Battle of the Giants…

Having recently seen the Harry Potter movie, it is scary. Ever since watching…. I now see giants everywhere. Before when I looked, I never knew they were there…

Two giants will be doing battle here in Delaware… (The recession is finally paying off for our little state.)

Papers were filed with the ITC (International Trade Commission) by the South Korean giant Samsung LED against a division of another giant this time from Germany, Siemens….. over 8 patient infringements.

Samsung LED also said it filed a lawsuit in the U.S. District Court in Delaware to seek damages and a permanent injunction to bar Siemen’s subsidary, Osram’s alleged patent infringement from entering this country.

At stake is the financial future of these two companies. One will win, and the other for lack of a better word, will be vanquished.

Since Siemens actually has a plant in Delaware, next to the Glasgow Park off Route 40 and 896, I’m putting my bets on that giant…. if they get hurt, it will cost jobs.

Hotels, restaurants, transportation companies all stand to be a little busier as this gigantic fight, gets under way…. It would be helpful to practice on the Korean and German dialects now, before the event gets under way…

Sprechen sie deutsch?

니미럴 개자식 ….

It should be an interesting fight.

Response to Duffy

Duffy is God’s answer to a prayer.. I miss the old days of blogging when we were debating principals instead of people… Duffy has stuck to the old line of debating principals with facts, and that is what makes him special in the eyes of bloggers everywhere…

Since the passing of Steve Newton, he has been the only one to challenge me in any argument, and usually some pretty good stuff comes out of both sides during the exchange… I have respected that.. Cause once again, opinions mean dick. Facts are what we steer by.. It is my hope that in responding to his challenge that an answer may make itself apparent.. Who knows? It may not come from me… But if I’m the catalyst for bringing it out in the open, then… none of this was in vain..

Why I like to debate Duffy is simple.. Neither side, he or I, is concretely set in their opinions… We accept it when the other side makes sense… I usually go into such debates having no idea where they’ll end up… I hope the rest of you enjoy the ride as welI….

That said..

Duffy leads: Wall Street’s problems were caused by Fannie and Freddie loaning money to people they knew couldn’t pay and moreover, forcing banks to lend money to people who couldn’t pay. That was not deregulation but misregulation

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate.

First off, the Community Reinvestment Act of 1977 was developed for, and locked in on, urban developmental areas and had no part of the subprime boom, which primarily occurred out in western desert regions where owning 4 to 5 investment homes was normal… Those homes were overwhelmingly funded by loan originators NOT SUBJECT to the act… We all know the crises was not because people couldn’t afford a payment on their house. It came about, because with no occupants, people could not afford the payments of 4 to 5 houses….. Instead of one loan per borrower turning up in default; four to five were.

Second off, The housing bubble reached its point of maximum inflation in 2005.

Courtesy of NYT

Third off, During those exact same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of loans secured by the Feds… Follow the dotted line on the very bottom of the graph…

Courtesy of NYT

Fourth off; During those exact same years, private secures, like Delaware’s own AIG, grabbed the lions share of the market.

Courtesy of NYT

Remember these graphs for later on when I discuss the results of deregulation, versus regulation… But like it or not, these graphs conclusively show that private insurers, who thanks to Marie Evans, we now know were deregulated by Phil Gramm in the 2000 Omnibus Bill, were the primary cause of the worlds financial collapse.. Probably put best by these words of AIG’s spokesperson, who when asked why they didn’t have sufficient funds to cover losses, said point blank, “We were deregulated. We were no laws requiring us to keep any funds, ..so we spent it…”

Duffy leads: The loosely regulated hedge funds escaped this mess largely unscathed. Why? They can’t count on a bailout like the big banks. The Too Big To Fail banks were counting on a bailout (not unlike the S&L bailouts which started on the Republican’s watch) and they got them.

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. I agree that the hedge funds did survive better than the banks. Not because of bailouts, but because they sold short during the crises and made billions while firms closed and people got thrown out of work. There is nothing wrong with that; I did the same. In fact close readers may remember my warnings that the crises was impending almost a year earlier. Very close readers may remember my telling them exactly when to sell, and at what point the stock market would rebound… I must say: I called it rather well. 🙂

“Hedge funds were not in my understanding, at fault in the credit crisis,” said David Ruder, former chairman of the Securities and Exchange Commission. “At the most what they did was to sell securities when some of their investments were declining and they needed to have liquid funds. They were not the architects of these problems.”

De regulated hedge funds are not the issue… De-regulated, excessively leveraged, mortgage securities, are a different story however… They, not the banks that held them, are the cause of the crises…Years from now, when academics search for causes of the stock market crash of 2008, they will focus on the pivotal role of mortgage-backed securities. These exotic financial instruments allowed a downturn in U.S. home prices to morph into a contagion that brought down Bear Stearns a year ago this month – and more recently have brought the global banking system to its knees.

Where you err is when you state that banks too big to fail, assumed they would be bailed out… By implication, you say imply they failed from squandering money, and wanted the bailouts.. But your tax dollars didn’t flow directly to the bottom line.

The roughly $200 billion the Treasury Department has handed out to battered banks was swapped for a special class of stock that pays a 5 percent dividend (rising to 9 percent after five years.) As of April 15, the Treasury had collected about $2.5 billion in dividend payments on its investment.

So in that sense, the bailout money represents an expense for banks. That’s one reason a number of banks have said they want to give the money back as soon as possible.

You say big banks were counting on a bailout, and they got them? That didn’t happen to these banks. New Mexico, Georgia, and Florida each lost a bank just last Friday. That brings to 8, the number of banks failed in June. Unfortunately if a bank is failing, it can’t bet on itself to fail, as can a hedge fund.

Duffy leads: Banks have successfully lobbied to get their losses absorbed by taxpayers and gains are kept private. How nice for them. They felt comfortable making insane gambles because they knew they’d be bailed out. Most of them were right. Also remember that it was Bill Clinton who tore down the wall between retail and investment banking. The idea was to give banks more stability as they typically perform as exact opposites in bull and bear markets. (FWIW, I think that was a good idea and I can tell you first hand that two of the Fortune 100 banks I worked for were carried by retail banking in bear years. They may not have had bonuses those years but they didn’t have layoffs either)

kavips rebutt’s:Uh… Mr. President. That’s not entirely accurate. The idea is that the banks made bad decisions knowing taxpayers would bail them out is the issue that is inaccurate. For the record, I have no qualms that it was the Clinton legacy who tore down the wall between banks and investment banking. Like you, I feel it was a good idea to do so… Again the problem was not primarily with banks making loans to people who could not pay.. Although, it was as late as October 2009, when I was made aware of one private Bank in Denver still exaggerating income to make loans look good enough on paper to get approval of securitization. What caused the collapse was the leveraging of those loans as securities, so that as the housing market became overextended, and the ARM jumped past the low cost opening years, the damage was 100 times worse because of leveraging. What made the collapse criminal, was that the insurance most financial institutions had bought from AIG, to cover such an improbable event, had already spent by that companies executives, out on bonuses to themselves. What made it doubly criminal, was that when they received government dollars through a taxpayer bailout, those same executives assumed it was to first go towards paying their bonuses again. However, very recent events may give some cover to the argument that some collusion was implicit in the bailing out of Goldman Sacs and AIG… Basically, once bailed out, AIG paid Goldman Sacs for shares twice as much as they were worth. The documents also indicate that regulators ignored recommendations from their own advisers to force the banks to accept losses on their A.I.G. deals and instead paid the banks in full for the contracts.

Saakashvili must leave!

On the fifth day of protests, still 20,000 showed up in Tbilisi to protest their president’s mismanagement of last summer’s war…

If you can remember, he launched an attack upon the Russians in South Ossetia at the insistence of Karl Rove and John McCain’s campaign chairman, in order to create an international crises that was hoped to make Obama appear unready to hold the reins of power..

The ploy backfired all around, and especially in Georgia, where the Russians quickly set up a defensive perimeter and Georgia was left wondering who their president was representing… them? or an American political party half a world away….

His opponents say the 41-year-old leader has made too many mistakes to remain in power until 2013. They have a point.

The twenty thousand who showed up on the fifth day, is down from the 60,000 who originally protested on Thursday… That gives Mikheil some breathing room… In central Asia, protest are supposed to grow on succeeding days… not diminish.

The protesters are asking for Saakashvili’s resignation, but with diminishing turnout, it appears that will not happen… For his part, Mikheil has asked to engage in discussions with the opposition to obtain some form of resolution… Most believe some funding of the opposition is coming across the border from Russia… since no one has money in Georgia anymore….

Ironically both Mikheil and Barack got their original funding from the same person…. George Saros…

Today “State Department Spokesman Richard Aker told reporters Friday that the U.S. had no stance on whether Saakashvili, (whom the U.S. vigorously supported during the conflict with Russia last July over breakaway provinces South Ossetia and Abkhazia) should step down. Aker said any question of political leadership was an “internal Georgian matter” and stated that the U.S. supports the right to peaceful public protest.”

The current leadership has learned how NOT to behave from its predecessor… We are fortunate for their wisdom….

888

Just a couple of coincidences. To the Chinese, the number 8 means prosperous. The Olympics began on that date, and based on the number of records being broken, the Chinese should be commended. Incidentally, American viewership is up….way up…..

Coming from an American official, the invasion of Ossetia being timed on that same day, 888, was no coincidence…..

That invasion and its Russian reply, has recently convinced Poland to secure those controversial missiles from the United States. Today Poles marched in the street to celebrate the anniversary of a rare victory over the Russians…..That battle happened exactly 88 years ago.……..