Saturday, May 09, 2009

Cliff Asness responds to Obama

Cliff Asness wrote When hedge funds, pension funds, mutual funds, and individuals, including very sweet grandmothers, lend their money they expect to get it back. However, they know, or should know, they take the risk of not being paid back. But if such a bad event happens it usually does not result in a complete loss. A firm in bankruptcy still has assets. It’s not always a pretty process. Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first. The process already has built-in partial protections for employees and pensions, and can set lenders' contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.
And that is the way it should be. A greedy president should not be able to steal investor's money to give an unfair advantage to the union that caused the problem in the first place, just because they gave Obama donations to get him elected.
The above is how it works in America, or how it’s supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.
To obama patriotism does not mean support for the country, it means support for anything he wants in order to change the country to the Socialistic/Communistic/Fascist view he has for the country.
Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing. Clients of hedge funds include, among others, pension funds of all kinds of workers, unionized and not. The managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views. That’s how the system works. If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy.
And you would not give that fund any more of your money.
Let’s quickly review a few side issues.

The President's attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. Why is he not calling on his party to "sacrifice" some campaign contributions, and votes, for the greater good? Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.
In other words standard Democratic policies.
Let’s also mention only in passing the irony of this same President begging hedge funds to borrow more to purchase other troubled securities. That he expects them to do so when he has already shown what happens if they ask for their money to be repaid fairly would be amusing if not so dangerous. That hedge funds might not participate in these programs because of fear of getting sucked into some toxic demagoguery that ends in arbitrary punishment for trying to work with the Treasury is distressing. Some useful programs, like those designed to help finance consumer loans, won't work because of this irresponsible hectoring.
And the fear that if they buy the toxic assets and try to recover money from them, Obama may get congress to pass laws saying they can't do that. That they must rent the property to people at a price the Government sets.
Last but not least, the President screaming that the hedge funds are looking for an unjustified taxpayer-funded bailout is the big lie writ large. Find me a hedge fund that has been bailed out. Find me a hedge fund, even a failed one, that has asked for one. In fact, it was only because hedge funds have not taken government funds that they could stand up to this bullying. The TARP recipients had no choice but to go along. The hedge funds were singled out only because they are unpopular, not because they behaved any differently from any other ethical manager of other people's money. The President’s comments here are backwards and libelous. Yet, somehow I don’t think the hedge funds will be following ACORN’s lead and trucking in a bunch of paid professional protestors soon. Hedge funds really need a community organizer.

This is America. We have a free enterprise system that has worked spectacularly for us for two hundred plus years. When it fails it fixes itself. Most importantly, it is not an owned lackey of the oval office to be scolded for disobedience by the President.


Two Tulsa Area Bloggers Discuss Star Treck

Christopher Lee and Irritated Tulsan discuss the new Star Trek movie. I can't see it in the theater, but I am eager to see it when it comes out on DVD or Cable.


Miss Susie Goes to Washington

Dutch, Reformed blogged Ten years ago today, as I stood in the back of an ornate committee room in the nation's capital holding six-week-old Mary Margaret, Susie testified before a subcommittee of the U.S. Senate Finance Committee, which was considering a new $21 billion daycare plan. (She had been invited by Senator Don Nickles, who later wrote her a note praising her remarks.) Her testimony garnered coverage on News9, in the Tulsa World, and on the front page of The Oklahoman, and was printed on The Oklahoman's editorial page on Mother's Day. Here's what Susie (The Velvet Hammer) Dutcher told the committee:

.... I would love to put more dollars into our retirement account, for example, but I'm forced to put them into your Social Security trust fund, which I don't trust. I'd like to buy more books for Lincoln, Elizabeth, and Mary Margaret, and put more money in their college fund, but you've already seen fit to use that money funding closed-captioning for the Jerry Springer show. I'd love to get ballet lessons for Elizabeth, but my money is tied up buying food stamps for the deceased. I'd love to give more money to support our church's missionary in Albania, or the free medical clinic in Oklahoma City, but instead I'm forced to fund fish farming in Arkansas and Social Security disability payments for escaped convicts. Call us greedy, but my husband and I would like for the most part to make our own choices concerning the fruit of our labor. But naturally, under threat of imprisonment, we defer to your choices.....

Just think what she would say if she was allowed to testify today. The increased spending during the Bush administration was bad, but it is orders of magnitude worse today. They were worried about Mary Margaret then. Obama is spending Mary Margaret's inheritance, and the inheritance of Mary Margaret's children and grandchildren.

Hat tip to Michael Bates


The $357,000 photo

The White House finally released the $357,000 publicity photo of Air Force One that frightened so many New Yorkers because they tried to do it in secret, and not warn anyone of the flight.

AllahPundit blogged Louis Caldera, the White House official who approved the flight, is now nestled snugly alongside Rev. Wright, Father Pfleger, and about 20 other people under the Messiah’s bus.

Christopher Lee says I Could Have Done It MUCH Cheaper. $70 for Photoshop.


Wednesday, May 06, 2009

Israeli Nukes

Washington Times reported President Obama's efforts to curb the spread of nuclear weapons threaten to expose and derail a 40-year-old secret U.S. agreement to shield Israel's nuclear weapons from international scrutiny, former and current U.S. and Israeli officials and nuclear specialists say. The issue will likely come to a head when Israeli Prime Minister Benjamin Netanyahu meets with Mr. Obama on May 18 in Washington. Mr. Netanyahu is expected to seek assurances from Mr. Obama that he will uphold the U.S. commitment and will not trade Israeli nuclear concessions for Iranian ones.
That is because no one believes Iran would keep its word. Except for the promise that it intends to destroy Israel.
Assistant Secretary of State Rose Gottemoeller, speaking Tuesday at a U.N. meeting on the nuclear Non-Proliferation Treaty (NPT), said Israel should join the treaty, which would require Israel to declare and relinquish its nuclear arsenal.
If they have to relinquish their arsenal, what about over Iranian airspace?
"Universal adherence to the NPT itself, including by India, Israel, Pakistan and North Korea, ... remains a fundamental objective of the United States," Ms. Gottemoeller told the meeting, according to Reuters.
And anyone that expects India and Pakistan to get rid of their nukes, other than over each other's state, is foolish.


Toxic Assets reported Buying loans from banks – the types of loans that need to be handled with latex gloves and hazmat suits – is becoming a new growth industry. Former mortgage bankers and Wall Street wheeler-dealers even now are leafing through confidential bank documents detailing tens of billions of dollars of bad mortgages and other loans known as “toxic assets.” Their goal: to find undervalued assets they can buy cheaply and make money on.
What they need to be concerned about is if they buy assets they think they can sell, will congress suddenly change the law and say they cannot eject the current resident that is not paying for the house, and rent it to them at a price congress determines. If the White House will threaten to ruin the reputation of bondholders that will not take 20 cents on the dollar, and are holding out for 30 cents on the dollar for Chrysler, while giving 55% of the company to the unions, what makes you think they will not attempt
It may be chutzpah. It may be opportunism. Or it may be the solution to cleaning up the banks’ balance sheets. Whatever the case, many prospective buyers are mining for data that will help them in June, when a new government plan to deal with banks’ problems starts up.
Get a firm commitment they won't change the rules in mid stream.
This time, unlike during the roaring mortgage boom, some potential investors are actually visiting houses, talking to lenders, and acting like crime scene investigators for bad loans.
Crime scene investigators are what is needed. The people that forced the banks to make bad loans should be in jail, along with the people that bundled bad loans with good and sold them.
The decisions made by loan sleuths on how much to pay for the banks’ bad holdings will determine the success of the government’s plan to try to move those holdings off the banks’ books. If the banks agree to the prices offered for their loans, the shifts in ownership of those loans could ultimately free up capital for the economy’s recovery. But if the banks balk because they believe the assets are more valuable, think about the economy in terms of molasses.


Britain Bans 16 for 'Fostering Extremism' reported The British government on Tuesday named 16 people who have been banned from entering Britain for "fostering extremism or hatred,"
It's about time, but there are a lot more than 16 muslim extremists yu should ban, including a bunch that are already there.
including Muslim extremists, a former Ku Klux Klan grand wizard, a U.S. radio talk show host and a Kansas preacher.
I hope they just included them so they could not be accused of profiling Muslims.
Home Secretary Jacqui Smith, who is responsible for domestic security, said she decided to make the names public to show the kind of behavior that Britain is "not willing to have in this country."

The list includes six Americans. Perhaps the most prominent is Michael Savage, a nationally syndicated conservative radio host who has made controversial remarks about immigrants and Muslims, such as urging Americans to "burn the Mexican flag on your street corner" and saying that "when I see a woman walking around with a burqa, I see a Nazi."
He never flew planes into buildings, killing nearly 3,000, and he did not dance in the street when others did
.... The Rev. Fred W. Phelps Sr. and his daughter Shirley Phelps-Roper of the Kansas-based Westboro Baptist Church also are unwelcome in the United Kingdom.
I don't want them here either. I wish the UK would take them in, and keep them.
The pair, who have picketed at funerals carrying placards with anti-gay slogans, are banned for "fostering hatred," the Home Office said.

The other Americans on the list are Eric Gliebe, described by the Home Office as a distributor of "racist leaflets"; Abdul Ali Musa, a Muslim activist; and former Klan leader Stephen Donald Black.
Do they include Senator Robert Byrd, a former Klan leader?


Dems Stab Specter

Capitol Briefing reported The Senate dealt a blow tonight to Sen. Arlen Specter's hold on seniority in several key committees, a week after the Pennsylvanian's party switch placed Democrats on the precipice of a 60-seat majority.
And this is after he negotiated a deal with Reid. Does this mean that Reid really does not speak for the Dems he is the supposed leader of in the Senate, or that he promises one thing, and then stabs you in the back once he gets it. I suspect both.
In a unanimous voice vote,
That must mean Reid voted to stab Specter.
the Senate approved a resolution that added Specter to the Democratic side of the dais on the five committees on which he serves, an expected move that gives Democrats larger margins on key panels such as Judiciary and Appropriations.
But just grabs his vote, and devistates Specter. Will Specter try to jump back to the Republicans? Or will he just retire, knowing no one likes him?
But Democrats placed Specter in one of the two most junior slots on each of the five committees for the remainder of this Congress, which goes through December 2010. Democrats have suggested that they will consider revisiting Specter's seniority claim at the committee level only after the midterm elections next year.
And what is the probability of that? If a guarantee from the Majority Leader does not mean anything, what is the promise of reconsidering going to be worth. All they are saying is if you are the Democratic nominee, don't throw the election and let a Republican get in.
"This is all going to be negotiated next Congress," Jim Manley, spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said tonight.

Ed Morrissey blogged Democrats sent a more practical message with this vote. Specter needed to retain his seniority in order to make the argument that electing him would keep Pennsylvania in a position of power in Congress. The caucus has made it much easier for a Democratic primary challenger to beat Specter by taking that advantage away from him.
So the Dems are happy to take Specter away from the Republicans, but they want a real Dem to defeat him in the Democratic primary.
It’s practically a signal flare to Joe Sestak, approving of his run against Specter.

Contrast this to the treatment given Jim Jeffords when he jumped to the Democrats and temporarily gave Tom Daschle control of the Senate. Jeffords kept his seniority and landed a committee chair (Environment and Public Works), and kept his seniority for committee assignments. If Reid really did make a similar deal with Specter, then his caucus just sent him a message as well, a humiliation that will make Olympia Snowe and Susan Collins think twice before following Specter into rookie status.
I wish it would make them vote more reliably with the Republicans.


Tuesday, May 05, 2009

Ayatollah Moqtada al-Sadr

Adnkronos reported Radical Iraqi Shia cleric, Moqtada al-Sadr, is reported to have assumed the title of Grand Ayatollah after concluding his studies in the holy city of Qom in Iran.
When he returns to Iraq someone should remove his head, with the black turban still attached.
Sources close to the cleric's faction released the news to the Arab daily, al-Sharq al-Awsat.



Obama’s proposed budget this year was $3.6 trillion, and yet somehow he couldn’t find $18 million in it for a school voucher program in DC that WORKS. Parents who worked hard to see Obama get elected want to know the answer to one simple question:


Unfortunately the answer is he really does not care what works, or what children need. He wants to appease unions, including the Teacher's Union.


Monday, May 04, 2009

Never let a serious crisis go to waste

The Caucus - Obama Agenda Could Rest on Link to Economic Crisis - reported Rahm Emanuel, the White House chief of staff, encapsulated President Obama’s goal long before the first of the First 100 Days: “Never let a serious crisis go to waste.”
They take advantage of it with solutions that couldn't possibly help, but that they want done.
.... Team Obama casts his initiatives on health care, energy, education and the auto and financial industries as responses to that crisis.
Even though they make things worse, spending money we don't have.
His Republican adversaries call the recession merely an excuse for big-government ambitions that liberals have failed to achieve for decades.
And which they don't think a conservative can reverse when they get in control.
Mr. Obama currently holds the upper hand, riding high in the polls while Republicans appear chaotic and hapless. But he is racing to capitalize for good reason.
At some point people are going to realize their savings will no longer buy what they used to because of the way he is devaluing our currency, and they will turn on him.
Political history, and some early signs this spring, suggest that time is not on his side.