Most Interesting Timing

The mortgage settlement being worked on between nearly all state attorney generals and the five largest mortgage services is coming to the close. As pointed out on Naked Capitalism here, here, and here this settlement is looking like a slap on the wrist for the servicers with an extra helping of moral hazard.  The state is absolving them of further liability and prosecution. This stinks of more state shielding of [bankers, bond holders, unions] with large bailouts, little consumer relief and no criminal investigations.

How many prosecutions have there been during this entire crisis?  Subpoenas?

Most interesting is the timing of the settlement - before Christmas.  The best way to give bad news is to do it before a holiday when it will get forgotten.  That is Public Relations 101 - give the bad news when nobody will notice it.

I expect to see the settlement next Wednesday or Thursday of next week.

Further Reading:
Calculated Risk
Mish's Global Economic Trends Analysis

Obama Failed Math

Obama proposes to spend 3% of GDP to get a 2% boost - no thank you.

Obama's big jobs plan, according to economists at Goldman, Moody's, and JPMorgan, will boost GDP 2%. What happened to the 1.5 multiplier in the 2009 mega stimulus, which never materialized. The 2009 plan projected further that unemployment would not go over 8% with the ARRA. Notice the bold claims from the administration are not quite so specific. Expect to hear the stories of roads to nowhere, pet projects, programs that cost $400,000 per job, and an unemployment rate that does not go down to the claimed 7%. This program will NOT create 1.9 million jobs and unemployment will go up when labor force participation is factored in.

Government jobs plans don't materially create jobs on net. This plan spends over 3% of GDP to get a hoped for 2% GDP boost – there is no money back guarantee. We are borrowing the economy toward insolvency. The ability to print money does not change this.

References:

Bloomberg Article

Greek Bonds

Greek bonds are priced in expected recovery - not a borrowing rate.

Here is a 3 year chart of 1yr Greek Government Bonds:

Whither thy Euro?

Giant Phillipine Salty

Video of a very large salt water crocodile captured alive in the Phillipines

State Insurance Subsidies for the Wealthy

North Carolina and other states create a situation where private insurance are disallowed to charge rates commensurate with coastal property risk. With the rate restrictions, the insurance companies stop issuing policies since it is a huge liability. To supplant private insurance, NC and other states step in as the insurance provider of last (only) resort. The state provides below cost risk, backed by taxpayers, to coastal property owners. The state, being the rule maker, creates reserves that will likely prove inadequate in a bad year.

The outcome is to subsidize risk by lowering the cost of ownership thus creating moral hazard. With the artificially reduced rates, more people are encouraged to develop coastal properties. This means the taxpayers are on the hook for ever bigger payouts. According to the Wall Street Journal article below, these taxpayer backed policies are up 82% since 2005. Homeowners and taxpayers far from the coast and damage pay to rebuild, generally wealthy property owners, beachfront vacation homes.

Here is a quote from this article

Homeowners insured through companies other than the Beach Plan would have to bail out the Beach Plan only if a "one-in-134-year" storm hits, officials estimate.

Still, critics say the worst-case scenarios underscore deeper problems with insurers of last resort. Many of the pools are in the same uncomfortable spot as North Carolina, with capital cushions that could be wiped out by one mega-storm, or several midsize ones.

In addition, by trying to keep rates affordable for homeowners, the last-resort insurers help fuel coastal development that puts homeowners across the state at financial risk, some critics say.

Recoveryless Recovery

Last week's Q2 and Q1 GDP were, in a word, ugly. We appear to be in a recoveryless recovery. Below a chart from Calculated Risk highlighting unemployment compared to other recessions going back to 1948.

David Rosenberg of Gluskin Sheff & Associates, predicts a 99% chance of recession by 2012. He left the 1% margin for wiggle room. This is a balance sheet recession and he views this more of a continuation of the recession absent the massive fiscal stimulus covering up the downturn. Watch David here.

Linux to Mac Using AFP

I needed to move many files from my Fedora 14 Linux machine to my iMac. Samba, also known as SMB or Windows File Sharing, was being difficult trying to connect from Fedora to my iMac. The solution it seemed was to use AFP (Apple Filing Protocol). By default Fedora does not appear to have this enabled. So off to Google to find the answers.

First, I found that Linux supports AFP. On Fedora 14, it involves three utilities/services, netatalk, avahi, and afpd. To install these services, perform the following commands. I expect you have sudo or su access and know how yum works.

sudo yum install avahi netatalk

Once yum installs those packages you must configure the services.

Add the following to the end of your /etc/netatalk/afpd.conf file:
- -tcp -noddp -uamlist uams_randnum.so,uams_dhx.so,uams_dhx2.so -nosavepassword -advertise_ssh

Next, edit /etc/netatalk/netatalk.conf to ensure proper configuration. The following values need to be set:
ATALKD_RUN=no
PAPD_RUN=no
TIMELORD_RUN=no
A2BOOT_RUN=no
CNID_METAD_RUN=yes
AFPD_RUN=yes


To configure sharing of folders edit the AppleVolumes.default file. For example to configure the sharing of a folder named "Pictures" in the user Tom's home directory (/home/tom/Pictures) add the following line to AppleVolumes.default:
/home/tom/Pictures allow:tom rwlist:tom options:usedots,upriv

The AppleVolumes.default, as well as the other files mentioned, is well documented regarding options and settings.

Apple's Bonjour service is called mDNS on Fedora. To configure mDNS by defining a service for Avahi by creating the file /etc/avahi/services/afpd.service:
<?xml version="1.0" standalone='no'?>
<!DOCTYPE service-group SYSTEM "avahi-service.dtd">
<service-group>
<name replace-wildcards="yes">%h Xserve</name>
<service>
<type>_afpovertcp._tcp</type>
<port>548</port>
</service>
<service>
<type>_device-info._tcp</type>
<port>0</port>
<txt-record>model=Xserve</txt-record>
</service>
</service-group>


Then add mDNS to the hosts: line:
hosts: files mdns mdns4_minimal [NOTFOUND=return] dns
Configure the services for system startup with the following:
#chkconfig netatalk on
#chkconfig avahi-daemon on

Start the services:
#service netatalk start
#service avahi-daemon start

If either was already running change "start" above to "restart".

Open firewall ports 548 tcp to allow connections. Run "nbplkup" to ensure the Netatalk service is running. For me it displayed nothing although others have gotten the following:
"localhost:AFPServer" 65280.31:128
"localhost:netatalk" 65280.31:4
"localhost:Workstation" 65280.31:4


References

• http://www.techienote.com/2010/12/appletalk-on-fedora.html
• http://www.kernelhardware.org/appletalk-file-server-on-fedora-linux/

Eurozone in Debt Crisis

Reuters has some beautiful charts and graphics on the Eurozone Debt Crisis. Hava a look.

Hat tip to Kathy Lien

Bicycle

Most would say you should not, some try, and a few make it look easy. This is one of the few.

Killing Mac Defender

Mac Defender (and Mac Protector) is malware it is not a virus familiar to most Windows users. It is installed only with the approval (usually through artifice) of the user. Mac Defender is successful in that it has achieved a bit of social engineering and that is about it. Ask anyone who has had to remove a windows virus. That process can take many, many hours and an in-depth understanding of many aspects of the Windows operating system. Even expert users may submit and resort to familiar "format and re-install".

To stop the Mac Defender malware you simply close the application and delete the ".app" from the applications folder and either restart or logout and login.

Be safe kids and don't install stuff just because your friendly web page banner ad says you need to or it is free.

CDC Zombie Preparedness

Prepare for the zombies! The CDC has a preparedness page for when zombies attach.

http://emergency.cdc.gov/socialmedia/zombies_blog.asp

No Love on Valentine's Day [MERS]

So MERS cannot act as an agent of the banks in mortgage transfers on Bloomberg.

Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has no right to transfer the mortgages under its membership rules, a judge said.

MERS holds about 50% of all residential mortgages in the US so the impact is non-trivial. This is bad timing because, according to Case-Shiller, housing is starting to turn negative again. The Case-Shiller Index is a very lagging indicator so price depreciation is probably further along than indicated in the index.

Business Unfriendly Government

Seahawk Drilling has filed for bankruptcy protection. Seahawk is an offshore oil and gas service and drilling company working in the Gulf of Mexico. They do not do deep water drilling. In fact, they specialize in contract drilling and exploration of depths up to 300ft. Seahawk employs 494 people and many jobs may be lost.

The reason for the filing:

Houston-based Seahawk said it's been hurt by a slowdown in Gulf of Mexico drilling following the BP oil spill last April. The government has imposed tough new rules and standards that have sharply slowed offshore drilling.

Read more: Seahawk Drilling

The impact is being felt thanks to the heavy hand of a government moratorium on all drilling in the Gulf. A ban that has landed the Obama Administration's Interior Department in contempt of court for failing to rescind the moratorium. The Interior Department continues a de facto ban by failing to approve any new projects. The insult in all of this is the Interior Department, read taxpayers, are required to pay the legal fees of the group that brought the suit. The outcome of the (implicit) moratorium will be even more dependence on foreign oil and the exit of valuable capital and expertise to other countries.

This is the problem when your funding is other people's money. Ignoring a judge's order by any private company risks that organizations' own capital - their choice, at their peril. Wasting taxpayer money is not acceptable but is beginning to be a pattern of behavior with the current administration. The administration continues to push forward with ObamaCare after being struck down in Federal Court (see references) as well.



References:
Bankruptcy
http://www.newsobserver.com/2011/02/12/985468/summary-box-seahawk-drilling-seeks.html
Contempt on Moratorium
http://www.bloomberg.com/news/2011-02-03/u-s-administration-in-contempt-over-gulf-drill-ban-judge-rules.html
Ignoring Ruling on ObamaCare
http://www.csmonitor.com/USA/Justice/2011/0131/White-House-vows-to-implement-health-care-reform-despite-judge-s-ruling.

From an article on WebMD I would re-word this:

The costs of treating heart disease are expected to triple by the year 2030, creating an “enormous financial burden” for millions of Americans, the American Heart Association says in a new policy statement.

To this:

The costs of treating heart disease are expected to triple by the year 2030, creating an “enormous financial burden” for millions of Americans, many of whom don't even have heart disease, the American Heart Association says in a new policy statement.

Since we are trying to shift the cost of care from the individual to the taxpayer.