Threat Micro Thread Alerts Widget Added to Tech Resources

5 11 2008
The Trend Micro Thread Alerts will now appear on the Tech Resources page.

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President-Elect Obama Speaks

5 11 2008

Reaffirms America’s Penchant for Change

Ladies and Gentlemen, The President-Elect of the United States …

Well, who could possibly follow that?

Sphere-It!





AIG Not Telling US Treasury How They Used Up 3/4 of $123 Billion in 2 Weeks

4 11 2008

Possible Signs of Internal Financial Irregularities

After taking an $85 billion emergency loan from the Fed, and then another $38 billion, A.I.G isn’t being very aig-logospecific on how it has already spent most of the money, according to Mary William Walsh‘s article in the New York Times:

(emphasis added)

A.I.G. has declined to provide a detailed account of how it has used the Fed’s money. The company said it could not provide more information ahead of its quarterly report, expected next week, the first under new management. The Fed releases a weekly figure, most recently showing that $90 billion of the $123 billion available has been drawn down.

A.I.G. has outlined only broad categories: some is being used to shore up its securities-lending program, some to make good on its guaranteed investment contracts, some to pay for day-to-day operations and — of perhaps greatest interest to watchdogs — tens of billions of dollars to post collateral with other financial institutions, as required by A.I.G.’s many derivatives contracts.

No information has been supplied yet about who these counterparties are, how much collateral they have received or what additional tripwires may require even more collateral if the housing market continues to slide.

Some industry observers say there must be undisclosed irregular accounting leading up to the bailout for so much of the $123 Billion lifeline to have been used up so fast.

“You don’t just suddenly lose $120 billion overnight,” said Donn Vickrey of Gradient Analytics, an independent securities research firm in Scottsdale, Ariz.

Mr. Vickrey says he believes A.I.G. must have already accumulated tens of billions of dollars worth of losses by mid-September, when it came close to collapse.

The article details indications of a sustained effort on the part of AIG top management to bury any details of an internal debate on how to value it’s derivatives contracts over the past few years.  When a former SEC accountant was brought in due to previous irregularities,

He began to focus on the company’s accounting for its credit-default swaps and collided with Joseph Cassano, the head of the company’s financial products division … When the expert tried to revise A.I.G.’s method for measuring its swaps, he said that Mr. Cassano told him, “I have deliberately excluded you from the valuation because I was concerned that you would pollute the process.”

(emphasis added)

Astounding Burn Rate

In the roughly 6 weeks since AIG got the massive government loans they have already used up 90 of an available $123 billion at last reports.

A spokesman for the insurer, Nicholas J. Ashooh, said A.I.G. did not anticipate having to use the entire $38 billion facility. At midyear, A.I.G. had a shortfall of $15.6 billion in that program, which it says has grown to $18 billion. Another spokesman, Joe Norton, said the company was getting out of this business. Of the government’s original $85 billion line of credit, the company has drawn down about $72 billion. It must pay 8.5 percent interest on those funds.

For $59 billion of the $72 billion A.I.G. has used, the company has provided no breakdown. A block of it has been used for day-to-day operations, a broad category that raises eyebrows since the company has been tarnished by reports of expensive trips and bonuses for executives.

(emphasis, links added)

US Federal Deficit 1989 - 2004

US Federal Deficit 1989 - 2004

Possible Legal Violations

Rep. Barney Frank, House Financial Service Committee chairman said on Friday in remarks directed at Banks who had received a separate $125 Billion government buy-in, that financial institutions were “distorting” the government’s $700 billion economic bailout plan by using the money for bonuses, dividends and acquisitions.  Frank said any uses of that money other than lending were “violation of the terms of the act.”

On 7 October Rep. Henry Waxman’s Committee on Oversight and Government Reform held hearings on the causes of AIG’s need for a bailout. (Full Hearing Video).  At the hearing it came out that the week after AIG got an $85 Billion initial govenrment bailout, executives went on a retreat at a luxury resort, spending $443,343.71. Rep. Elijah Cummings (D-MD) said:

Have you heard of anything more outrageous – a week after taxpayers commit $85 billion dollars to rescue AIG, the company’s leading insurance executives spend hundreds of thousands of dollars at one of the most exclusive reports in the nation…Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1,400 at the salon. They were getting manicures, facials, pedicures and massages while American people were footing the bill. And they spent another $10,000 dollars for I don’t know what this is, leisure dining. Bars?

(emphasis added)

AIG Gets Another $25 Billion – Total: $144 Billion (so far…)

On Thursday 30 October, AIG said “it would be able to borrow up to $20.9 billion under the new program, raising its maximum available credit from the Fed to $144 billion under three different programs,” the New York Times reportsAnd there’s no sign yet that will be enough.

From Walsh‘s article:

Edward M. Liddy, the insurance executive brought in by the government to restructure A.I.G., has already said that although he does not want to seek more money from the Fed, he may have to do so.

AIG’s unwillingness or inability to place a determinative valuation on their deriviative contracts has poisoned the credit market. As Tavakoli Structured Finance President Janet Tavakoli observes, “When investors don’t have full and honest information, they tend to sell everything, both the good and bad assets. … “It’s really bad for the markets. Things don’t heal until you take care of that.”

The NYT reports “Ms. Tavakoli said she thought that instead of pouring in more and more money, the Fed should bring A.I.G. together with all its derivatives counterparties and put a moratorium on the collateral calls.”

Tavakoli is an expert in derivative and similar financial products, and recently debated “mark to market” options on Bloomberg.

Vodpod videos no longer available.

Morningstar Analyst – May be better to let losses be realised

Bill Bergman, Senior Equity Analyst at Morningstar observed, “We may be better off in the long run letting the losses be realized and letting the people who took the risk bear the loss.”

– assembled from various reports by dcm

Sphere-It!





Accellerating Down that Slippery Slope …

4 10 2008

Our velocity down he slippery slope grows faster.

Low Earth Orbit objects - NASA

A Cage?

Earlier, there was the Matrix, and Total Information Awareness.

And particularly since September 11, we have been getting more and more data synthesis capability about You and Your movements and activities:

And now, a unit is being brought back from Iraq to be more or less permanently assigned to domestic duties.

The day before yesterday that unit began their tour, according to Army Times.

From the article about the 3rd Infantry Division’s 1st Brigade Combat Team, just returning home from Iraq:

“Training for homeland scenarios has already begun at Fort Stewart and includes specialty tasks such as knowing how to use the “jaws of life” to extract a person from a mangled vehicle; extra medical training for a CBRNE incident; and working with U.S. Forestry Service experts on how to go in with chainsaws and cut and clear trees to clear a road or area.

“The 1st BCT’s soldiers also will learn how to use “the first ever nonlethal package that the Army has fielded,” 1st BCT commander Col. Roger Cloutier said, referring to crowd and traffic control equipment and nonlethal weapons designed to subdue unruly or dangerous individuals without killing them.

“The package is for use only in war-zone operations, not for any domestic purpose.

“It’s a new modular package of nonlethal capabilities that they’re fielding. They’ve been using pieces of it in Iraq, but this is the first time that these modules were consolidated and this package fielded, and because of this mission we’re undertaking we were the first to get it.”

Sidewalk Graffitti in London

So, no worries, right? We’ve gotcha Covered. Land, Sky, and Social Patterns.

Anybody think we need some new plumbing?

For What It’s Worth,
-dcm

A slightly different version of this post appeared as a comment on this item at RawStory.com.





Welcome to Scribal Thrum

4 10 2008

Welcome to Scribal Thrum – a chronicle of journalism, analysis, and commentary.

My name is David C. Manchester, aka dredeyedick.  My background is a combination of concurrent careers in IT, Journalism, Military Public Affairs, Constitutional Law, Economics, and  Intelligence.  I am not a Lawyer, nor do I work for any legacy media organisation, military unit, school, or intelligence organ.  My income is from IT Contracting.  My main concern here is that the evolving information, political, and economic systems we embrace be fair, humane, effective, and reasonable for individual Human Beings.

If I had to classify myself by any sort of ideology, my best guess would be to say that having started my adult life as a laissez-faire advocate of capitalism, I have passed through various stages of maturity, until today, when I favor an as-yet undeployed, emerging digital peer-to-peer system of social credit which I would call DotCommunism.

From the start of my career as a dissident military journalist at the end of the Vietnam era through my various incarnations as a Journalist and IT Contractor, I have been struck by the disconnect between the rhetoric emitting from our politicians about what sort of individual (and corporate) liberty the United States stands for, versus the reality of our political economy organised around the needs of progressively more and more consolidated corporate control over our governments, laws, financial systems, “news” organisations, and Personal degrees of Freedom.

As a journalist and military dissident, I have found over the years that the unbridled practice of free speech while in the military will follow You for all the years of Your life, if the opinions You voice don’t strictly adhere to the american military’s “party line” of the moment.   I wrote some of that story at Civiblog, an Open Net Initiative site, in December, 2005.

Since then I have been relatively quiescent, not blogging, just dropping links to previous work in related places.  But now I think it’s time to get a little more organised, a little more active.

Scribal Thrum is the result.








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