is up to three times as great in competitive athletes.

Such diagnoses have derailed the ambitions of many young athletes. But Ms. Vollmer and her family decided against what may have been a career-ending decision to implant a defibrillator in her heart, and instead chose – with the approval of her doctors – to allow her to continue training as long as an external defibrillator was always within reach.

In 2004 in Athens at the age of 16, Dana won her first Olympic gold in the 4×200-meter freestyle relay event. Dana didn’t qualify for the 2008 Olympics in Beijing but has since returned, renewed and refreshed overcoming her physical problems and the psychological effects that were holding her back. Monday night, she not only won the gold in the 100 meter butterfly, she did it in won in 55.98 seconds, breaking the world record. Then on Wednesday night at the Olympic Aquatic Centre, Dana Vollmer swam the second leg of the 4×200 freestyle relay, along with Missy Franklin, Shannon Vreeland, and Allison Schmitt on the last leg, the U. S. swim team won the Olympic gold medal and setting an Olympic record. The U. S. women’s team hadn’t won a swimming relay eight years at the Olympics.

Overcoming the psychological trauma of being sexual assaulted by her coach when she was 13 years old, Kayla Harrison won the first gold medal in judo for the United States.

In November 2007, a man pleaded guilty in a federal court in Dayton, Ohio, to illicit sexual conduct involving a 13-year-old girl. He was a judo coach, and the girl was a student he had trained closely and brought to international tournaments. Her name was given in court papers simply as “K.H.” or “the victim.” [..]

Harrison is simply the best on the team. It helps that she is also good-natured. And that she has a story she is not afraid to tell, a story that is jarring even for a sports press that can be nearly unhinged in its pursuit of the next inspirational tale.

The questions she fielded at the end of her match, about what she was thinking on the podium, about what the medal means to her, about how this compares to her own struggles, could be wince-inducing in their coy inquiries into such a painful topic.

But she answered them all with the same composure she had just used against her opponents on the mat.

“It’s no secret,” she began, after a long pause, when a reporter asked her to name the worst moment she had to face in her career, “that I was sexually abused by my former coach. And that was definitely the hardest thing I’ve ever had to overcome.”

Harrison has told her story before, first to USA Today only days after the indictment of Jerry Sandusky came down and the front pages were full of news about Penn State, sexual abuse and coaches who exploit their authority.

She said she felt it necessary to speak out so that others in her position could take heart.

Kayla is not a “victim”, she is a hero and a champion.

And for us for us seniors, who think that our time is over to be Olympic competitors  there is Equestrian Hiroshi Hoketsu of Japan the London Olympics oldest athlete:

The crowd did not go wild for Hiroshi Hoketsu of Japan as he rode Whisper out on to the sand of the Greenwich Park equestrian arena at one o’clock on Thursday afternoon. It wasn’t a question of bad manners; more a question of consideration.

A stadium-sized roar to acknowledge the arrival of the Games’ oldest competitor – a ramrod-straight and dapper man of 71 – would have frightened the mare and probably embarrassed her rider.

Hoketsu, after all, had not travelled from his home in Germany to fly the flag for older athletes, nor had he come to court the sympathy vote.

He had come to London, as he went to his first games in Tokyo in 1964, and to Beijing four years ago, to compete and, hopefully, to win.

And beneath a bright sky that turned Whisper’s brown coat a dark gold, that is what he tried his best to do. [..]

His white-gloved hands keeping her on a tight rein, Whisper executed a neat diagonal cross of the arena before pausing and reversing neatly to one corner. Seven minutes later, after she had appeared to jog on the spot, skip and goose-step her way around the arena, Whisper came to a stop in front of the judges. As the first drops of rain began to fall from a greying sky, the crowd burst into applause and Hoketsu raised his hat in acknowledgement.

And with that, the oldest Olympian rode out of the arena, to finish 17th out of 24.

When he was asked about his performance and  if he would compete in Rio in four years, he blamed any errors on himself and said that competing was in doubt because of his partner Whisper’s age. He also lamented how the Olympics have changed since he started competing 48 years ago:

“The Olympic Games itself has changed a little bit,” he said. “At that time, participation was of more importance to everybody. But now I think medals are much more important, not only for athletes but also even for politics.“

We salute all the champions at the Olympics.

Jon Stewart’s extended interview with Fred Guterl.

As Syrian War Roils, Sectarian Unrest Seeps Into Turkey

　

By JEFFREY GETTLEMAN

ANTAKYA, Turkey – At 1 a.m. last Sunday, in the farming town of Surgu, about six hours away from here, a mob formed at the Evli family’s door.

The ill will had been brewing for days, ever since the Evli family chased away a drummer who had been trying to rouse people to a predawn Ramadan feast. The Evlis are Alawite, a historically persecuted minority sect of Islam, and also the sect of Syria’s embattled leaders, and many Alawites do not follow Islamic traditions like fasting for Ramadan.

The mob began to hurl insults. Then rocks.

“Death to Alawites!” they shouted. “We’re going to burn you all down!”

Then someone fired a gun.