Monthly Archives: September 2008

Term of art: "fraudulent conveyance"

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Andrew Sullivan posts some thoughts by a reader on the proposed financial bail-out.

Third, the administrations proposals continue a process of socializing loss and preserving profits and distributions, many of which were made with full knowledge of the pending losses. When management distributes illusory profits to insiders in full knowledge of a massive loss, this is called a fraudulent conveyance, and in equity proceedings such distributions are routinely recovered for the creditor mass. There should therefore be a careful scrutiny of distributions of profits and bonuses by failed firms.  The bailout we now see may mean effectively that taxpayer money is subsidizing the purchase of macmansions and Bentleys by investment managers who behaved irresponsibly. 

The origins of the mortgage crisis

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A number of soi-disant “conservative” pundits have been blaming the sub-prime mortgage mess on “liberal political correctness”. Jim Lippard and Craig Cantoni provide facts rather than FUD:

LAS VEGAS – As part of President Bush’s ongoing effort to help American families achieve the dream of homeownership, Federal Housing Commissioner John C. Weicher today announced that HUD is proposing to offer a “zero down payment” mortgage, the most significant initiative by the Federal Housing Administration in over a decade. This action would help remove the greatest barrier facing first-time homebuyers – the lack of funds for a down payment on a mortgage.

Speaking at the National Association of Home Builders’ annual convention, Commissioner Weicher indicated that the proposal, part of HUD’s Fiscal Year 2005 budget request, would eliminate the statutory requirement of a minimum three percent down payment for FHA-insured single-family mortgages for first-time homebuyers.

“Offering FHA mortgages with no down payment will unlock the door to homeownership for hundreds of thousands of American families, particularly minorities,” said HUD’s Acting Secretary Alphonso Jackson. “President Bush has pledged to create 5.5 million new minority homeowners this decade, and this historic initiative will help meet this goal.”

Maxwell's demon and Sarah Palin

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Today’s snorting-coffee-all-over-my-keyboard moment was provoked by a beautiful fisking of the latest utterance from the woman who “knows more about energy than probably anyone else in the United States of America” by hilzoy. The comment thread is delightful! And aren’t you glad that “they don’t flag, you know, the molecules”? I know I am!

First thing we do is shut down the rating agencies

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Wisdom from Michael Thomas in Forbes.com today:

As I pondered, the thought came to me that if there are particular culprits who are conspicuously and flamingly behind Wall Street’s unholy predicament, and who bear continuing responsibility for its day-to-day worsening, they are the rating agencies. Which leads to the logical conclusion that perhaps the best thing Paulson, Bernanke, Geithner, et al., might do in the present crisis would be to shut down Moody’s and Standard & Poor’s.

Going back three years, at a minimum, any reader of my idol James Grant would have been struck by the undisguised scorn he heaped on the two agencies’ ratings of various structured debt instruments–ratings that were based on “models” that premised that in a ziggurat of crap, the highest layer deserved an AAA rating because it would be the last to stink up the joint.

Ignored was what seemed to me self-evident: Crap is crap wherever and however you stack it. And yet, having gulled both the innocent and greedy into massive purchases of this “AAA” (sic) garbage, they still rule. From day to day, markets convulse in anticipation of, or reaction to, the agencies’ changes in the ratings of AIG and others.

RIP Richard Wright

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From the BBC:

Pink Floyd keyboard player and founder member Richard Wright has died aged 65 from cancer.

I think I’ll plug in my headphones and listen to “Umma Gumma” for a few minutes….

"Lie to Me"

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Scalzi on McCain.

When there is no real-world penalty for lying, distorting and demonizing, then the only thing to stop you is your own moral compunctions. However, if McCain actually had any moral compunctions on this point, he wouldn’t be running the campaign he’s running now. And I would suggest that a man who shows no moral compunction in pursuit of power is not a man who will suddenly find those compunctions once he has power. An election is a job interview, people. If someone lies to you during a job interview, and says to you “yes, I’m lying, what of it?” when you catch them in the lie, and you hire them anyway, well. You shouldn’t be surprised at what comes next.

Al Stewart and Gabby Young at the Triple Door

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We went to see Al Stewart at the Triple Door yesterday. The Triple Door is an interesting place, set up for dinner and music. It’s associated with the Wild Ginger restaurant upstairs, and the food was wonderful.
The calendar entry for the show hadn’t mentioned any other names, and so I was surprised when the MC introduced an opening act: Gabby Young with Stephen Ellis. We were blown away by her voice and her songs. Stephen is one member of Gabby’s band (Gabby Young and Other Animals), but he’s also involved in another group (the name of which escapes me right now Revere), and he did one song from their repertoire, which was very nice.
So to Al Stewart. I enjoyed seeing Al again (how many times now, since 1968?), but we agreed
afterwards that it was slightly disappointing. For me, there were four problems.

  • First, Dave Nachmanoff. Some years ago, Dave popped up as an Al groupie who knew the guitar changes to all of Al’s songs, and he became a fixture. He’s a good guitarist, a decent singer-songwriter in his own right (though the one song he sang yesterday was really dire – Sunday School stuff), and a good accompanist. The problem yesterday was that Dave was grandstanding on almost every solo, and a small section of the audience (his fan club?) was wildly and disproportionately applauding everything he did. Al and Dave even commented on it, but it made no difference. I want to hear Al’s songs, not have the words drowned in raucous applause for a routine guitar break.
  • Second, the setlist. Al has a new album out, Sparks of Ancient Light. (It’s released on the 16th, but they had CDs for sale at the show.) I wanted to hear more of the songs from the album, but we only got three (or maybe four – I haven’t listened to the CD yet). Instead we got “Al’s greatest hits”: “On The Border”, “Time Passages”, “Soho (Needless To Say)”, “Fields of France”, and “Year of the Cat”. OK, I guess, but a bit disappointing.
  • Third, Al was not in the best voice tonight. Side effects of the road trip, or age? I should be able to answer that after listening to the new album.
  • And finally there was the drunken, loud-mouthed member of the party of four sitting just behind us. After several requests to the staff, he was eventually escorted off the premises, but it was an unpleasant distraction.

Ah, well.I’m glad we went: the food and wine (a Coldstream Hills pinot noir) were excellent, Gabby Young was a wonderful discovery, and it was great to see Al again.
UPDATE: Well, a number of people on the Al mailing lists have been beating me up about this review. Let me add a few thoughts, edited from my emails.
Al has always worked best with another good guitarist to complement him, and I’ve seen many of them. Peter White and Laurence Juber were/are obviously the best (and I don’t think that Dave would disagree).
So do me a favour. Go back and listen to either “Rhymes in Rooms” with Peter White, or the “Dutch Tour 1996” with Laurence Juber. Even though Peter and Laurence are handling the more complex guitar passages, neither of them pushes forward as Dave did yesterday. Neither of them turns every bridge into a solo. And in those earlier shows the audience responded appropriately.
Look, I like Dave. I have a number of his CDs. The music that he creates covers a wide range, and speaks to different audiences. Some of his songs I like; others I find simplistic or trite. One of the things I love about Al’s work is the subtle, sophisticated word-play, and that wasn’t what Dave offered us last night.
I was glad that I went to the show, and I enjoyed it. That said, I’ve seen Al many times over the last 40 years, and some of those shows were sheer magic. Go back and read my comments on the Al+Dave show in Bellevue in January, 2007. Note that Dave included “The Loyalist”, which fit nicely into the historical theme that Al has made his own. So I was a little disappointed last night – OK?