Category Archives: USA
Everyone is talking about today’s big question. So let’s join them.
Whether Obama or McCain is the next US president is not my concern. I don’t get a vote. I’m pretty sure that either of them will be an improvement on the present incumbent, but that’s scarcely a vote of confidence. I shall judge the winner by his actions in office.
One note: I think if Obama wins, he’ll be a disappointment in a couple of years. That’s not a reflection on him: rather it’s about the weight of expectations amongst his supporters. McCain carries no such burden of inflated expectations, and could therefore be less of a rollercoaster.
What frightens me is that both candidates carry a nightmare scenario. In McCain’s case it’s painfully obvious: at his age, there must be an above-average risk he doesn’t manage the full four years, and that woman [shudder] in the top job really doesn’t bear thinking about.
Obama’s nightmare is surprisingly similar. His age isn’t an issue, but the US has more than its fair share of both nutcases and guns. One nutcase with a gun who sees a n***** in the top job as the ultimate outrage gets lucky, and … . Someone joked that the reason he picked Biden as a running mate must’ve been to scare would-be assassins off, but wouldn’t that imply a level of rationality? Well, maybe Dubya survived because the alternative was worse.
We should know the winner tonight. But no matter who wins, a nightmare will be lurking.
Just a fortnight ago I wrote “Losing money and glad of it“, following the Lehmans collapse. Bizarrely, my holdings survived the next couple of days big falls intact. That’s now corrected itself firmly downwards, despite the fact I was able to sell my banking shares at a small profit on Sept 19th (and a very substantial profit compared to their value this morning)!
In the intervening time, my optimism over the powers-that-be’s stomach for doing the right thing has taken about as much of a battering as dodgy banks around the world, including the four(?) that collapsed in a single day yesterday. More scapegoating (short-sellers are parasites but they didn’t cause this mess), and more throwing money, King Canute style, into the system on a breathtaking scale. Our own government and most of the chattering classes are still wedded to the principle of keep on trying the same failed policies and hope the problem goes away.
Hint: the original problem was too much money. Throwing ever more money at it will do us as much good as the same policy in Zimbabwe does for its economic collapse. The Northern Rock bailout bought our surviving banks a year or so before reality crept up on them again, at a terrible price (the tangible market distortion is probably more damaging than the taxpayer losses). Bear Stearns bought the ‘merkins a few months. Fannie and Freddie were even bigger, but bought only a few days.
But some of the ‘merkin legislators appear to be quicker on the uptake than ours. They’re still throwing money at it, but in formulating the Paulson bailout, they’ve started talking about something other than blind, reactive panic. And in rejecting that, they’ve taken another step forwards from “we must do something – never mind what – at any price“. Perhaps it’s an admission from those who have an economic clue (Ron Paul keeps getting mentioned) that the bailout now would’ve been lucky to buy good news for long enough even to get through the US presidential election.
The Lehman non-bailout may have been the first step from King Canute denial to facing the storm so we can come through to the other side. The Paulson plan and its rejection are further positive steps. Eventually – one might venture to hope – it’ll pick up a firm direction, and sweep up our own spineless legislators in its wake. The [Obama|McCain] presidency will be interesting times.
 Unlike the ecological destruction we’re causing, there is another side of economic recession to come through to. Unless we really do succeed in driving the entire productive economy abroad, by taxing them ever more to prop up house prices (and now banks too).
Today’s news about Lehman Brothers seems likely to hit stock markets hard enough to send my portfolio firmly into the red. No, I don’t have stock in or near Lehman or its peers, but the expectation is that there will be substantial collateral damage throughout the world’s stockmarkets, including those stocks I do hold.
Why am I happy to make such losses?
Well for one thing, there’s no reason they should be sustained. They won’t vanish as quickly as the surreal gains that followed news of the fannie/freddie bailouts (gains of 10-15% in UK bank shares on Monday didn’t even last the week). But neither do they reflect on the fundamental value of unconnected businesses.
More importantly, the end of the bottomless taxpayer purse is long overdue. The US allowing Lehman to fail is moving on from its King Canute phase to face reality (and so close to an election, they must expect it to be popular – or at least less unpopular than another bailout). The UK is showing signs of doing likewise, with Mervyn King reportedly taking a stand against throwing ever more taxpayers money into the black hole of housing. In the meantime both countries have suffered huge losses, but better late than never.
This weekend seems to bring us much closer to drawing a line under “housing rescue” schemes that serve only to prolong the pain. The Vested Interests can stop talking the market up, and start telling vendors to drop 60% from peak prices if they’re serious about selling. When a £200K house has fallen to £80K we’ll be back to something like the long-term average in terms of income multiples. Then I’ll be able to afford a house, and those stockmarket losses will cease to matter.
 Mainstream predictions – coming from vested interests – started this year at about +1%, moved to -10% in six months, and are now moving to -25% and more amongst those who need buyers as well as sellers. All in an effort to convince people like me to start buying at prices that are still a long way above their long-term trend, in the expectation they won’t fall very much further.
When Enron collapsed, we heard the trouble was with off-balance-sheet liabilities that had been hidden. Today, Fannie Mae and Freddie Mac are revealed as the same thing: off-balance-sheet liabilities. Only this time, it’s government doing it.
When Enron collapsed, a few Enron executive faced criminal charges, but the main casualty was their auditors, Arthur Anderson. So who is going to face charges this time?
/me declines to mention Northern Rock or Bradford&Bingley.
Since my visit to the US coincides with a somewhat interesting time in US politics, perhaps I should join half the rest of the world in commenting on it. Like everyone else, I speak from ignorance on the subject.
The US, in common with most other countries, has a political system that ensures that only a crook can attain high office. But some of them are clearly worse than others. And among the current crop may be a glimmer of hope that 20 years of near-unmitigated evil might change. An evil that contrasts strangely with a country that produces so many great people, not to mention corporations that have behaved – on average – significantly better than their European counterparts, in terms of treating me fairly through my years of IT contract work.
Who will win? Who can say, but McCain is looking good. The republicans have selected their (obviously) most electable candidate: one who is not a religious loony or moral fundamentalist, but who appears to have a clue about the economy and environment. By contrast, the democrats appear to have shot themselves in the foot. Not because they still have two candidates – that’s just how things are. But disenfranchising some states must surely be seen as a slap in the face to those states. If Florida democrats can’t get motivated to vote, then McCain surely won’t need any voting irregularities or hanging/pregnant chavs (or whatever they were called) to win there.
Do I care for the democrat candidates? Not very much, though I know too little to pass informed comment. Clinton rides her husband’s relative popularity, but Bill Clinton’s years were .. well, the best one can really say is Not Bush. His was the time of unprecedented economic imperialism, the rise of the patent troll, and record growth of state-sanctioned piracy. While he didn’t invade Iraq, he did maintain a steady amount of bombing on them, and on whomsoever else he took against. It was he who turned a blind eye when Netanyahu tore up the 1993 middle-east peace agreement. And he set the stage for Dubya’s open abandonment of his country’s international treaties, and the notion of international law being determined by anything other than raw power.
As for Obama? All I know about him is that he has great charisma and rhetoric, which makes him potentially the most dangerous of all. If Dubya could, at a stroke, abolish the 20th century’s Land of the Free and attract widespread support for doing so, a man with Obama’s charisma could – if he chooses – command wide support for worldwide atrocities on a scale to make events like the Holocaust and the Inquisition look like childs play. I’m not suggesting that he will do any such thing, but the precedents are worrying.
Could any of them become a great leader, and tackle very necessary things that involve taking an economic hit? In particular, winding down America’s pollution and armaments exports, and taking an international lead there? A recipe for, erm, saving the world, might include Obama’s charisma with McCain’s establishment credentials, along with qualities that would rule a candidate out of any chance of getting nominated. I expect we’ll see incremental improvements, but anything substantial would take real courage and leadership.
Well, I don’t get to make that choice. But on the positive side, it may not be such a clear and dismal case of none-of-the-above as in recent US elections. Or indeed UK ones.
The Fed. today joins the US government and much of the financial sector in complete panic mode. They feel the need to print themselves more money since their housing bubble (or should I say pyramid scheme?) collapsed. Like the last desperate gamble in a Hollywood epic, it may even work – subject to suitably adjusted expectations. The losers will be those who didn’t benefit from the bubble, but did expect to benefit from their own prudence.
The UK authorities panicked when they threw unlimited billions into Northern Rock. Just a few short months later, they’re into damage limitation, where damage dwarfs the bailouts of lame-duck heavy industries in the 1970s. And the only reason the government is getting off so lightly in the blame game is that too many people – including opposition politicians – supported the intervention that created the problem in the first place. They, and their paymasters, were panicking too.
I have a suspicion that Mervyn King, governor of the Bank of England, would have done a much better job if he hadn’t been put under political pressure to throw good money after bad. We’ve already committed to the biggest round of inflation for a generation: let’s hope he can resist the pressure to make it far, far worse than it already is. His current speech sounds like a worthwhile attempt to defend against the worst of it.
p.s. yes of course Northern Rock should have been allowed to go bust! That would have triggered an automatic injection of public money under the depositor protection scheme, but on a less staggering scale than what has now happened. And the other institutions bidding for its assets could have done so with clarity, as opposed to trading taxpayer-funded sweeteners for political expedience, and not even really knowing who they’re dealing with.
p.p.s Another “told you so” moment, as George Soros, in an interview this morning, points out that house price inflation was driven more by excess money supply than by housing supply-and-demand.
<arreyder> niq cyberwar on going.
<arreyder> you should have participated
<niq> arreyder: where?
<arreyder> I got a shell on all 15 teams webservers with a cgi exploit
<niq> BAD arreyder
<arreyder> the one I told you about a while back. I got them to set up remote access if you wanted to play
<arreyder> I didnt get root on all of them though, I didnt have time and people were not cooperating like they usually do
<niq> erm, I’d prefer NOT to be carted off to Guantanamo Bay by some spook who hadn’t been told it’s an authorised game
To give this some context, arreyder works for the state government of Iowa, USA, and has mentioned these security exercises before. He seems keen on the idea of me donning a black hat and hacking in to their machines. Now that’s fine for him. It might be fine for me if I was an accomplished cracker with access to a botnet, and maybe an IP address or two in China to cover my tracks. It might even be fine if I was an American citizen who could demand constitutional rights between being arrested and clearing up the idea that I was authorised to crack into their machines.
But I’m none of those things. I’m just a dullard who is far too scared of the consequences to hack into anyone else’s computer. Let alone a U.S.-owned computer, in the time of the Inquisition. Even if the good folks in Iowa have authorised it, the spooks at my door might not see it that way. I’d be in no position to argue with them. And given the culture of secrecy amongst spooks, there’s no guarantee arreyder and his colleagues would ever hear about it.
In the ensuing discussion, arreyder explained that the computers in question are actually at the University of Iowa rather than the state government itself, so perhaps the target addresses are not quite so sensitive. But in any case, there’s no reason to suppose I’d have penetrated the target machines any further than, or even as much as, arreyder himself.
I got another letter today, from the US IRS. It’s all part of the ITIN saga. This one says they’re refusing me an ITIN, because I already have one.
Well, that’s true. But, erm, I didn’t when I applied. Let’s review the chronology of it:
- Late February: initial application with (expensive) supporting documentation. According to their literature, I should have it within six weeks.
- Early May: Nine weeks after applying, I try to follow it up. They can’t find it!
- Later May: Apply a second time, this time in person at the US embassy in London. This one will take up to twelve weeks.
- Mid-August: the ITIN finally arrives, about twelve weeks after the second application.
- Today: Letter arrives refusing an ITIN because I already have one.
My guess is that both applications finally got processed, though now I’ve no idea which one brought me the August number, and which led to today’s rejection. I just have to hope they won’t give me any more trouble. I think my executive summary from August still stands.
Has Uncle Sam just conned the world?
There’s been an element of the pyramid scheme in stock markets for as long as there’s been a stock market. From time to time a pyramid grows into a big bubble, and bursts.
Right now the bubble that’s bursting is US housing, and money lent on it is being written off (even as the dodgy lenders are sending ever more spam). But who is paying? Markets in Europe and Asia appear to be suffering proportionally more than American markets. Does that mean the rest of the world is writing off a (big chunk of now privatised) US national debt?
And why are central banks bailing out their financial industries with huge amounts of public money? If I get into trouble, the best I can hope for is social security, and I’m not even eligible for that while I have a business. But for financial institutions, an altogether different story. Isn’t it massively inflationary to pour in billions of public money like that?
Something here smells of Keynesian intervention. But it’s being applied as an uncontrolled panic measure, a sticking plaster over the symptoms (not the cause) of the underlying problem. Can any good come of that, or is it pouring good money after bad?
Americans have a long history of being smarter investors than the rest of the world. That’s what gives them their big success stories, such as all the biggest names on the ‘net. And it’s probably also why their markets are faring less badly than others right now. But it has an ugly side, and when Uncle Sam unloads dodgy debt while continuing to accrue ever more of it, he’s no better than a con-man. The world is full of suckers.
Just three months after my second application, which I travelled to make in person, I finally have an ITIN. That is, a US Individual Taxpayer Identification Number. So finally my publisher can pay royalties on the book. That is, assuming there are no further hurdles in the way.
I must email them soon. It would be nice to hear how sales are going, too. Shame the dollar has lost half its value while I was waiting
I really should use this post to pass on the Executive Summary and Recommendation to anyone else needing an ITIN from the US government:
- Don’t send them the forms.
- Do go in person to the nearest embassy, no matter how inconvenient.
Or failing that, pay one of the agents listed on their webpages to do the whole job. In retrospect, I’d probably have been better off stumping up some utterly exorbitant fee to have KPMG (who are an accredited agent and have an office in Plymouth) do it for me.