Grab Bag — Just a Couple of Things
Posted on: May 20th, 2010 by ecthompson md
- One of my commenters reminded me of the shenanigans that were going on at the Department of the Interior. Most of that was going on in the division of Minerals Management Service. These guys have been under scrutiny lately because of the oil spill in the Gulf of Mexico. For a while, this was Corruption Central. Lucrative contracts were steered to former employees. Employees were accepting gifts, including golf, ski and paintball outings, along with tickets to football and baseball games. Alcohol, cocaine and marijuana were shared with oil and gas company representatives. Sexual relationships between industry representatives and members of the Minerals management service were also found. It's kind of surprising we haven't had more problems than we have. We need to fix this.
- Michael Burry is the hedge fund manager mentioned in Michael Lewis's book, The Big Short. He figured out the housing bubble and invested in credit default swaps. Basically, the credit default swaps acted as insurance against mortgage-backed securities defaulting. If the securities defaulted, Michael Burry got paid. (He made over $1 billion with the crash.) Somehow, I missed an op-ed that he wrote in the New York Times over a month ago. Burry challenged Alan Greenspan to explain why he, Greenspan, did not see economic collapse coming. The article is unusually lengthy but clearly worth a read. I believe that all of Michael Burry's points are extremely valid. If he was able to put together all the pieces using publicly available information, why wasn't the Fed able to put together those same pieces? I think that this is a valid question. The Fed failed us, the American people.
- There are several contentious issues with financial reform. The one that I've been pushing and trying to hammer on is making the banks smaller. Another issue is fixing these derivatives. Derivatives are currently unregulated. Blanche Lincoln, Senator from Arkansas, introduced legislation to regulate these derivatives. It's somewhat surprising that she would introduce such a legislation, as she is associated with the free market crowd. The chairman of the Senate Banking Committee, Christopher Dodd, opposed this regulation and was trying to scale it back. He met with stiff opposition and has dropped his objections. (I'm hoping that some time in the near future someone will write a book about Christopher Dodd, Barney Frank and other members of the House and Senate banking committees. I think their loyalties are somewhat divided.) There's an interesting conspiracy theory that is floating around. Senator Lincoln, up for reelection and being challenged from her left, never intended for this legislation to be passed. Instead, once she was able to squash her primary opponents she would withdraw her amendment. At least that's how the conspiracy theory goes. Currently, she is in a runoff.
- Finally, over the last several days the NBA has shown us that the Orlando Magic and the Phoenix Suns are not strong enough to pull off an upset. If the Lakers and Celtics stay healthy, they should cruise to victory and meet in the finals. This would be a GREAT final.
