He hasn't returned yet from his summer palace

He'll call you when he has the time, Guys;

The White House has informed a U.S. House of Representatives Committee that the newly appointed U.S. Ebola "czar" will not be available to testify later this week at a hearing examining the U.S. response to the deadly virus, a committee official said.

Probably too busy studying up on medicine, seeing that he's not a doctor. But, that should leave more time for questions for others;

The committee, chaired by California Republican Representative Darrell Issa, a frequent Obama critic, has also invited Dr. Nicole Lurie, the assistant secretary for preparedness and response within the U.S. Department of Health & Human Services, to testify.

Lurie has confirmed that she will appear, the committee official said.

And that woman is a doctor! So, we'll be curious as to why she isn't the Ebola Czar.

We're from the government...here to manipulate your stock

Insurance Journal tells a little more about the trial in Washington over how American Int'l Group was treated as a cash cow by the Treasury and the Fed, to the ultimate benefit of Goldman Sachs;

Under questioning by [plaintiff Starr's attorney David] Boies yesterday, [AIG ex-CEO Edward] Liddy [who was handpicked by Goldman Sachs executives, and former Goldman executives running Treasury, to head AIG] testified that he supported a reverse 20-1 stock split in 2009 only to boost AIG’s lagging share price.

“We were in danger of being de-listed by the New York Stock Exchange,” he told Boies. “I didn’t want that to happen.”

 Our bold in the above.

[Plaintiff] Starr contends the reverse split was designed to allow the government to get a desired proportion of common stock without winning a shareholder vote. The maneuver reduced the number of issued shares while leaving untouched authorized shares.

The effect of that tailoring was to enable the government to convert preferred shares to common stock from the undiminished pool of authorized shares, endrunning a shareholder vote against increasing the number of authorized shares, according to Starr’s lawsuit.

Normally, a company's CEO owes a fiduciary duty to his shareholders. (Again, our bold in the above two paragraphs.)

Boies asked Liddy, as an experienced businessman and former head of the Goldman Sachs Group Inc. board audit committee, if he’d ever heard of a reverse split that applied only to issued shares.

And didn't get a responsive answer;

“I just didn’t focus on those mechanics,” Liddy testified.

Boosting the share price “was the only reason I wanted it done,” he told the court.

But there has already been evidence produced in the trial that it didn't much matter what the hand-picked by Goldman CEO wanted. Only what the government wanted mattered;

Earlier in the week, [plaintiff attorney] Boies confronted Sarah Dahlgren, the New York Fed’s monitor of AIG after the bailout, with documents suggesting the government was running the insurer.

Boies showed Dahlgren an April 2009 e-mail to her from one of the bank’s attorneys asking for comment on a draft version of an AIG proxy statement and noting an upcoming call to discuss the document.

AIG executives were “not on the invite list” to participate in the call, Dahlgren said.

Advantage; plaintiff.

Boies also showed the court a February 2009 e-mail, in which a Federal Reserve official told Treasury Department counterparts that his bosses wanted the New York Fed “to have people lined up to replace the board of directors and assign a successor to Liddy.”

Game; plaintiff.

Another witness, Margaret McConnell, a former deputy chief of staff to then-New York Fed President Timothy Geithner, was shown a March 2009 e-mail she received from a colleague stating that Liddy “has no decision-making authority and is paralyzed at this point by the USG’s [US Government's] role.”

Set; plaintiff.

The rich are different from you and me; Piketty returns their calls

Unfortunately for Thomas, the second richest man in the world got there by thinking (mostly) clearly about economics;

Piketty was nice enough to talk with me about his work on a Skype call last month. 

Though patronizing your adversary works for Bill Gates too;

As I told him, I agree with his most important conclusions, and I hope his work will draw more smart people into the study of wealth and income inequality—because the more we understand about the causes and cures, the better. I also said I have concerns about some elements of his analysis, which I’ll share below.
I very much agree with Piketty that:

• High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.
• Capitalism does not self-correct toward greater equality—that is, excess wealth concentration can have a snowball effect if left unchecked.
• Governments can play a constructive role in offsetting the snowballing tendencies if and when they choose to do so.

We fail to see why any of the three above points of agreement between Gates and Piketty are true (or at least supported by some empirical evidence). Especially that last one--how's that LBJ inspired War on Poverty been going? However, when the loveable tycoon with the bad haircut gets going, he's formidable;

Take a look at the Forbes 400 list of the wealthiest Americans. About half the people on the list are entrepreneurs whose companies did very well (thanks to hard work as well as a lot of luck). Contrary to Piketty’s rentier hypothesis, I don’t see anyone on the list whose ancestors bought a great parcel of land in 1780 and have been accumulating family wealth by collecting rents ever since. In America, that old money is long gone—through instability, inflation, taxes, philanthropy, and spending.

You can see one wealth-decaying dynamic in the history of successful industries. In the early part of the 20th century, Henry Ford and a small number of other entrepreneurs did very well in the automobile industry. They owned a huge amount of the stock of car companies that achieved a scale advantage and massive profitability. These successful entrepreneurs were the outliers. Far more people—including many rentiers who invested their family wealth in the auto industry—saw their investments go bust in the period from 1910 to 1940, when the American auto industry shrank from 224 manufacturers down to 21. So instead of a transfer of wealth toward rentiers and other passive investors, you often get the opposite. I have seen the same phenomenon at work in technology and other fields.

Through the simple mechanism of an entrepreneur coming along with a better idea that fills the needs of the consuming public, at prices they willingly pay. Which is in stark contrast to government programs that fail to meet their promised goals. (Remember Bill's point #3 above; 'governments can play a constructive role...')

And Gates is clearly correct here;

I am also disappointed that Piketty focused heavily on data on wealth and income while neglecting consumption altogether. Consumption data represent the goods and services that people buy—including food, clothing, housing, education, and health—and can add a lot of depth to our understanding of how people actually live.

Which is, in the early 21st century, pretty darn well for even the lowest income earners in the USA, Canada and Europe. Thanks to all that Kapital improving labor productivity.

Need a monument? Look around at the empty shelves

Granma says, be there or be on our list of counterrevolutionaries;

The Hugo Chávez Institute for Advanced Studies [of Hugo Chávez] will promote research into the philosophy and legacy of the Bolivarian leader beginning with a series of conferences across Venezuela, the President of the institute, Adán Chávez, announced on Tuesday.

The Governor of Barinas state told the press that another of the objectives is to “encourage participation, be proactive, to work with his legacy and strengthen the homeland that he (Chávez) left us.”

And they know how to 'encourage participation' in Venezuela.

Bombs away

Instead, the British Museum would prefer Londoners look at the porcelain rhinoceros in the room;

Germany is a new country, and a new country needs a new history, commented the director of the British Museum, Neil MacGregor, in an interview with "Radio Times." The Scottish-born director says he is on a mission to change the British perception of Germany - and encourage people to reflect on it.

....Guests may ... wonder about a porcelain rhinoceros included in the showcase. The template for the sculpture stems from a 1515 creation by Renaissance artist Albrecht Dürer. MacGregor says the template is one of 10 objects that reflect modern Germany. Craftsmen and women at Dresden's famed Meissen porcelain manufactory create the rhinoceros based on Dürer's model, even though the artist never saw a rhinoceros himself.

And never hoped to see one.  Though he'd surely rather see one than be some of the other exhibits included.

Sahara to import sand?

Fidel Castro's trained Venezuelan seal keeps insisting that socialist prosperity is just around the corner;

The news did not go down well among Venezuelan president Nicolás Maduro’s opponents: according to Reuters, the country is to receive a shipment of crude from Algeria on October 26.

Well, opponents can be dealt with in Venezuela. Foreign exchange, is another matter;

Venezuela produces extra heavy crude in oil fields located in the southeast of the country. Because it is so dense, the oil needs to be blended with other components before being processed at local refineries.

Which have to be paid for in USD or Euros.

The high cost of naphtha, the diluent used to transport the viscous crude along the pipelines, was making a big dent in Pdvsa’s [USD] accounts. Now, according to Reuters, Caracas has decided to sign a contract with Algeria to purchase Saharan Blend, an extra light crude that is easier to refine. This should ease the burden on the state oil company, which already contributes $96 of every $100 that the state collects in taxes.

The measure should go mostly unnoticed by the general population. President Maduro is so far refusing to raise the price of gas – which is practically given away....

Which is why they don't have toilet paper. Have they noticed that?

Anatomy of the next train wreck

They who forget their history, are bound to be bullied into repeating it by the next politician who comes along;

Fannie Mae , Freddie Mac and mortgage lenders are nearing an agreement that could lower barriers and restrictions on borrowers with weak credit, a move that would expand access to home loans amid the sluggish housing recovery.

Which worked out soooooo well, the last time.

The move by the mortgage-finance giants and their regulator, the Federal Housing Finance Agency, would help lenders protect themselves from claims of making bad loans, according to people familiar with the matter.

Well, we couldn't have anyone blamed for doing something that, the last time it was tried, nearly destroyed the economies of numerous nations. Someone's feelings might get hurt.

In previous years, Fannie’s and Freddie’s regulator had tried to shrink their outsize role in the mortgage market. However, under new director Mel Watt, who took office in January, the FHFA has turned to expanding mortgage access, partly to ensure that tight credit doesn’t stifle the housing recovery.

That's the same former congressman Mel Watt who Republicans objected to being named to head the agency, because they feared exactly this kind of thing.

“He is a good man up for the wrong job,” Sen. Lamar Alexander (R-Tenn.) said.
Said Senate Minority Leader Mitch McConnell (R-Ky.): “America needs someone with technical expertise and experience to run Fannie and Freddie's conservator and ensure that we don’t repeat the same mistakes that led to the last financial crisis. And taxpayers need someone who will protect against future bailouts. This is the second FHFA nominee that President Obama has sent who did not meet those standards."

And, how did Watt get confirmed when the Democrats didn't have the 60 votes necessary to overcome the Republicans threat to filibuster his nomination?  They changed the rules, that's how;

In October, Watt failed to clear a 60-vote threshold necessary for his nomination to advance. But a recent controversial Senate rule change, which requires only a simple majority vote to get around procedural hurdles, cleared the way for Watt’s confirmation.

This is where we came in;

It is the thesis of this paper that, in an attempt to increase homeownership, particularly by minorities and the less affluent, an attack on underwriting standards was undertaken by virtually every branch of the government since the early 1990s. The decline in mortgage underwriting standards was universally praised as an 'innovation' in mortgage lending by regulators, academic specialists, GSEs, and housing activists. This weakening of underwriting standards succeeded in increasing home ownership and also the price of housing, helping to lead to a housing price bubble. The bubble increased the number of housing speculators with estimates indicating that one quarter of all home sales were speculative sales prior to the bubble bursting.

And when that bubble burst....