Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
An attempt at answering you 2 questions ...
"What I'm wondering is why those who have cooperated with investigators haven't (maybe they have) shown invesitgators how the dopers are covering up their trail"
Every person is different (in terms of motivation), so tough to give a blanket answer.
We know that there are some rare instances where athletes have spilled the beans. In track and field, Kelli White. In cycling, there are several, the most prominent of which would be Jesus Manzano. (If you want to have your eyes opened, google up Manzano and you should be able to find several multi-part pieces published in Spain's largest daily newspapers, and even some video where he does quite a bit of explaining how systematic doping is carried out for pro cycling teams -- it was his testimony that ultimately led to the bust of Dr. Fuentes and the infamous Operation Puerto, that snared literally hundreds of pro athletes in European soccer, pro cycling, etc., etc. Problem is, so many spanish national heros were getting doped by Fuentes that the Spanish courts tried to bury all the evidence. Only recently have Italian anti-doping agencies gotten ahold of DNA and been able to round up more of them.). In the past couple years, 2 members of the German Telekom/T-Mobile team spilled the beans on how a respected University (Frieborg) lab and doctors systematically doped the then-world's #1 team. When you read the Manzano pieces, note that you are seeing inside how they doped in the early 90s. As complex as that may seem, it's child's play compared to the sophistication that's developed in the nearly 20 years since then.
As for why more don't follow suit, it's because generally, there's lots of downside, and little upside. First, even if busted, most athletes can just serve the penalty and go back to making a much bigger living in the sport than they ever could doing anything else -- but only provided they don't get blackballed for opening their mouths. Second, even if banned from the sport permanently, there are still plenty of ways to make a living (i.e. broadcast commentators, coaches, managers, etc., etc.) in the sport -- but again, only if you haven't been blacklisted.
Then there are the personal issues. Performance enhancing drugs are still drugs. Do them for years and you are a drug addict. There is personal shame in making a full admission. Much easier to do like Marion Jones and "admit" a watered down version of the truth, containing only a "one-time" lapse in judgment, or only 1 drug, not a whole sophisticated regimen. People like that often have trouble admitting even to themselves what frankensteins they were turned into.
As for investigators knowing the techniques, the people in the know, definitely have a good grasp. They recommend to the people running the sports how to catch people, but the sports themselves are run, at the top, by people making enormous amounts of money off the stars. They have no financial incentive to do more than the minimum amount necessary to pull of the p.r. of convincing people they're "anti-doping."
"A question on Armstrong: How has he been able to avoid detection"
Not to be trite, but by being always 1 step ahead. In 1999 when Lance returned to cycling, a test for EPO did not exist. So he (and his team) used EPO with impunity through 2000. This was confirmed in embarrassing detail when samples he gave during the 1999 Tour were later tested (after the EPO test was finally developed) and he was positive on all 6 samples from that year's Tour.
Then came a return to autologous blood doping. With no out-of-competition testing, the game became to dope the heck out of yourself in the off-season, and during early season races where you knew you wouldn't finish high enough in the standings to be tested. The equivalent in baseball was to dope in the off-season. Then, you maintain what you've gained by "micro-dosing". You continue on, but keep your dosages low enough to be below threshold. In the case of blood doping, mid-race, you re-inject.
You would be surprised at how easily blood (and urine) values can be toyed with, in a matter of hours. You can destroy a urine test by putting a little lye on your finger and making sure that gets into the sample, and boom, you've washed out the EPO test, for example.
Rather than carrying on in detail, here's a little IM chat between former Armstrong teammate Frankie Andreau with current Team Slipstream-Garmin manager Jonathon Vaughters.
http://www.cbc.ca/sports/indepth/landis/instantmessage.html
As for your question whether his anti-cancer regimen helped him avoid detection, the answer is yes, for a while. The biggest scam in doping, is that you can LEGALLY dope -- all you need is a TUE (therapeutic use exemption). Lance carried TUEs for corticosteroids and other "medications" for the first three of his yellow jersey performances (and made good use of them).
But here again, he's hardly alone. Would it surprise you to learn that more than 70% of the riders in the European pro peloton have been diagnosed by their doctors as severe asthmatics? So severe they cannot be treated with mild medication, but instead require a TUE for Salbuterol or other steroid based medication? Yes, this is a scam. Give any cyclist a big hit of salbuterol prior to a 30 minute maximum effort time trial and give them unnaturally large dilation of the bronchii and voila, they can process more oxygen input to the bloodstream and produce a superior result.
You are absolutely correct, behind it all, there are sophisticated networks that make this all work. Dr. Fuentes alone had at least 300 clients, and was responsible for countless gold medals, several World Cups, scores of World Championships, etc. And he was just one of the Spanish based networks (granted he had "houses" all over Europe so his clients could get dosed no matter where they were competing). Italy's Francesco Conconi and his pupils Michele Ferrari (Armstrong's guy), Checcini, etc. have the longest and most "distinguished" record, dating back to the early 80s.
BALCO was just one of the U.S. based "outlets". If you go back, you'll find it wasn't just Bonds, Giambi and a handful of MLB guys, it was Marion Jones, Tim Montgomery, and a host of elite track and field athletes, it was NFL greats, tennis players, and so on. BALCO alone produced literally dozens of Olympic medals for the U.S.
But here's the toughest part ... the U.S. Olympic committee itself has fostered and covered up doping since the late 1950s when it began the development of modern anabolic steroids. There is a load of evidence that Lance Armstrong was indoctrinated into doping when he entered the U.S. national team as a teenager, and there is a logical case to be made that his testicular cancer was a result of that doping. (More than 50% of his former teammates on the jr. national team suffer from bizarre autoimmune and endocrine diseases and issues, and three of the 5 elite members of that team ultimately sued the US Cycling Federation, which paid out substantial settlements to them, of course with the obligatory gag provision so they couldn't talk).
Ultimately, when you begin to understand the limits of testing, the advances in ways to manipulate body chemistry, and the ways in which sophisticated doctors can help athletes evade detection, one begins to wonder how anyone but the "little fish," who can't afford the expensive programs, ever gets caught.
Ironically, much as in business, where better capitalized businesses can capitalize on economies of scale and their bigger bankrolls to crush smaller competition, so too can the elite athletes use money as a competitive advantage in the doping arena, buying more sophisticated doping regimens that produce better results, and ... get by with stuff the competition can afford to buy.
"My guess is that ..."
"There are a couple of misssing pieces to this whole PED scandal. ... My guess is that some deal was made to place the blame on this one drug and one incident, when MLB had substantial evidence that Manny has been dirty for a long time. .... "
This might help fill in a few blanks for you.
First, a bit of background on the testing.
Unlike WADA, USADA and other reputable sports anti-doping testing programs, MLB (a) refuses to publish its list of banned substances and the testing protocol for outside review, and (b) MLB, in agreement with the Player's Union, has set up a process that hides the details of any positive test or violation of the testing process.
So, there's a bit of speculation on my part, but here goes. While the current MLB testing does screen directly for the presence of some known basic steroids types (by searching for a molecular match), it knows there are loads of anabolics for which it does not. Remember Bonds and "The Clear"? BALCO had a chemist make a few changes to molecular structure and voila, they had an anabolic agent that wouldn't be picked up in testing. So ... the way testing procedures try to deal with this is to test not only for the presence of a specific molecular compound, but to test for the resulting changes in body chemistry that would signal that the athlete used a substance that had the effect of an anabolic, but for which the testing doesn't screen for the specific molecule.
FWIW, all anabolic steroids manifest in higher T levels. That's the ultimate goal. T itself is known as the granddaddy of anabolic steroids.
The most basic screen is for the ratio of Testosterone (T) to Epitestosterone (E). The body naturally produces Epitestosterone in conjunction with Testosterone. While there can be variances in amount of natural T in the population, the range of natural values for the T:E ratio is between 0.8 and 1.2, with something approaching 90% of the population testing to 1.0. So all testing programs screen for T:E ratios as an indicator of anabolic use. We don't know what MLB's threshold is, but we know that WADA, USADA and just about every other testing regime have set their current threshold trigger at 4.0. Rumors abound that MLB's is a more "generous" 6.0. But we simply don't know whether it's 4 or 6.
WRT Manny, here's what we know: back at the beginning of spring training, Manny was tested. Although MLB (and Manny) are hiding the results of that test, we know 2 things. First, there was nothing in his system that matched any of the anabolic steroids for which the test specifically screens (if there was, then there is a more sinister deliberate coverup going on in MLB). Second, we know that his T:E ratio was abnormally high. It is being reported (on leaks from inside MLB) that the number was "between 4 and 10". For context, the middle of that range equates to 6 standard deviations, e.g. impossible to have occurred naturally. Translation: MLB knew he was doping.
http://seattletimes.nwsource.com/html/mariners/2009208952_basenotes12.html
Now, if his T:E had been above MLB's threshold, presumably they would have been directed by the testing protocol to go to "Step 2," which is to run a 2nd, more detailed screen of the T itself (a carbon isotope ratio test) that would confirm the presence of exogenous T (non-natural, therefore artificially ingested). And that would provide an AAF (adverse analytic finding), or "Positive" test and a violation of the anti-doping rules.
If, on the other hand, Manny's T:E ratio was below the T:E threshold, although MLB likely could go on and run the carbon isotope ratio test and confirm the existence of exogenous T (and know for certain that he was doping), because technically the test would "stop" at T:E below threshhold, the test result would still be "Negative" or "No AAF".
So ... we KNOW that Manny was on anabolics -- the blowout T:E ratio tells us that. We also know, that unless MLB is directly covering up a positive, that the direct evidence, however, wasn't "seen" by the test. Either because he used a substance that cleared his system by the time the test was taken, or because he used a substance for which the test is "blind".
As for Manny's T:E, if it was above the threshold, then MLB is covering up the subsequent positive for exogenous T. If it was just below the threshold, then MLB is playing it straight. The subsequent carbon isotope test confirming the exogenous T is "inadmissible" by protocol, b/c if you're below the threshold, the testing can't go beyond that point. (Nice, huh?!)
But ... the rules of the testing do permit MLB to demand medical records, which it did, and after Manny's doctor screwed up and forgot to scrub the hCG prescription, they were able to bust him on that.
And that leads to an answer to your question of "why athletes (like Lance Armstrong?) continue to believe that they can outsmart the testing system" ... which is because there are so many foolproof ways to beat the testing. Anyone who wants to make an effort can run a high grade, robust steroid stacking program, supplemented with hGH and insulin, have their blood levels monitored on their own, and KNOW they will be below test thresholds, with 100% certainty and confidence -- as they know all the specifics of the testing protocol.
We may never know whether MLB is simply handcuffed by a fundamentally (and deliberately) flawed testing protocol, or whether Manny stayed just below the threshold.
But we can reasonably infer the following:
(1) Manny was on a T or anabolic regimen
(2) We know by the presence of the hGC, that the regimen was heavy enough to have fundamentally altered his body chemistry to the point he needed to take the hGC to get things back to normal
(3) Manny was not an unsophisticated doper -- he managed to evade direct testing protocol.
(4) Manny's multi-substance program is of the type that requires "professional" guidance -- meaning there were people helping him, and it would be unlikely that it was just the one doctor.
(5) Because a more sophisticated program (one that would have your T:E extremely elevated, but just under the T:E ratio testing threshold, or in the alternative, that would have it above that threshold, but show no trace of any steroid the testing program tests for -- which is what we know of Manny's regimen -- rarely is the "initial" doping program for an athlete, Manny had, in all likelihood, been a doper for a long time prior. Translation: it takes a willful suspension of logic to believe he was clean while playing for the Red Sox.
But the real takeaway goes back to your Lance question ... the reality is this: MLB and the Player's Union are running a scam on unsuspecting fans. Yes, they KNOW their testing can be beat -- it was set up that way, deliberately. Yes, there are loads of guys out there today doped up. The same basic principles apply -- guys will do what they can get away with when there's an MLB roster spot on the line, when there's a competitive advantage (or disadvantage) involved, where there is that much money on the line. That includes guys who don't want to do it. They feel compelled to do it to keep up, or lose their roster spots or lose the contracts they believe they're entitled to on a "level playing field" (i.e. the Barry Bonds mindset that made him burn inside at the notion of far less talented guy like Sammy Sosa putting up superior numbers and in line for more accolades and bigger contracts).
The two last things I'll say are: first, this isn't just a baseball problem. It's across all sports, internationally. The Olympics, in particular, are largely a charade. Competitively at least. It's great spectacle, and great drama, to be sure. But the overwhelming majority of what you see isn't "natural." And second, the nature of doping is this: there aren't 1 in 10 athletes who spend years on an ever increasingly sophisticated doping program that ever get off it. They come back with their public pronouncements of having changed, but the only thing that changes is they get a heck of a lot more serious about being disciplined in sticking to the doping programs that will ensure they test clean.
Quote of the day
Asked what he thought about the A-Rod pitch tipping allegations, here's what Big Papi said he'd do if he ever got wind of a teammate doing anything like that ...
"I would beat the crap out of him. I mean, seriously. You're my teammate. I mean, I don't care if that's your brother out there. We're trying to win this game. That's not the right thing to do."
FWIW, last night when asked on air in pre-game what he thought of the pitch-tipping allegations, Orel Hersheiser admitted that rumors of pitch-tipping have been around baseball for a long time, that it could be done very easily, would require virtually nobody to know, and would be nearly undetectable in certain instances. Know what else Orel said? He said that as the pitching coach at Texas during all 3 of A-Rod's years there, A-Rod was relaying pitch signals to the Texas outfield on most pitches (for positioning). Meaning ... even if you analyzed tape of the games and could pick up a deliberate pitch signaling system A-Rod was engaged in, you couldn't bust him for pitch tipping -- even if he was engaging in it!
It's pretty straightforward, really. Division opponents play each other 18 times in a season, often in 4-game sets. One middle infielder trading with just a single other middle infielder in the division might be worth 10-20 at-bats a season. Trade with only 3 guys and you're looking at 50 at-bats.
For a guy who would normally get 15 hits in 50 ABs, that means you're looking at 35 ABs a year you'd be making outs that now you've got enhance opportunity to "convert" from out to base hit. Figure you succeed just half the time -- call it 18 extra hits in an entire season.
Seems like chump change, right?
Wrong.
Take a solid .280 hitting outfielder. In 650 ABs, that guy racks up 182 hits.
A .280 hitting outfielder makes maybe $3 million a year, struggles not to get beat out every season and never makes an All-Star team.
Now add in 18 hits.
That's 200 hits. And a .308 average. And a contract of more like $12 million, and a handful of All-Star games.
The guys at the top of MLB are banking that the casual fan doesn't know any better and doesn't understand the real ramifications here, so they can say "we're investigating", then quietly close the case when everybody's forgotten a few months later.
"never tested positive"
Stunning that people STILL don't get it no matter how much proof is piled up. There isn't 1 positive test for every 100 positive cases. MLB's testing is deliberately set up to serve a p.r. purpose of convincing people the game is "clean," while being easily beatable. It is there specifically because people seem to be suckers for the "never tested positive" line.
Ironically, Manny's screwup only serves to further underline that. The hCG positive tells you he's steroid cycler, and not a casual one, and yet he walked straight through the drug testing program clean as a whistle.** He only got tripped up b/c they screwed up on the hCG dosing. The same is true for virtually every one of the big names that were busted in the Mitchell report and since - they all got busted by other means, even while testing clean.
I promise you if you could see Manny's test results, I'm confident you'd find his levels were carefully below the T:E limits*** and otherwise all in line.
Just like they are for all the other guys out there still doping. Of which I promise you, there are loads.
**For those who aren't familiar, hCG is used to boost natural Testosterone production, which becomes necessary for long-time, heavy cycle steroid user, as all anabolic steroids are derivatives of the big-T, testosterone (T). The higher the dose of steroids or exogenous testosterone, and the longer the steroid cycle, the more likely the body is to compensate by shutting down natural T production. That's at the root of why athletes have to cycle steroids to begin with. You've got to cycle off or they have a series of cascading negative effects. Secondarily, hCG is used to boost epitestosterone levels, which is important because ... (see below)
***T/E is a threshold (read: cheaper) screen that is run before the lab goes searching for exogenous testosterone, which is a much more difficult and much more expensive test. T/E is the ratio of Testerone to Epitesterone. In the adult population, the average person's ratio is very close to 1.0. The natural range is from 0.8 to around 1.2. Someone doping T would have jacked up testosterone levels relative to epitestosterone. Just so you know, MLB's T/E threshold is 6:1. Meaning you could have nearly 6 times natural testosterone levels in your body and you wouldn't even trigger the testing of your samples for exogenous (outside introduced) T. That's right -- you can be 6 times the normal presence and test "clean." That's how much leeway there is.
Those who know the inside of pro sports and physiological enhancement know this has been going on in all sports for decades, and that most of what the general public consumes as "heroic" champions, isn't real at all.
Amazing how the press seems to have missed
... the two real bombshells in the pre-release teasers.
On the subject of doping, if the allegations in the book are true, then it means baseball's CURRENT doping testing system has been beaten with impunity. Which leads to this: if guys have had a way to reliably and consistently beat the testing, then you can be sure baseball is still rife with doping. To people inside elite athletics, this is a great big "duh." But to the average fan, I expect it would be a shock of they found out a ton of their heroes are still out there doping, and that the whole thing is being enabled by a deliberate conspiratorial con job, just the same as it was in the 90s and early 00s.
You can bet the players, owners and Commissioner's office is praying the entire focus of the story is on "the past." There is no threat in more of the same from "the past." People have made up their minds about the past, and not many want to hear about it any more. BUT if the media and public ever figure out that the current testing system is a complete public relations con job, that it can be evaded with 100% confidence by those who wish to continue doping, then it will dawn on them that the game is still rife with doping, and the competitive results they see aren't "real" at all. And eventually they'll realize the entire "anti-doping" assurances are nothing more than a giant, cunning, con job.
Worse, though, is the allegation of pitch-tipping. THAT is the real nightmare for A-Rod, and for baseball. THAT is the one they hope will be lost in conversation about steroids and hGH.
Think about this for a minute. Let's use a football equivalent analogy. Jets running back Thomas Jones has an incentive clause in his contract that gets him a $250k bonus if he breaks the 1,000 yd rushing plateau. He's in the 15th game of the season and he has 875 yards. He knows it's going to be very close on that 1,000 yds and his $250k hangs in the balance. The Jets are playing the Patriots. Across the ball on defense, playing outside linebacker is an old college buddy of Jones. Jones catches him and says "hey man, next time it's a sweep to your side, fall down and let me get clear to the secondary and pick up an extra 20 yards, and I'll signal you the next time we've got a pass play with short protection on your side and you can blitz in and get an extra sack -- which should help you get your bonus for XX number of sacks too."
Meanwhile Brett Favre is back there and has no idea. Nor do the Jets fans, nor do the millions of people who have bet the point spread. So instead of a perfect scoring pass play the Jets were going to score a TD on, instead the tipped off linebacker blitzes and decapitates Brett Favre.
Tipping pitches, IMO, is grounds for immediate and permanent expulsion from the game. That is so far over the line, it's not even a close call. And I don't think if most fans sit down and think about what pitch-tipping really is, and what the ramifications are, there would be many who would disagree with having him thrown out of baseball -- if the allegations are true.
As to whether the allegations are true ... think about it ... how would anyone ever just dream that up unprompted? The odds that someone maliciously wanted to "screw A-Rod" and came up with that? I'd say extremely low odds.
I certainly hope there are no pitchers on any of A-Rod's teams that took a line drive in the head during the late innings of a blowout game.
Think about it. You're a pitcher standing 55 feet from home plate, semi-off balance after delivering a pitch, and you find out your own teammate has just tipped the hitter it's going to be a fastball and the guy has dug in his heels and is ripping away with all his might like it's batting practice? If I had a teammate do that and I found out about it, I'd get him in the clubhouse and beat the living tar out of him. For that matter, I'm not so sure the rest of the position players wouldn't feel seriously enough betrayed that they'd want to do the same.
A guy doping to make himself a more productive teammate is something the other guys in the clubhouse can turn a blind eye to. A guy selling out his own teammates by tipping pitches? WAY over the line of the internal "code". If A-Rod was already a persona non-grata in the clubhouse, you can only imagine what it's going to be like now.
I have so little faith in the sports media, and think most fans are so brain-dead, I don't expect this will ever blow up fully. Especially given how hard MLB will want to sweep it under the rug and the lengths we know they'll go to do that.
Then again, you never know.
change and strawmen
I see no strawman in what KCMW has expressed concern about. More often than not in our political system, there is a vast gulf between campaign rhetoric, the words spoken to manipulate voters to vote a certain way, and the actions that follow.
KCMW is right to be concerned about how much "change" will be cosmetic, spin and packaging, and how much will be substantive.
This is an especially legitimate concern given Obama's first actions as President-elect, which have consisted of:
(1) Hiring as his Chief of Staff, a former investment banker known for the largess of investment banking $$ he raised for the party, and who sat on the Board of Fannie Mae and relentlessly lobbied for the deregulation that enabled the Fannie blow-up (seriously, it's not like there's a dearth of qualified people to choose from among -- would YOU choose someone who sat on Fannie's Board and presided over that?!!);
(2) Convened a financial advisory board that includes among its members:
(a) the former Treasury Secretary who engineered the dismantling of Glass-Steagall, and who as head of Goldman Sachs engineered the beginning of the massive expansion into proprietary trading that ultimately led to the blowup,
(b) the Chairman of the SEC, who engineered and presided over the infamous 2004 Rule change that let the 5 major investment banks expand their leverage, not to mention the non-regulatory ruling on CDS, who was quite literally the pivot point at the center of the two most disastrous decisions that led to the blowup,
(c) the incompetent former CEO of Xerox, who drove that company into the ground,
(d) the incompetent current Chair of Time-Warner, who destroyed massive shareholder wealth,
(e) the couple of pols who are among the most responsible for the mess that is Detroit.
When you choose as top advisors, people who were as responsible as anyone for creating the current financial mess, it's perfectly reasonable to ask "Is that change, or is it more of the same?"
p.s. Those who don't find it appalling that Obama would be inviting in former SEC Chair Donaldson to advise him on setting the economic and financial policy course, it would be worthwhile listening to this:
http://www.nytimes.com/interactive/2008/09/28/business/20080928-SEC-multimedia/index.html
"The root of the problem ..."
"The root of the problem isn't really gas consumption - it's that we're extremely mobile as a population and we buy a lot of basic stuff that needs transporting across great distances."
Given that roughly 95% of the energy consumed in human transportation is used to move around the mass of the vehicle and only roughly 5% on the human(s), I'd say an equally important part of the problem is the failure to get serious about efficiency. If we built the sort of efficient vehicles that modern technology is perfectly capable of building right now, we wouldn't even be discussing this.
We've gotten suckered into thinking the game is about the type of fuel producing the energy consumed in transporting mass, when the real game-changing power resides in the vehicle.
My modest proposal is this: Don't dump another $25 billion into the coffers of the worst run "businesses" on the planet (GM, F, Chrysler). For less than $10 billion, simply buy them. They're already effectively socialized, what with the government clearly prepared to provide healthcare and pension backing (which are the bulk of their massive liabilities). It's just that we're getting all the cost and none of the benefit this way. And we're permitting the same idiots that have collectively lost over $100 Billion over the course of the past 5 years, to have access to $50 billion taxpayer money over the course of the next 5. ABSURD.
Boot the brain-dead idiots on the current Boards and replace them. Top of the list is Amory Lovins. Then set the standards and goals, set the timetable, create large all-or-nothing incentive bonuses. And go. There's no chance that would turn out to be more costly or more bungled than the current incarnation of these companies. Empower Lovins' concepts. Direct, by legislation and directly specified regulation, if necessary, that Lovins' overhaul of manufacturing and components be implemented.
It's a crime that the vast majority of Americans have no clue what is possible and cost efficient even today, due to the massive incompetence and complicit coverup generated by Detroit.
"there's no money to do it just now"
There's over $40 billion a year in federal gas taxes going into the Highway Trust Fund. More than enough to cover federal highway infrastructure costs. There's another roughly $100 billion a year in state and local gas taxes going into state and local budgets, ostensibly for road construction and maintenance.
The problem is, government being government, those pots of money are raided for all sorts of other things, including mass transit -- regardless of cost efficiencies.
"I like that Reagan put some of the money collected by his gas tax towards public transit, too, and would definitely favor doing so again now."
It might be more accurate to say, Tip O'Neil, George Mitchell and their colleagues wrote into the 1982 Transportation bill, a requirement that 20% of the near-doubling of the Gas Tax be directed to the then newly-created Mass Transit Trust Fund (from the Highway Trust Fund). It was a good idea, well-meaning idea, but the execution, as with much of government, was atrocious and grossly inefficient. The majority of that money never made it to any useful purpose, other than supporting the creation of new bureaucracies. Even in the instances where some of the money actually went to real projects, they were often ridiculously economically inefficient, and produced little benefit. Take the south Florida Metrorail boondoggle. After two decades of operation, the numbers are clear: on a per rider basis, it would have been cheaper by a factor of 2 to have purchased each rider a brand new limousine and paid for a personal driver.
You know, of course, that I'm a big supporter of mass transit and public transportation. But there must be economic efficiencies and sensibilities. As a society, we don't have infinite capital for unlimited application. Spending wisely is more critical today than ever before.
"I think a raised gas tax is a good idea. ... But it takes Republicans like Eisenhower, Reagan, and Bush to put it into practice, apparently."
Ouch. I think that's a re-writing of history. The more than doubling of the gas tax took place during Reagan's term, true. But that emanated from a Democratic Congress, was over Reagan and his administration's objections - and done only in trade for Congress giving Reagan his massive military increases. In a nutshell, O'Neil and Co. gave Reagan huge increases in military spending which they didn't like or want, but in return got Reagan's complicity in sweeping expansion of social programs and "hidden" increases for General Revenue.
Gas taxes
Interesting that so many progressives support the piling on of regressive taxes. Sure, it can be "dedicated" via a "Trust Fund" to specific use. But the reality is, it's all general revenue and simply permits government to spend that money elsewhere, or give tax breaks elsewhere.l
By far the most economically efficient thing to do would be to overturn the policy decisions that have permitted the oil and gas industry to externalize and socialize a large portion of the true cost of their products and services.
Take the increased costs of healthcare (yes, there are quantifiable numbers for this, and they are staggeringly large), the costs of military escort and protection of the industry's infrastructure and personnel in "unfriendly" parts of the world (again, a staggeringly large number), just for starters. Tell the oil companies they can pay for their own private military protection, or they can hire the US taxpayers' battle groups and reimburse us for the cost.
They will of course, include those expenses in their accounting, and raise their prices accordingly, to produce the same 8%-10% Gross Margin they've always made (yes, the "gouging" oil companies have Gross Margin less than 1/3 of Apple's -- thank goodness we aren't going to descend into the pandering lunacy of a "windfall profits tax", as Apple reaps triple the "windfall" any oil company does).
This promotes rational economic behavior. Would alternative energy be "more expensive" if we had neutral public policy governing cost-shifting and externalities? In a word, NO. If a version of "full cost accounting" were employed so consumers could see the actual full cost of one choice versus another, we'd be miles further down the road to a more balanced energy infrastructure. Equally important, we wouldn't be wasting precious hydrocarbons (for which there is no sensible substitute in many non-fuel industrial applications), which will be needed in other parts of the economy for the indefinite future.
Simply grabbing a random tax number out of thin air isn't the smart way to go. It may be the easiest. It may be the only thing the dimwitted types like Pelosi are capable of processing. But certainly not what a smart, progressive, first-rate economy would do.
p.s. One thing more to consider about using Taxes rather than efficient markets ... when governments and their bureaucracies construct tax edifices and become dependent on them for their existence, the taxes typically remain, regardless of whether they become unnecessary or inappropriate at a future date. Take the cigarette tax. As smoking declines, so do the public costs of associated subsidization of health care, so do the revenues per pack, as sales decline. But the government still wants just as much money (which despite the dedicated "trust funds" still supports the general scale and scope of government), so taxes per pack are raised and raised and raised. Doesn't matter if you're a smoker or not, that sort of thing should ring an alarm bell. If we set a "man on the moon" 10-yr national goal, then achieve it, will the gas taxes revert or sunset at that point? Of course not. The pigs at the trough would never give up the largess of that meal.
Most especially now, as we enter a most dangerous time for the future of our country, with massive federal intervention in free markets, and a Congress led by people who have little knowledge of basic economics, and ambitious plans for government expansionism. IMO, there is even more riding on the shoulders of Barack Obama than most fully appreciate. If he succeeds, the greatest triumph (and biggest challenge) of his first term will be to fight off the lunacy of the Pelosis and Millers, etc.
"It's all starting to sound like Windows stuff now"
Bingo. And for all the ballyhoo about Microsoft's strategy being the winning model, the current model is proving to be a loser for them. Their "old" model was the winner, and their old model is where Apple might eventually want to be.
There's nothing that says it can't or wouldn't, launched at the right time, turn out to be THE tipping point event, leading to an avalanche in Apple's favor. The notion that non-locked down, non-command/control, consumer choice friendly is somehow mutually exclusive with, or contradictory of greater profitability is BOGUS.
Not to mention that it's also bogus to cast it as an all-or-nothing choice. (e.g. the OS would degrade to a disaster if forced to run on every conceivable configuration -- when there is the middle ground of a tightly regulated, narrowly limited configuration control).
re the 9th circuit
It may be the most overturned, but it's the heart of tech. And that's not the subject mater where it gets the overturns. It's also not the only place you'll find those holdings.
"shocked these guys are still in business"
I'm not. Setting aside issues of how to finance litigation and skipping straight to the merits, there is no settled law here, and a boatload of consequential issues raised. If PsyStar has managed to latch onto counsel that is willing to work on some sort of modified contingency basis (as it appears is the case), then this is hardly a laughing matter for Apple.
Start with the question of sale vs. license. You'll find case law on both sides, but notably including SoftMan v. Adobe Systems, where a California federal district court nuked the notion of "license," holding "Software is sold, not licensed."
If something's sold, then it's a minefield to try and meaningfully restrict its use, bumping up against restraint of trade.
Then there is the EULA. Again, we have case law on both sides when it comes to legality and enforceability, and nothing settled up the appellate chain. I'm sure you're well aware of the problems with boilerplate/fine print and adhesion contracts. The intersection with UCC only complicates matters.
Then there's the "tying issue" that's been such a thorn in Microsoft's side. Apple can argue it's not a monopolist and therefore not subject to the monopolist standard, namely b/c it's got a small percentage of the computing market. The opposition can argue that Apple has monopoly-equivalent control over an entire computing platform, and therefore subject.
It may sound like a laugher to think of a couple guys in a warehouse in Hialeah taking on mighty Apple's mighty legal team. But I don't think anyone would be laughing if Dell decided to crash the party and said "we're willing to pay Apple their license fee for their OS, just the same as we're willing to pay Microsoft their license fees -- why would Apple try and block us ... unless they were concerned about losing monopoly control and the ability to artificially jack up the prices of their hardware?"
Even if Apple were to win such a confrontation legally, it would be a P.R. disaster, as the achilles heel of "Mac tax" and "overpriced" and other such terms would be front and center getting splashed across the press daily.
In fact, it may be that Apple is concerned enough that it might not prevail, and for that reason has taken the matter to binding arbitration rather than the formal courtroom smack-fu route, specifically so it can avoid precedent, avoid appeal, and seal the record from public view.
I would say none of that is a particularly difficult concern b/c Apple can "break" hardware configurations with software updates and upgrades. But Microsoft didn't fare so well on that front, and that would be another road of tears with a bad ending.
Which leaves ... the strategy of using proprietary hardware, then tuning the OS to run solely on that proprietary hardware. Problem solved. Except for risking finding yourself right back to the backwater mess it got in with the PPC consortium.
I don't view this is as a joke at all. I do NOT want to be stuck back in a proprietary backwater universe again. AFAIC, competition is good for everyone, most especially the end user, and it wouldn't bother me in the least if Apple was forced to license to anyone willing to pay. For starters, I don't fear that Apple would "lose" money. As I've detailed before, only a relatively small percentage of customer revenue results from the initial box sale. And on that sale, only a portion of the profit comes from the hardware -- the bulk comes from the software (that is, if you recognize the software at market value). I think the MAJORITY of Mac purchases would still be made on Apple hardware. Apple makes high quality, compelling hardware for which most people aspire and are willing to pay up. And the "lost" hardware sales, would only see a partial loss of the initial box sale profit -- as the software sale would still be made, just through another entity. No doubt in my mind that would be more than offset by the additional software sales of an openly licensed OS, where incremental gross margin is over 95%.
Seriously Ace
You're getting ready to commit to spending roughly $2,500 on a phone and service, and you'd rather save 3%-5% on that purchase and be stuck with that piece o' junk form factor?
I can (sort of) understand if someone wants to have a non-OS X driven smartphone. But to force oneself to suffer that sorry form factor to do it? Yeeesh.
That isn't competition, that's like a screaming advertisement FOR Apple. No offense, but Aaron Task has been utterly clueless (and dead-wrong) repeatedly in the past. Citing him in support of a proposition is like making a political argument about how a presidential candidate ought to run his/her campaign, and backing it up by citing Bob Schrum's agreement as some sort of endorsement of the veracity of the approach.
Nothing Jobs says
... should be taken at face value. He has a long history of denying Apple has any interest in a market, even while he's got engineers burning the midnight oil and spending millions of Apple $$ pursuing that market.
He lies when he believes it's in the best interest of the company. He lies when he thinks it will sell more products. He lies to keep himself out of the grips of the SEC. He lies when he just doesn't want to provide an answer. He lies when it helps stoke his ego. He lies to affirm his control over information. He lies for all those reasons and many more. He may be pathological, but hey, he's OUR pathological, so it's all good. LOL.
All of which is to say, of course Jobs is well aware of the netbook market and well aware of the demand in the Mac user base for a netbook, and well aware that not every "Pro" wants to be constrained to a 15" form factor and nothing smaller. And he'll respond to those markets if and when he damned well pleases. And not a moment sooner.
About that $2.69 in normalized EPS ...
According to Tim Cook, Apple ended the quarter with "about" 2 million iPhones in the (various distribution) channel. Of course he also suggested 6 weeks inventory is the right range -- which would impute something closer 3 - 3.5 million units. Because we know the quarter started with 0 iPhone 3Gs in the channel, it's not tough to back out the channel-fill portion of sales. Using the 2 million figure, assuming cost of goods sold and taxes run straight-line proportional, then non-GAAP EPS adjustment would have been $0.93, for total adjusted EPS of $2.19
Superb. But not quite matching the breathlessly hyperbolic Jobs sales gush.
And that's assuming Cook's 2 million figure is used, rather than the 6 weeks of channel fill he seemed to imply (which would have taken the figure down to the $1.80 range).
Also worth keeping an eye on ... it's almost certain we'll see Revenue per unit falling continuously into the future on the iPhone, just as it did with the iPod. Nevertheless, it sure does appear Apple is still getting a generous bounty from ATT per user, in addition to the retail price of the phone -- they're just getting it all up-front now.
Despite the fact that I expect Apple to see a dramatic slowdown in CPU sales and growth rate on the PC side of the business (sorry, I see the new notebook lineup as less than optimal for the current economic climate), as well as no growth at all in the iPod business, I think there's all kinds of value in AAPL sub-$100. If Apple's non-GAAP earnings aren't north of $8 for FY'09, and $10+ for FY'10, I'd be very surprised.
"Samsung gives up on proposal to buy SanDisk"
Or said differently ...
"In light of greater clarity of information concerning the dimensions of the coming economic cycle, and concerning the price and availability of credit and capital, and light of the increase in difficulty for Sandisk gaining sufficient access to capital to survive the economic cycle, Samsung has elected to "fully re-characterize the nature of its negotiations in its efforts to acquire Sandisk"".
Translation: OK, suckers, you don't like $26? Let's see how $10 feels for a while, and we'll be back with our next offer ... which might be something more like $20. Reject that one, we can always withdraw it, wait for you to realize you won't be able to access enough capital to make it to the other side of the economic cycle, then offer $15. Meanwhile, enjoy the cash-burn. Hope you don't run out of money while you're waiting for us to come back. Call any time you'd like to chat. Much love, Samsung.
Microsoft backs down ... again
XP gets yet another stay of execution. Now extended to July 2009.
http://www.theregister.co.uk/2008/10/03/windows_xp_recovery
"Despite Jobs' apparent good health ..."
Wow. That's quite a leap of faith. From "that story is not true" to "Jobs apparently is in good health."
I'm beginning to think regardless of what else is or isn't wrong with him, Jobs' brain isn't functioning clearly on how best to handle this so the press gets off his back and his staff isn't regularly distracted, and Apple's business interests aren't negatively impacted when media column inches that normally give free promotion to Apple's wares, get eaten up on this garbage. (And not that Jobs has ever given much of a rip about common shareholders, but some of them are his employees, and having the share price get yanked around on rumors of his health doesn't help them focus on Apple business).
This stuff isn't going to just go away. In fact, it's likely to get worse. The current policy is a clear failure. Jobs has had to undercut the policy directly himself, and now the P.R. staff have been forced to do the same.
Time for Jobs to get a physical and clean bill of health, state that in an SEC filing, then establish the new policy that says essentially: Steve Jobs will receive regular physicals, including cancer followup checks quarterly or semi-annually. Any change in Steve Jobs' health that in any way impacts his ability to do his job or could be expected to impact his ability to do his job in the future will be assumed to have a material impact on AAPL and thus will be reported by SEC filing. In the absence of such filing, Steve Jobs can be assumed to be in good physical health and the company will answer no questions regarding his health.
Simple, straightforward, keeps the press off Jobs' back with a minimum amount of effort and little concession to personal privacy.
"more compelling at $60"
Let's see, first you show up, and without so much as an introduction, start ripping and mocking people for daring to point out that the stock price and the rumor-mill were both reflecting the high likelihood that the September event was going to be limited to iPods and music only.
Next you're talking about how you've held the stock for 4 years. And now you're ripping analysts for not having put a sell call on 4 weeks ago when presumably you believe anyone knowledgeable in AAPL would have known to sell. Then issuing your own call for AAPL to go to $60.
I guess somewhere between the post about holding AAPL for 4 years and now, you must have sold it and gone short, or loaded up on puts, right? Being as "it'll be more compelling at $60" and all.
Here we go again - Jobs health rumors
Seems some bozo filed an "iReport" citizen journalist report on CNN's site claiming local TV channel 4 had reported Steve Jobs rushed to hospital after heart attack. Spread to DIGG and all over. AAPL spiked down to $95. Then spiked right back up to $102.
Apple PR flacks respond to official media inquiries with a flat denial. Thankfully, Apple seems to have been willing to dump its "we refuse to comment on any matter regarding Steve Jobs' health" policy in an instant.
This incident, however, only serves to reinforce the unworkable nature of the "we refuse to comment on questions regarding Steve Jobs' health, it's a private matter" policy. Time for Apple to accept that Jobs' health, like that of any CEO, is material to the fortunes of the company. Even if it wasn't, the bunker-down approach isn't going to work here. It's disruptive, distracting, and causes far more problems than it avoids. It's incredibly shareholder unfriendly. And it won't change the ultimate outcome.
Scam game?
You've got enough perspective not to get caught up in minute-to-minute thinking, right? If Buffett's investment in GE is a scam, then the market will figure that out and ignore the alleged salutory benefits. In fact, it will punish GE because if there are no genuine benefits, then surely the terms of the deal are dilutive to shareholder value and that will be reflected in the future performance of the stock.
If it's a scam, you should trade it that way. Buy some puts or assemble a bear put spread.
About that short ban ...
Seems there are some companies well enough run they don't need the "protection" of this SEC sham:
http://www.clusterstock.com/2008/9/Short-Selling-Rules-In-Flux
If it was really possible to simply kill a properly run, appropriately leveraged, appropriately capitalized company by shorting it to death, does anyone believe Greenlight Capital would have asked off the list? These guys are absolutely HATED by the mindless "long-only" types, for having exposed the entire Wall Street CDS sham, for having repeatedly shown light on the LEH disaster for months and months before the lid got blown off and it collapsed. There is no shortage of people who'd like to see Greenlight get nuked.
Hang in there Annie
Not exactly sure where Mr. Appear-from-nowhere arrived from. Or why. But Mr. Appear-from-nowhere's references didn't appear to berate AAPL or promote penny stocks. If they had, we'd have nuked them.
Granted, the YouTube videos Mr. Appear-from-nowhere linked were partisan in nature. Nevertheless, there are probably a few around here who might benefit from watching them.
During the critical decision-making period for the Iraq war, there are those (myself included among them) who argued the most loyal thing an American could do at that time was question the basis for this "American" act. I think the same is true for loyal Republicans and Democrats. The most loyal thing each could do for their own parties is not to serve as reflexive apologists for them every time they are criticized, but to find when they're wrong, most particularly when they become rotten or corrupt, and fight to root that out.
You're not alone in being unsettled by the events unfolding in this "financial crisis". To the extent you find yourself in a bad mood about it, ticked off that you played by the rules, lived your life responsibly and don't like swallowing the pile of crud we're being force-fed as a result of years of ineptitude, outright corruption, and abysmal public policy, I'd say most of us are right there in the same boat. John McCain is right about one thing -- heads should roll. People should be held accountable. Republicans who fought for SEC deregulation and promoted policies that let Wall Street run wild, and Democrats who fought to corrupt Fannie and Freddie, as a means to create a hidden wealth transfer. All are responsible. And I see no reason why people shouldn't be ticked off about it. Nor any reason any of us ought not be ticked at ALL the people responsible, not just the ones who caucus with the political party with which we're not affiliated.
My own personal rant: I find breathtaking the level of denial in some, which seems to be exceeded only by their lack of effort to get past ignorance on the subject matter where their partisan compatriots are concerned. On both sides. Maybe you should share that bucket of cold water with me.
Seriously, your contention is ...
... that the credit crisis is the product not of a housing bubble and a bunch of massively over-leveraged financial derivatives based on poor quality mortgages, but of naked short selling, hedge fund "manipulative" trading practices, and the lack of an uptick rule?
This is like a passenger hanging over the bow-rail of a boat who, gee surprise, got a little spray in the face as the boat hit an iceberg and ripped a massive hole in the hull, bitching about how the spray coming over the bow is sinking the boat, and if only there was a spray-guard up there, they wouldn't have gotten wet and the boat would still be afloat.
"WTF happened to constitutional Law?"
You're confusing Constitutional law with parliamentary procedure. Although it breaks with custom, there's hardly a violation of law in the Senate voting first on a bill, then passing it on to the House.
Remember, unless the House and Senate version of any bill are identical, they go to Conference Committee to have the differences negotiated anyway. Doubtless in this instance every effort will be made to get identical bills, but if buying the last handful of House votes necessary for passage involves adding in a few extra goodies to the House version, that's what will happen. And then the leaders' hand-picked conferees on the Conference Committee can make a match however they want.
"I won't miss em..."
Maybe you should. If they're blowing up, it means they've managed to screw the pooch and transfer a whole pile of net worth out of their accounts into the accounts of others. Including, potential any of us.
Plus, by their nature, when hedge funds get in trouble, they bail with such force they create temporary dislocations in pricing that provide incredible opportunity for those who know what they're doing.
It's the ones that aren't blowing up that I worry about!
"as if its being naked shorted to death"
"funny they took away shorting financials for us and it has no effect either way what nonsense"
Always the nefarious explanation in the absence of facts. Not nonsense at all. HIG got hammered b/c it had its credit rating hacked today. And it has been getting sliced and diced for a couple weeks because it's been fessing up to have AIG, Fannie and Freddie paper, among other crapola. Not picking on you in particular, but at some point, people have got to stop reflexively blaming their own poor decisions on the bogeyman behind the curtain, the conspiracy theory du jour, etc. It only further cripples the ability to make good decisions, when one digs in and feels the need to defend and rationalize. Again, not you, personally, but there's a growing amount of that around here. Never once did I see Zeev ever do that. When he screwed up, he quickly recognized it, and acted accordingly. Even if he couldn't figure out where he was wrong, he would default to accepting that he must be wrong, b/c the market was telling him so. And he'd flip around and recover what he'd lost and then some. I think if Zeev was still here, he'd have a better way of saying that than I. Maybe he wouldn't say it at all. But I suspect in his own dignified and polite way, he would.
I kindly decline your invitation
Dear Apple, Inc. Wall Street analysts,
Thank you for the invitation to your earnings and price target downgrade party for AAPL, which I must, by way of this note, kindly decline. While I understand it's fun to "run with the herd," I seem to have misplaced my pitchfork and torches, and thus probably wouldn't fit in anyhow.
Sincerely,
Gene "Herman" Munster
p.s. I'm keeping my $250 price target. See ya north of the deuce.
http://www.appleinsider.com/articles/08/09/30/apple_still_better_positioned_than_most_firm_says.html
Richard Gardner? Paging Richard Gardner.
Yo, Richard. You're LATE.
http://blogs.barrons.com/techtraderdaily/2008/09/30/citi-cuts-estimates-on-apple-price-target-cut-to-170
Definitely a candidate for least helpful call of the day.
AAPL tumbles for 6 weeks straight, from $180+ all the way to $105. And THEN you send around the note to Citi clients suggesting they might not want to be aggressively long AAPL?
NOW??
OT: another view of the vote
Kudos to the NY Times for this ...
"25% is the next year earnings growth"
FY'08 Consensus EPS => $5.22
FY'09 Consensus EPS => $6.00
Consensus earnings growth Y/Y => 14.9%
FY'09 consensus is falling. Because analysts update their forecasts periodically, they tend to trail the trend. Which is why in good times they have to keep raising their estimates, and in bad times they have to keep cutting them. In other words, it's a near certainty that the FY'09 number is, at the moment, greater than the actual estimates if you could poll the analysts today, and that even if you had the truly current consensus estimate, it would would likely be too high.
Big picture, macro, the growth rate in earnings Apple has enjoyed over the past several years is unsustainable: chief among the reasons is that it's not possible to reproduce the 10-fold increase in operating margin (from 3% to 30%), which enabled earnings to grow dramatically faster than top-line. Bottom line, AAPL isn't going to be able to command the same PE multiple. This is nothing new for anyone who's been reading this Board and keeping up the company though.
"there were no effects on the regular economy ... "
"there were no effects on the regular economy, and the average man did not know that anything had happened."
Funny, I'd say the opposite, I doubt you can find an "average man" who doesn't know anything is happening, and thinks this has no effect on the "regular economy". (Osama bin Hiding in a Cave doesn't count).
Check the local papers around the country, they're running stories daily about how the credit crunch is already whacking auto sales, home sales, business wholesale ordering and inventory, etc.
There are people out there with perfect credit scores, high liquid net worth, high-end jobs, who are being quoted for mortgages at 11% - 14%. That's like the bank saying it's "open" but with the front doors locked.
The "regular economy" is already being hit, and it's going to get hit even harder.
Share buyback ...
Not sure they'd want to do a direct wash, b/c that would just highlight the insider money grab. Reducing cash and directly neutral on EPS, maybe not so good.
Announcement of a large buyback, though, perhaps funded by the deferred revenue from the iPhone, would be salutory, IMO. Would be greeted extremely well by Wall Street, and likely a very popular move among shareholders, some portion of whom have wanted one for years and years.
Beautiful timing ...
With all the banks diluting their shareholders with capital raises, what better time for Apple to announce ... it will dilute its shareholders with more executive stock grant handouts. Ouch. One thing for this to happen when the stock is high-flying, quite another at a level when loads of people are going to be underwater (and thus aggressively diluted). Then again, it's never been any secret that AAPL's management would sell retail shareholders up a river for their own pecuniary grabs.
Morgan Stanley cuts AAPL
... from Overweight to Equal Weight.
New price target: $115
"like WB on friday, they come out of nowhere"
It may be a practical impossibility to read loads of financial statements, but WB didn't come out of nowhere, it's been on the "dead" list for ages, among those who read balance sheets. In fact, they went directly on life support the moment they made the deal for Golden West 2 years ago. I just think there are a lot of people out there who prefer to mock "evil short sellers" and any kind of sober analysis as somehow manipulative or artificial. There is an unbelievable denial factor that, I suppose, leads to the mind wiping out all the warning signs and bad news along the way, leaving a great "surprise" when the ultimate dive gets taken.
RBC cuts AAPL from Outperform to Sector Perform (eom)
OT: "Social Security is in pretty good shape"
Presumably you mean in "good shape" the way someone waddling around at 100 lbs overweight with a 300 cholesterol reading, and advanced coronary artery disease is in "pretty good shape" compared with the patient in cardiac arrest on the operating table undergoing quadruple bypass surgery.
OT: CRA
"Frank and his pals". This has become something of a absolute article of faith among the right wing; kind of a stabbed-in-the-back/it-wasn't-our-fault meme."
It isn't an article of faith, it's a mountain very plain facts. Nor is disappointment at the way the CRA was corrupted, the sole province of "the right wing," although I understand the need of some to reflexively view everything in those "good guy / bad guy," simpleton terms. As for the "right wing" they bear enormous responsibility for a whole host of other disastrous complementary power-plays, including the absurd regulatory waiver granted the Big 5 investment banks by the SEC, and going downhill from there.
"after all, the sub-prime mortgages where this all started are, by definition, non-conforming loans that FNMA and FDMC couldn't touch."
You have this literally backwards. Suggest you go back and see what Clinton-Frank et al did to CRA beginning with the first major overhaul/expansion in 1995.
There is hypocrisy enough on both sides of the aisle. Each has failed us. It seems, however, for some, it's never permissible to point that out. If you want to pretend Barney Frank wasn't a major driving force behind the expansion and enlargement of CRA, including legislation and regs that paved the way for both a reckless 4-fold expansion of Fannie and Freddie's leverage, as well as dramatic loosening of lending standards. Given the legal requirements of CRA, lenders were pushed into loaning to people who, by definition, couldn't afford and thus couldn't qualify for, mortgages under the old standards. And if they didn't, they'd be sued.
However well intentioned CRA was, I know of no government program that has been as wholly and thoroughly corrupted, and delivered so little good at such a staggering cost.
OT: run on the bank
According to the Office of Thrift Supervision, the official figure was $16.7 billion yanked from WaMu between Sep. 15 and judgment day. Figure there's been quite a bit yanked out of the National Citis and their ilk at the same time.
On the bright side, those piles of cash equivalents being yanked from shaky institutions all week have been flowing into Treasuries, covering up what in all likelihood otherwise would have been a major hole from the Asian players freezing in their tracks. Imagining what might have been the response if that demand hadn't been there doesn't exactly give me the warm and fuzzies. As it stands, the next few auctions should be more than a little interesting.
Naturally, not once in this mess have we heard "National Debt" cross the lips of any of our "leaders". Nor the nearly $60 Trillion it now approaches when all liabilities are included. Nor how none of these "bailouts" amount to squat if we don't face the fact that we either scale back our entitlement programs and military complex soon, or we are toast.
Now here's your quote of the day:
"The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing."
That's from Barney Frank, in 2004, as he led the fight to block creation of agency authority in the Treasury Department to oversee Fannie and Freddie. At a time when the CRA (Community Reinvestment Act) mandates were being expanded by Frank and his pals to force Fannie and Freddie to use implicit taxpayer guarantees to support that expansion. Frank wanted people who could pay for mortgages to get them anyway, and didn't give a damn that taxpayer money was going to get stuck eventually paying the difference, if not paying for those mortgages en toto.
Wall Street's chutzpah in all this has been matched only by the Frank-types, who were still trying to cram into the bailout bill, a pipeline to funnel billions more into "affordable housing initiative" right up to the bitter end. Read: taking even more money we borrow from the Chinese and steering in the form of giveaways ... because we haven't gotten ourselves in enough trouble yet with that approach.
Reassuring isn't it, to know it's the very same Barney Frank getting together with Wall Street's own point man Paulson to assemble this deal? Always nice to see the 80% in the middle of America getting their pockets picked for the benefit of the 10% on either end of the extremes.