THE Chinese authorities had been fearing trouble, but nothing on this scale. An orgy of anti-Chinese rioting convulsed the Tibetan capital, Lhasa, on Friday March 14th, leaving security forces uncertain how to respond. For many hours mobs controlled the streets, burning and looting as they pleased.
The approach of Beijing’s Olympic games in August is seen by many of Lhasa’s residents as an opportunity to put their contempt for Chinese rule on display to the outside world. China’s desire to ensure the games are not marred by calls for boycotts is tying its hands as it considers how to respond.
Your correspondent, the only foreign journalist with official permission to be in Lhasa when the violence erupted, saw crowds hurling chunks of concrete at the numerous small shops run by ethnic Chinese lining the streets of the city’s old Tibetan quarter. They threw them too at those Chinese caught on the streets—a boy on a bicycle, taxis (whose drivers are often Chinese) and even a bus. Most Chinese fled the area as quickly as they could, leaving their shops shuttered.
Monthly Archives: March 2008
So, the Fed is in the Mortgage Business?
Apparently, Britney has some shaky assets on her balance sheets. Well, don’t worry Britney. You’re not the only one.
In an announcement that has sent produced a large and varied reaction, the FED has announced that they will attempt to bail out banks by letting them use mortgage-backed securities as collateral for loans. This move is unprecedented in the Fed’s history. For the first time, they are entering the mortgage business. Since its inception, the Fed has used open market operations (the buying and selling of treasury bonds) to expand or contract the monetary policy. A good detailed discussion is here, at interfluidity. Simplistically, the Fed’s balance sheet looks like:
A Bailout, for Everyone by Steven Pearlstein:
Last week, it was a $200 billion cash-for-bond swap for the banks.
This week, it was a $200 billion bond-for-bond swap for the big investment houses.
If they keep this up, pretty soon you’ll be able to walk into any Federal Reserve bank and hock that diamond brooch you inherited from Aunt Mildred.
Forget all that nonsense about the Bernanke Fed being too timid or behind the curve. In the face of what is turning into the most serious financial market crisis since the Great Depression, the Fed has been more aggressive and more creative in using its limitless balance sheet — in effect, its ability to print money — than at any time in history.
We can argue till the cows come home about whether this is a bailout for Wall Street. It is — but only to the extent that it is also a bailout for all of us, meant to prevent a financial and economic meltdown that drags everyone down with it. In broad strokes, we’re going through a massive “de-leveraging” of the economy, wringing out trillions of dollars of debt that had artificially driven up the price of real estate and financial assets, and, more generally, allowed Americans to live beyond their means. The Fed’s goal has not been to impede that process, simply to make sure that it proceeds in an orderly fashion. But even that has required central bank intervention that is unprecedented in scale and scope. And despite yesterday’s huge rally in the stock market, Fed officials warn that this de-leveraging is nowhere near finished.
Evaluating the Proposed Delta/Northwest Merger
Doug Parker had a vision. His successful America West had completed a merger agreement with bankrupt US Airways Group on May 19, 2005. With this deal he planned to become the dominant low cost carrier in the country as the new US Airways (NYSE: LCC). And he would be its CEO. The next day CNN reported that “Parker thinks he can buck history and make a success out of merging his more successful airline with one in bankruptcy.” The company’s press release said:
Building upon two complementary networks with similar fleets, closely- aligned labor contracts and two outstanding teams of people, this merger creates the first nationwide full service low-cost airline.
On September 29, 2005 trading began for Mr. Parker’s new carrier. On that day its stock closed a little above $20. Then in a remarkable run-up to November 24, 2006 it was trading at around $63. Doug Parker seemed close to realizing his vision. Close, but no cigar. The run-up was followed by a steady erosion in shareholder value that on Friday March 7, 2008 saw his stock close at just under $11. That represented an 82% loss in value from its peak and a 46% loss from its initial price. What went wrong?
Northwest is Madison’s largest carrier. This proposed merger, combined with high oil prices that will dramatically reduce the number of small jets servicing airports like ours may require rethinking local air service.
NSA’s Domestic Spying Grows As Agency Sweeps Up Data
Five years ago, Congress killed an experimental Pentagon antiterrorism program meant to vacuum up electronic data about people in the U.S. to search for suspicious patterns. Opponents called it too broad an intrusion on Americans’ privacy, even after the Sept. 11 terrorist attacks.
But the data-sifting effort didn’t disappear. The National Security Agency, once confined to foreign surveillance, has been building essentially the same system.
The central role the NSA has come to occupy in domestic intelligence gathering has never been publicly disclosed. But an inquiry reveals that its efforts have evolved to reach more broadly into data about people’s communications, travel and finances in the U.S. than the domestic surveillance programs brought to light since the 2001 terrorist attacks.
The “500 True Believers”
The deal is, we’ve been told, that CEO pay is so high because demand for the 9-sigma talent of these Water Walking Wonders, so very beyond your and my shriveled imaginations, wildly exceeds supply when it comes to the 500 jobs as Fortune 500 CEOs. I contend that there are exactly 500 Guys (almost all guys, hence I can safely use the term) who believe that line of reasoning—namely the 500 CEOs of the F500 companies. (I guess I could also throw in the heads of the biggest search firms, who unearthed many of these so-far-beyond-the-pale dudes, which perhaps puts the total at 505 True Believers.)
The Inspiring Invincibles! Chuck Prince (Citigroup, formerly head of)! Stan O’Neal (Merrill Lynch, formerly head of)! Angelo Mozilo (Countrywide, formerly head of)! Tough cookies, each one. And yet, somehow, on their watches, The Three Geniuses allowed their firms, through grotesque negligence—maybe silliness or Theaters of the Absurd would be better words if the stakes weren’t so high—to get into positions in which tens upon tens of BILLIONS of greenbacks had to be written off from their books of account. Dodger, my 5-year-old Aussie, could have done a better job. (He could have bitten anybody who tried to make a $500K loan to someone who had never had a job or paid a bill and signed his name with an “X”; and peed on the pants of any 22-year-old University of Chicago PhD who said, “With my clever algorithm I’ve designed what’s called a ‘derivative’—it’ll make risk a thing of the past.” Yes, had Dodger bitten and peed on schedule, the likes of Citigroup would be ten or twenty billion ahead of their current position.) But, since the demand is so strong for the 500 different-from-mere-vice-presidents-Monumental-Management-Marvels, and the supply is so short, The Three Geniuses, on the basis of “Upside Potential,” were able to chalk up about a half BILLION buckaroos on their pay stubs over the last five years, while busily installing the tools necessary for Global Economic Meltdown. Well, I guess that means they’re “excellent” at something. Isn’t there some line about wool & eyes & pulling? (In most cases, their pay deals, especially the parts about “if you turn out to be an idiot, we’ll pay you a king’s ransom to clean out your desk,” were effectively set before they set foot in the executive suite. Wow, I wanna piece of that action!)
Agent Zigzag
Just finished this excellent book by Ben Macintyre. Joseph Kanon digs in:
It’s rare that a single war story inspires two books in the same season. But even by World War II standards, the exploits of Eddie Chapman, a professional Soho criminal turned double agent for the Germans and the British, are extraordinary. His is a spy drama in the classic manner, complete with secret codes, invisible ink and parachute drops, cyanide capsules, sexy blondes (named Dagmar, no less) and a dashing hero. One of his girlfriends thought Eddie looked like Errol Flynn; certainly Flynn could have played him. He was an adventurer with a smile. Ben Macintyre says he could look you “straight in the eye” while he picked your pocket.
Chapman has surfaced before. In 1954 he published “The Eddie Chapman Story,” memoirs so eviscerated by the Official Secrets Act that his work for MI5 is not even mentioned (a gap that led some readers to conclude he had been only a German spy). A 1966 update, “The Real Eddie Chapman Story,” tells more, but guardedly. This book led, in turn, to a dim 1967 film, “Triple Cross.” And during the postwar years, readers of the London press could follow the wealthy “gentleman crook” through a series of escapades.
By the time of his death in 1997, however, Chapman’s notoriety had faded. Then, in 2001, MI5 declassified his file, with more than 1,700 pages of interrogation transcripts, internal memorandums and radio intercepts — a trove of detailed information, catnip to anyone interested in wartime espionage. To Ben Macintyre and Nicholas Booth, both seasoned London journalists, the chance to tell the full Eddie Chapman story at last proved irresistible. Here were all the makings of a popular book. Or, as it happened, two.
Kill the Farm Bill
Farm subsidies in the United States go to just a handful of crops, corn, wheat, cotton, soybeans, and rice. Most fruits and vegetables are not subsidized, at least not directly but don’t forget opportunity cost!
David Zetland has the dirt.
Newspapers are Dead – At Least in the US
Tell me your favorite newspaper as a source for independent, objective news. The Wall St. Journal? Not even close. The NY Times? These days, the joke in NYC is seeing how long it will take the Sulzbergers to lose their flagship paper, just as the Bancrofts did with the WSJ. All it takes is a few years of mismanagement, and suddenly – ye gods! – Rupert Murdoch owns you.
This sentence is not proof that the words Murdoch and News can sit comfortably in the same sentence.
It turns out that over half of Americans now turn to foreign newspapers for their news, specifically to the BBC, the Guardian and the Telegraph. I would add the FT to the mix, although it has a US version now, so may be out of the running.
Panoramic Political Scenes in Ohio & Texas
The Washington Post has posted some great scenes from tomorrow’s primary states.
Deserts in Bloom: Late-winter rains in California and the Southwest have nature-lovers and sightseers holding their breath. This could be the best spring in years for seeing wildflowers.
The vistas here in this land of desert and rock feature deep canyons and striated rock formations. But the most impressive sight is yet to come. At some point next month, the gray floor of the desert will be set ablaze by carpets of wildflowers, in riotous shades of purple, yellow and red.
Aficionados maintain that witnessing desert wildflowers is one of the most rewarding experiences in nature. Fall’s dramatic leaf color change is guaranteed to happen every year. Desert wildflowers are far less predictable. If good spring rains are lacking, which was largely the case in 2006 and 2007, the flowers don’t appear. When nature does cooperate, for two weeks or a month the desert looks as if it has been streaked by a giant paintbrush.
This year is shaping up as one of those lucky years, due to a series of storms that swept California and the Southwest in January, followed by more rain in February. “I’m hoping it’s going to be terrific,” says Patrick Leary, a professor of plant biology at the College of Southern Nevada, who teaches a course in desert plants. “You suffer and wait and pray for a good year and when that year comes, you have to be out there every available moment. And then it’s gone.”