Okay, so I took more than a quarter off from posting after the web attack. Frankly, it’s amazing that anyone would bother an independent consultant by sending viruses through the blogosphere. So I’m going to be more careful about just approving any comment.

It has been an interesting summer and early fall for the key issues that I champion: libertarianism, Constitutionality, transparency, ethics, personal, corporate and government responsibility, and integrity. Frankly, the lot of them are in short supply, which bothers me most as a parent.

I am a fan of former Fed chief Paul Volcker who has been, umm, disappointed  about the current Fed head, Helicopter Ben, who really does not deserve to be reannointed. Look, Ben has sat in front of Congressional committees and lied through his teeth about where taxpayer money under his NON-ELECTED control has been going. Three guesses: offshore into  the bank accounts of people who should have or did take ethics and duty of care pledges.

Volcker explained his frustration in Newsweek!

Paul Volcker saw Barack Obama as an “agent for needed change” when the former Federal Reserve chairman endorsed him for president in January 2008. But lately Volcker has been feeling a bit ignored by the White House, and thinks that Obama isn’t changing Wall Street enough to avert another subprime disaster. Last week the current Fed chief, Ben Bernanke, came up with a proposal to make big banks behave: he pledged to change the way the nation’s top 28 banking companies pay their executives, removing incentives for short-term gains and “working to ensure that compensation packages appropriately tie rewards to longer-term performance.”

But Bernanke didn’t go nearly as far as Volcker says we should. Volcker wants to keep major commercial banks that enjoy federal-deposit guarantees away from big-time speculative trading. “They shouldn’t be doing risky capital-market stuff,” Volcker told NEWSWEEK before the Fed announcement. But, he adds, the president “obviously decided not to accept” his recommendations. Volcker says he was used as “some kind of symbol of responsibility and prudence” by the administration during the campaign, and now speaks to Obama only occasionally. A White House official, who didn’t want to be named talking about personnel issues, says Obama pays close attention to Volcker—and other dissenters, like Mervyn King, the Bank of England governor who also called last week for substantive structural changes to banks considered “too big to fail.” “The president has a great deal of respect for Paul Volcker; he has met with him more than a dozen times in the White House, and seeks his input frequently,” the official says.

The Fed’s scheme was designed by Fed governor Dan Tarullo, an Obama appointee, but was adopted without administration input, says a Fed official who requested anonymity to discuss internal deliberations. The official adds that Bernanke’s proposal is intended to address “the same issues of safety and soundness” that concern Volcker. In addition to the Fed’s rollout, last week Treasury official Kenneth Feinberg said the government will restrict compensation of the top 25 employees at bailed-out firms; Obama also urged the Senate to give shareholders “a voice” on executive pay. Volcker says he agrees with “about 80 percent” of Obama’s financial proposals, but it’s the other 20 percent that has him worried.

 

 

If the Ultimate Insider Bill Gross from the nation’s largest bond buyer PIMCO has lost confidence in the U.S. Federal Reserve, then look out !

I was impressed this weekend by an article in the Op-Ed section of The New York Times by staff writer Bob Herbert. “No Recovery in Sight” was the heading and his opening sentence asked, “How do you put together a consumer economy that works when the consumers are out of work?” That is really all one needs to ask when divining our economy’s future fortune. Unless an optimist can prescribe how to put Humpty Dumpty back together again and shuffle him/her back to work then there can be no return to an “old normal.” As unemployment approaches 10%, what is less well publicized is that the number of “underutilized” workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering. Common- sensically, one has to know that many or most of these are untrained for the demands of a green-oriented, goods-producing future economy.  Imagine a welding rod in the hands of an investment banker or mortgage broker and you’ll understand the implications quicker than any economist using an econometric model.

What this all means to you as an investor is near obvious as well. Unsurprisingly, what still can be modeled is the direct correlation of real profit growth to real economic growth, assuming a constant division of the “pie” between profits, labor and government. If long-term economic growth declines by 1½% then profit growth will as well. This, after settling at perhaps half of absolute peak profit levels of 2007, because of the rise of savings rates from 0 to 8% or higher. But to add to the woes of the investor class, one has only to observe that their share of the pie is shrinking. What does the General Motors example tell us all about the rebalancing of power between the investor class and the proletariat? What do trillion-dollar deficits and the recent reinitiation of PAYGO government programs tell you about the future of corporate tax rates? They’re headed higher. Do you really think that a national health care program can be paid for with cost-cutting as opposed to tax hikes at insurance companies and benefit-paying corporations throughout all sectors of the American economy? The new normal will not be investor-friendly unless your forecasting dial is turned to “Pollyanna” or your intelligence quotient is significantly less than 100.

http://www.pimco.com/LeftNav/Featured+Mark…oss+Appetit.htm

For blog visitors, I send my apologies.  Our site has been subjected to Denial of Service (DNS) attacks since last week. Since I have no agenda here and no advertising and the site is for entertainment purposes only, I cannot understand why I whould be subjected to a DNS attack. TSR has no IT department and no desire to antagonize anyone, just a desire to express free speech. I may have stepped on a few toes in the last quarter but meant no harm- I truly believe that our country is making very bad financial “decisions” by people not elected to make them. And those elected have been very compromised by the armies of corporate lobbyists running their agendas which you can be sure do not serve the interest of the shrinking American middle class. I will try to get the site back up for interested parties and would simply send you to Mike Morgan’s site in Florida- a financial advisor with the courage to highlight widespread and undeniable market manipulation by Goldman Sachs and other financial powerhouses  and Tyler Durden’s ZeroHedge site for some pretty plugged in insight into how these markets get rigged. The epitaph is for the “buy and hold” investor and the 401K saver and the “counting on my pension plan” lifetime corporate loyalist. God Bless You and Keep You!

Uhhhhh…. Ben? (Blatantly Unlawful Acts?)

Props to Zerohedge for having the nads to run this unconfirmed:

Which is why we were greatly troubled when we learned recently on good authority that Federal representatives may have opened multiple undisclosed-type accounts with none other than State Street Global Advisors over the past few months. All of these accounts are allegedly handled by one single trader, who is cocooned and isolated from interaction with other partners.

Zero Hedge can, as of yet, not vouch for this being 100% factual and is asking readers who may have additional knowledge of the situtation to please come forward and share their views (tips@zerohedge.com). If, indeed, the Federal Reserve or other derivatives of the administration, are now directly involved in trading, managing repo terms, stock lending, collateral distribution and other liquidity-crucial aspects of what was once an efficient market, then indeed this rally could be written off not merely as the biggest short covering rally of all time, but one that has been explicitly orchestrated by those who should be most impartial to an efficiently working market.

Uh, there’s a bit more than just “writing off this rally” there.

If this is true and especially if The Fed is involved, there is a major problem with the law.

See, The Federal Reserve is explicitly not permitted to buy anything that doesn’t have the full faith and credit of The US Federal Government behind it.  It is that fact (found in Sections 13 and 14 of The Act) that has led me to repeatedly rant about The Fed’s purchase of Fannie and Freddie paper – distinctly outrageous acts, given the plain language of the law. (Note that purchase of Ginnie Mae securities, which are fully guaranteed with full faith and credit, would be fine.  Note also that Ginnie Mae didn’t get in trouble fiscally either.  Hmmmm….)

The Fed’s charter and statement of operation is that liquidity operations are to be performed through the NY Fed dealing desk.  That transparency is important.  It is why I was able to detect the liquidity drain on September 24th and sound the alarm – even though it went unheeded – three days before the equity market collapsed.

This sort of transparency of open market operations is critical.  Even though nobody gave a damn about the huge liquidity drain in September, the record remains for Congress and others to look at in the future, should they so choose, and if there is an investigation of the propriety of those actions, the proof is right there in front of people’s nose.

If The Fed is dealing through one “special trader” at State Street, then all such transparency of action and intent is GONE.

Such intentional obfuscation can only have the purpose of being able to “act in the shadows.”  It is entirely possible that while Congress ignored my warning call, The Fed did not, realizing that there is a tremendous amount of exposure for them (as there should be!) for such an action, and therefore, acts were undertaken to hide this sort of thing in the future.

Bad juju folks.

Worse is that if this is true and is proved the risk of capital flight is extremely high.  Do you want to participate in a market that is “rigged” like this by The Fed, operating with essentially limitless liquidity to game the markets any time they’d like in violation of the law?

If this is just a bad rumor or some tinfoil conspiracy, then it is.  Lord knows there have been plenty about the “Plunge Protection Team” over the years.

If this proves up as real, The Fed must be immediately decertified and, if we can find a criminal act in here (I suspect that prosecutors might be able to) everyone responsible for this, or who acted with knowledge of it, needs to wind up in prison.

Tom Tamm was a classmate in my past and a fine person- ethical and caring. Actually, also a lot of fun and he surely did not deserve this harassment and fear. This man is no terrorist but actually a national hero. Any whistleblower is a courageous person who relies on his or her ethical standards to guide their conduct in a work setting. Look at the case of Angelo Mozillo, former CEO  and founder of Countrywide, the home of trash home loans,  the perpetual “orange tanned one” boasted that the loans he pushed were crap and he did not care a bit about the bad loans’ fallout. But look at Tamm’s story: Bush FBI sent 18 armored agents to search my house, wiretap whistleblower says- Raw Story reports.

Hey, this guy is a whistleblower, be VERRRY careful- he's got sensitive information- Join the Police State!

The Bush Administration’s FBI sent 18 agents in body armor to the home of a man who revealed details of the National Security Agency’s warrantless wiretapping program, according to a little-noticed account of the whistleblower published Thursday. Thomas Tamm, a former Justice Department lawyer in the Office of Intelligence Policy and Review, revealed details of the wiretapping program to the New York Times in 2004. In 2007, FBI agents raided his Potomac, Maryland home. Tamm wasn’t there. His college-aged son, wife and young daughter were — but their father had never told them of his leak to the Times. “They asked me questions like ‘Are there any secret rooms or compartments in the house’?”

This kind of citizen abuse wouldn't look good if people paid attention

Terry Tamm, his son, told Newsweek’s Michael Isikoff last December. “Or did we have a safe? They asked us if any New York Times reporters had been to the house. We had no idea why any of this was happening.” Thomas Tamm. Tamm spoke Thursday at the final panel of the Computers, Freedom and Privacy Conference. He said the agents who raided his home were well-armed. “They were all wearing body armor, they were all well armed,” he told the audience, according to Wired. “They asked my kids if we had any secret rooms in the house … or whether I had any weapons. They were in my house for over seven hours.” “I’m sure before that time my phone was listened to,” Tamm added. My wife “will never feel the same in my house … She really felt that her security had been victimized.” Tamm also expressed frustration that the Times took more than a year to publish a story on the program (Bush administration officials convinced the paper to withhold the story, which they’d known about since before the 2004 election). “Their editors would not publish the story,” Tamm remarked.

Wait and wait hey I'm out here exposed!

“They waited until December 2005 to publish it. So for a year, I’m sitting here going, I know I’ve revealed what they say is secret information. I wonder what will happen to me?” After the 2007 raid, Justice Department prosecutors tried to convince Tamm to plead guilty to revealing classified information. He refused. To date, he’s had a criminal indictment hanging over his head — but authorities have yet to charge him with a crime. He could be charged with disclosure of information harmful to “the national defense” or “communications intelligence” — both of which might involve sentences of up to ten years in prison. Now that President Obama has taken office, however, Tamm seems more likely to elude jail. Prosecutors told the Bush lawyer-cum-whistleblower last year that they’d delay a decision on whether to charge him until this year. It’s unknown whether the Justice Department will continue to pursue a criminal charge.

In contrast, Mozillo and his collaborators are assumed innocent The financial regulator alleged that Mr Mozillo sold his shares in Countrywide for nearly $140m (£86m) while he knew that the company’s business model was deteriorating. I mean, maybe the government should compensate us who shorted CFC as a fraud in 2007 and got smoked in the scam.

“We lent to anyone who could fog a mirror and collected the fees” (so I sold my stock so we got paid twice !)

David Sambol, the company’s former chief operating officer, and Eric Sieracki, the former chief financial officer, have also been charged with securities fraud. The SEC alleges that the trio misled the market by falsely assuring investors that Countrywide was primarily a prime-quality mortgage lender. “This is the tale of two companies,” said Robert Khuzami, director of the SEC’s enforcement division. “Countrywide portrayed itself as underwriting mainly prime-quality mortgages using high underwriting standards. But concealed from shareholders the true Countrywide, an increasingly reckless lender assuming greater and greater risk. “Mr Mozilo privately described one Countrywide product as ‘toxic,’ and said another’s performance was so uncertain that Countrywide was ‘flying blind’,” he added. Mr Mozilo, 70, is the most high-profile executive yet to face formal charges related to the credit crisis.

Bloomberg reports that Dudley’s TALF Comments Add Signs of a PPIP Stall- Surprise! An ill conceived program rejected by actual investors!

The Federal Reserve may not start lending against residential mortgage-backed securities under its Term Asset-Backed Securities Loan Facility, Federal Reserve Bank of New York President William Dudley indicated. “We’re still in the process of assessing whether a legacy RMBS program is feasible, and if it were feasible, whether it would be significant enough to make a major impact,” Dudley said at a conference today in New York hosted by the Securities and Financial Markets Association and Pension Real Estate Association.

His comments add to signs that Treasury Secretary Timothy Geithner’s Public-Private Investment Program to boost debt prices and rid banks of devalued assets to expand lending is stalling, after helping to spark a rally in stocks and bonds. The Federal Deposit Insurance Corp. yesterday delayed a test sale of bad loans held by U.S. banks that had been billed as a tryout for its role.

Responding to questions after a speech at the conference, Dudley said each home-loan security is different and must be separately evaluated for the size of the haircut that should be applied, so “there’s a huge administrative hurdle” to expanding the TALF to the bonds. Last month, the Fed’s program to finance commercial- mortgage bonds was potentially hampered by Standard & Poor’s saying it may downgrade many AAA securities, rendering them ineligible under the central bank’s rules. As much as 90 percent of so-called super senior commercial-mortgage bonds sold in 2007 may be affected as the ratings firm changes how it assesses the debt, New York-based S&P said.

PPIP Mechanism – Under the PPIP, which was announced in March, funds run by private managers buying so-called legacy securities may be able to supplement Treasury co-investments and loans with additional TALF financing. Under a “Legacy Loans Program,” FDIC- guaranteed debt would provide the leverage.

TALF loans may also be available to other investors as the government seeks to boost prices for the more than $2.5 trillion of U.S. residential and commercial mortgage bonds without government backing to free banks and funds to create new credit. Since the PPIP was announced, U.S. banks have raised capital through stock sales and by converting preferred shares, and as of yesterday the total reached almost $100 billion, according to data compiled by Bloomberg.

‘Complex’ Assets “Banks have been able to raise capital without having to sell bad assets – Sheila Bair said yesterday in a statement in Washington. She added pushing back the pilot sale will give regulators time to assess details of the troubled asset programs. .. “which reflects renewed investor confidence in our banking system,” FDIC Chairman parroted- yeah, sure…

For the Fed, lending against older home-loan bonds “is difficult,” David Miller, director of investments for the Treasury’s office of financial stability, said in an interview at the conference. “It’s a much more complex asset class” than older commercial-mortgage securities, which the central bank last month agreed to finance, he said. “It just takes longer to evaluate not only ‘if,’ but how to do it,” Miller said. “And that’s a challenge in terms of timing, which is maybe not as quickly as people would like. But we’re optimistic. And we’re also optimistic about the actual PPIPs getting up and running.” Managers of the public-private securities funds will likely be named in one to two weeks, after which they will have as long as 12 weeks to raise money, he said. The Treasury has narrowed the list of potential managers to less than 20, and plans to initially select five to 10, he said. (Do ya think Goldmen will be on the list???)

For ‘Fools’ - “We still need more” than the capital that banks have raised to revive commercial-mortgage lending, Russ Appel, a managing director at Praedium Group LLC, a New York-based real- estate-investment firm, said during the conference. “Until they start clearing the old loans, they probably won’t be making a lot of new loans.” After the apparent demise of the PPIP-FDIC program for loans, banks will probably try to mainly off-load commercial mortgages that investors would be “fools” to take on, because the debt would be more troubled than it seems, said Barry Sternlicht, chief executive officer of Starwood Capital Group Global, LLC, a real-estate investor in Greenwich, Connecticut. “The only things they’re going to try to sell is stuff you probably shouldn’t buy,” Sternlicht said, speaking on the same panel as Appel.

Legacy Impact – The TALF and PPIP plans contributed to a rally among many types of home-loan bonds. Typical prices for the most-senior prime-jumbo securities jumped to about 83 cents on the dollar on May 14, from about 63 cents March 19, before steadying, according to Barclays Capital. Similar bonds backed by Alt-A loans with a few years of fixed rates rose to 45 cents, from 35 cents, according to the bank’s reports. Alt-A mortgages fall between prime and subprime in terms of expected defaults. Just the announcement of legacy RMBS being included in TALF has already had a major impact,” Roger Lavan, a portfolio manager in New York at Stone Harbor Investment Partners LLP, a fixed-income asset manager, said in an e-mail today. “Not including legacy RMBS in TALF would be a big mistake.”

Commercial-mortgage “legacy securities are the alternative” to making new loans, David Twardock, president of Prudential Mortgage Capital Company, a unit of Newark, New Jersey-based insurer Prudential Financial Inc., said during the conference panel. After S&P’s downgrade announcement, “it’s unclear now what that picture would look like” because yields on older bonds rose making them more attractive investments, he added.

PPIP ‘Summit’ (oh, Great!) – Sifma billed the conference today as a PPIP “Summit.” Less than 48 hours after a Sifma event last November on U.S. purchases of assets under the Troubled Asset Relief Program where former TARP head Neel KashkariTim Ryan, the New York-based group’s president, noted in his opening remarks. spoke, the Treasury Department abandoned those plans, “This time, though, the FDIC did us a favor and announced they may not need the legacy-loan piece of PPIP before our summit,” he said.

Home short sales are getting more common but many banks balking with getting to grips with the weak markets, even as comparable properties fall in price and undermine the future realized price of the properties the banks hold. The Sarasota Tribune explains that the hammered Florida market is a bleeding edge in this housing crisis:

Tom Flood of Sarasota’s Covenant Mortgage said 90% of his closings today involve short sales, deals where a lender agrees to accept less than what is owed on a property, or foreclosures — and about 20%  of them never consummate.”This is the eye of the storm, and it is not good news,” he said. “You have to be careful with pending sales going through the roof. In a normal market, Flood said, less than 5%  of pendings fail to close. Not today. “We jokingly call short sales long sales,” he said. “You just cross your fingers.”

Are “Pending Home Sales” Real or another Phony ‘Green Shoot’? I’m no fan of CNBS but their real estate reporter, Diana Olick,
was no shill during the bubble years of 2005-2008. She calls the recent report of “good” news on pending home sales as the sham it was.

Rich Pedroncelli / AP

The latest report from the National Association of Realtors shows that the number of contracts signed on homes in April rose 6.7 percent from the previous month.That’s what they call a “pending home sale.”Of course that buyer still needs to do the home inspection and, most important, get the financing before closing.

(Video: CNBC’s Diana Olick discusses the April pending home sales jump.)

Once the contract is “closed” that statistic goes into the “existing home sales” bin.Historically, the pending home sales index has tracked along pretty closely with the existing home sales number, and so has been a pretty reliable leading indicators. Lately that’s become less and less true.Take a look at this chart from the Field Check Group and PaperEconomy.com:

Source: Field Check Group

Right around the third quarter of last year, the pending series got a little funky. Part of that is the increasing volume of short sales (where the bank agrees to let the house be sold for less than the value of the mortgage on it). Banks have been slow to approve these contracts and more likely not to approve them, so that muddies the numbers. A new government incentive to get short sales moving may help in the coming months, but so far it’s not. Another issue is appraisals. I realize I’ve already discussed this, so I won’t get heavy into it, but many appraisals are now coming in lower than the contract price. Today’s already-iffy buyers aren’t willing to hang in there when they find out the house is worth less. I’m wondering now though about this recent spike in mortgage rates. Believe it or not, a lot of buyers don’t lock into rates because it’s a bit more expensive. Many “unlocked” loans that are pending will obviously not be able to close, given the much higher monthly payments. I realize this is anecdotal, but I just saw a house go back on the market in my neighborhood over the weekend. The ad read: “Financing Fell Through.” Questions?  Comments? RealtyCheck@cnbc.co

Here’s an oddity! AP actually has some analysis in this report by Tom Krisher! Subsidies of $2-5,000 suggested aggressive pushing of sales at any price with Honda, THE JAPANESE SUPPLIER OF THE MOST FUEL EFFICIENT CARS, storing unsold cars at a vacant Ford manufacturing plant! Mike Jackson, the CEO of the nation’s biggest auto retailer says that the whole government intervention into the auto industry is a massive mistake- forcing dealers out of business, forcing cars onto consumers they don’t want, and generally destroying the concept of a “market economy”.

Chrysler LLC’s U.S. sales fell 47 percent in May, but the company says being under bankruptcy protection did little to deter customers from purchasing its vehicles. (AP/David Zalubowski)

Americans bought more cars in May than in any other month this year, drawn by fire sale prices that pushed General Motors and Chrysler’s sales above expectations despite their forays into bankruptcy protection.Low gas prices encouraged the sale of bigger gas guzzlers while small cars stacked up on dealer lots. That could be a problem for the Obama administration, if the demand for more fuel-efficient vehicles drops just as it is forcing the U.S. auto industry to produce more of them. Overall sales were still 34%  lower than a year ago. “The great migration away from fuel efficiency is once again under way,” said Mike Jackson, chairman and chief executive of AutoNation Inc., the nation’s largest automotive retailer. “The price of gasoline determines the type of vehicles consumers buy. Period.” Hard to change bad habits…

Almost every small-car model saw significant drops in sales compared with May of last year, which was a record month for many models as gas headed for $4 per gallon.Honda’s Civic was off 61 percent, Ford saw Focus sales drop 54 percent, and GM’s Chevrolet Cobalt was down 52 percent. Even Toyota’s Corolla, the perennial small-car leader, saw sales drop 55 percent. Jackson said gasoline price instability makes it difficult for automakers to decide what models to produce and dealers to decide which ones to stock. “I was an idiot last July when I didn’t have enough fuel-efficient vehicles, and now I’m an idiot because I have fuel-efficient vehicles,” he said in an interview Tuesday, calling for a revenue-neutral gas tax increase to keep the price stable at $4 per gallon. Early in the month, Honda had thousands of Civics stacked up in the lots of a closed Ford plant west of Cleveland, stored there from factories in Ohio and Canada.

Gee, Taxpayers PAID Fiat to take Chrysler -TWICE! Where's Lee Iacocca? A real manager!

Jackson said all automakers’ small cars suffered, but Honda was hit harder as a company because it is the most fuel efficient. Jackson said he is changing his dealers’ mix to larger vehicles, from midsize cars up to sport utilities, because that’s what people want to buy. Although Chrysler’s sales were off 47%, the decline was about the same as it was in the months before the Auburn Hills, Mich., automaker filed for Chapter 11 bankruptcy protection.

Of course, Government Motors will still lobby government!

The London Times describes the fallout and likely collapse of the horrid Gordon Brown reign from the vast corruption scandal detailed largely by the Telegraph. Frankly this is not much different from the U.S. Congresscritters’ abuse (with a few notable exceptions) from influence peddling by lobbyists and special interests who claim a right to FUTURE taxpayer receipts- like our grandchildrens’!

Hazel Blears dealt a potentially fatal blow to Gordon Brown’s political authority today when she announced her departure from Cabinet on the eve of crucial local and European elections. It was the fourth ministerial resignation in 24 hours and the second at Cabinet level after the news yesterday that Jacqui Smith, the Home Secretary, is also to stand down. It also came as Mr Brown’s critics in the Labour Party canvassed support for a round-robin letter calling on the Prime Minister to resign. Selected Labour MPs today received an e-mail asking whether they would sign a letter of no confidence in Mr Brown on Friday morning. Mr Brown’s opponents believe that they could secure the support of 70 or 80 MPs for the move. Under Labour Party rules, it takes 70 MPs to trigger a leadership contest.

The General Motors headquarters is seen with the moon in the background in Detroit, Sunday, May 31, 2009. (AP Photo/Carlos Osorio)

UPDATE: Wednesday morning, 14 hours after this piece was posted online, a General Motors spokesman informed the Washington Examiner that GM was canceling all of its contracts with outside lobbying firms. The company will maintain its in-house lobbying shop however.

General Motors will continue its multimillion-dollar lobbying operation in Washington, even after the federal government takes ownership of it. The automaker may even maintain its high-dollar lobbying contracts with some of the wealthiest and most influential K Street firms. “We believe we have an obligation to remain engaged at the federal and state levels,” General Motors stated in an e-mail after President Barack Obama announced his plan for the federal takeover of the carmaker, “and to have our voice heard in the policymaking process.” GM spent $13.1 on lobbying in 2008. In the first quarter of this year, while surviving on federal bailout money, the company’s lobbying tab was $2.8 million. What’s left to grift from the beleaguered taxpayer?? Keeping the options open for more cash?

more about “U.S. Needs the Equivalent of PM’s Que…“, posted with vodpod

Some ex-Fidelity colleagues running hedge funds have shut them down recently, and the trend is well established already this year- i.e. Art Samberg recently closed his Pequot Capital- the former home of John Mack, CEO of Morgan Stanley.

The Wall Street Journal reports this AM that Raptor and Gryfalcon are shutting too. Two prominent Boston money managers are winding down their biggest funds, another sign of the relentless shakeout in the hedge-fund industry. James Pallotta, who runs the $800 million Raptor fund, has decided to return money to outside clients, people familiar with the matter said. George Noble, a former mutual-fund manager who controls some $550 million across two funds named Gyrfalcon, intends to refund clients this month. He described his 2009 performance in a letter to investors Tuesday as “the most professionally disappointing and personally frustrating of my entire career.” Their simultaneous exits show how veteran investors still regard these markets with caution, despite stocks’ recent ascent. The decisions could portend similar moves by other fund managers who, burned by losses and facing pressure from clients, opt to close, even as the hedge-fund industry’s returns have improved. Investors say many funds are up about 5%. The moves also highlight the economics of hedge funds, where managers who have lost money have a strong incentive to wind down, return remaining cash and try to start over. Once funds start losing money, managers generally must make back losses before they can resume collecting big performance fees. Mr. Pallotta less than a year ago split off from hedge-fund pioneer Paul Tudor Jones, his investment partner for 15 years. Mr. Pallotta ran Tudor Investment Corp.’s Raptor fund, a stock-picking vehicle that at its peak had $9 billion in assets and some of the best returns in the industry but that hit a money-losing skid starting in mid-2007.

Dexter Filkins of the New York Times had a fascinating interview today on NPR and his excellent book, The Forever War, has just gone to paperback:(here’s the NYT review from last year)

An American Hero a la Ernie Pyle

Secretary of State Hilly Clinton warned recently: “If the worst, the unthinkable, were to happen, and this advancing Taliban encouraged and supported by al Qaeda and other extremists were to essentially topple the government for failure to beat them back, then they would have the keys to the nuclear arsenal of Pakistan,” Secretary Hillary Rodham Clinton said in an April 26 interview with Fox News. The fear that jihadists might obtain radioactive material for a dirty bomb is heightened by concern about a potential “insider threat” amid intelligence reports of strong Islamic and anti-American sentiment within the Pakistani officer corps. In fact “there is a rising tide of jihadist sympathizers within the Pakistani military,” asserted a senior U.S. defense official.

On the ground- Seriously Outnumbered by the Taliban

Defense Update details the spread of Taliban attacks into another Pakistan region- South Waziristan: As the Pakistani Army is on the offensive engaging some 4,000 Taliban militants in the Swat Valley, in a campaign that has earned Western praise, other regions in Pakistan are erupting with violence in several places seized under militant control. Most of the civil population of Mingora, around 375,000 residents has already fled from the area. The military briefly lifted a curfew Sunday, allowing some of the 20,000 or so that remained to buy provisions in the few shops that were open. While the Pakistani Army is seizing more area in the Swat valley, the fighting has already been spreading into other locations, such as South Waziristan, which has been under Taliban control for some time. Now, the militants seem to be getting closer to Pakistan’s nuclear production center in Khushab.

Patient people with nothing to lose, but NOT their homeland

Over the weekend, insurgents attacked an army convoy on the night of 30/5 near the village of Tiarza, located south of the Afghan border, in the high mountains of South Waziristan. The attack sparked more battles in the southern parts of the region. By daylight militants attacked with missiles an army camp in South Waziristan’s Jandola, located some 40 kilometers to the east, overlooking the city of Tank, which is part of the densely populated Indus River valley. According to Pakistani sources the military retaliated using artillery, and moved troops moved into a ‘Taliban-held village’ to force out the armed Islamist extremists, therefore admitting that Taliban has maintained a grip on this strategic region as well.

Magic Bullet? No Such Thing as a Winnable Afghan War

From the Times Review- and this is stunning: The work Filkins accomplishes in “The Forever War” is one of the most effective antitoxins that the writing profession has produced to counter the administration’s fascinating contemporary public relations tactic. The political leadership’s method has been the dissemination of facts reversed 180 degrees toward the quadrant of lies, hitherto a magic bullet in their never-ending crusade to accomplish everything from stealing elections to starting ideological wars. Filkins uses the truth as observed firsthand to detail an arid, hopeless policy in an unpromising part of the world. His writing is one of the scant good things to come out of the war.