reality-based educator

I have been busy with life, work, and other things and haven't been able to update the blog lately. I will be returning to regularly scheduled blogging in a short while.

Wow - the dirt surrounding the Rudy Giuliani campaign just gets worse and worse:

Judith Regan, the book publisher who was fired by the News Corporation last year, asserts in a lawsuit filed today that a senior executive at the media conglomerate encouraged her to mislead federal investigators about her relationship with Bernard B. Kerik during his bid to become homeland security secretary in late 2004.

The lawsuit asserts that the News Corporation executive wanted to protect the presidential aspirations of former Mayor Rudolph W. Giuliani, Mr. Kerik’s mentor, who had appointed him New York City police commissioner and had recommended him for the federal post.

Ms. Regan makes the charge at the start of a 70-page filing that seeks $100 million in damages for what she says was a campaign to smear and discredit her by her bosses at HarperCollins and its parent company, the News Corporation, after her project to publish a book with O.J. Simpson was abandoned amid a storm of protest.

In the civil complaint filed in state court in Manhattan, Ms. Regan says the company has long sought to promote Mr. Giuliani’s ambitions. But the lawsuit does not elaborate on that charge, or identify the executive who she alleged pressured her to mislead investigators, nor does it offer details or evidence to back up her claim.

...

One of Ms. Regan’s lawyers, Brian C. Kerr of the firm Dreier L.L.P., said she possesses evidence to support her claim that she was advised to lie to federal investigators who were vetting Mr. Kerik. But Mr. Kerr declined to discuss the nature of the evidence.

“We’re fully confident that the evidence will show that Judith Regan was the victim of a vicious smear campaign engineered by News Corp. and HarperCollins,” Mr. Kerr said.

FOX News and the NY Post - the TASS and Pravda of the Republican Party and specifically the Giuliani campaign.

How much of this dirt can get tossed on Rudy before the press finally turns away from stories about how low cut Hillary's tops are and actually takes a look at what a dirty crooked scumbag Rudy is?

You know, I looked at E*Trade's online bank awhile ago. They were offering the highest interest of any online banks at that time and I was thinking about opening an account. But then I read how they were having some subprime mortgages issues and decided to look elsewhere.

I'm glad I did:

Shares of E*Trade lost more than half of their value after the company said it expected additional asset write-downs and an analyst suggested that it might be forced into bankruptcy protection. While the bank assured customers that it remained “well capitalized by regulatory standards,” the analyst, Prashant Bhatia of Citigroup, theorized that a rush of withdrawals might leave the bank without enough funding to operate.

E*Trade has already warned that this year’s profits would be hurt by the subprime crisis. But the picture grew even more grim late Friday, when E*Trade said it expected to take additional write-downs on its $3 billion portfolio of asset-backed securities, which includes second-lien loans and C.D.O.’s.

What was potentially most unnerving to Wall Street was that E*Trade did not put a number on the size of the latest write-downs. E*Trade also withdrew its previous earnings forecasts, which had already been lowered several times this year.

“Management believes it is no longer beneficial to provide earnings expectations for the remainder of the year,” E*Trade said in a statement.

Mr. Bhatia, the Citi analyst, responded by cutting his rating on E*Trade to “sell” from “hold,” citing a “higher probability of a run on the bank.” About half of E*Trade’s deposits, or $15 billion, are in accounts that contain more than $100,000, he said in a report dated Sunday. These account holders are the most likely to bolt, because bank deposits above that amount aren’t insured by the Federal Deposit Insurance Corporation.

If customers rush to withdraw their money, E*Trade could be forced to hold a fire-sale of other assets to generate capital. The resulting losses could wipe out its tangible equity, Mr. Bhatia wrote.

E*Trade's stock fell 60% today. It's now worth less than $4 a share.

Here's how the stock has done in the past year:



POSTSCRIPT: The advertiser on the website where I got the chart of E*Trade's stock performance over the last year was E*Trade.

Wonder how much longer they'll be in business?

Here we go:

HONG KONG (MarketWatch) -- Crude oil topped $98 a barrel and gold futures rose as high as $848 an ounce Wednesday after comments from a senior Chinese official suggesting China should consider diversifying some of its foreign reserve holdings sent the dollar to fresh lows.

Gold prices spiked to multi-decade highs on safe-haven buying amid concerns that higher oil prices and dollar weakness could lead to inflation. The front-month contract for bullion leapt $20.03 to $843.70 an ounce in recent London trading, adding to the $12.60 rise Tuesday that took bullion to its highest close since 1980.
Oil for December delivery touched $98.46 a barrel in electronic trading, before easing to $98.19, up $1.49 from the New York close.

Cheng Siwei, vice chairman of the Standing Committee of the National People's Congress, said Wednesday in Beijing that authorities should consider the appreciation of currencies such as the euro when the country purchases foreign bonds with its $1.43 trillion stockpile of foreign-exchange reserves, according to media reports. Later in the day Cheng reportedly said his remarks had been misinterpreted.

The Fed looks like it's going to be coming in with another rate cut next month as oil looks like it will top $100 today or tomorrow, as food and energy costs sky-rocket and as the dollar hits all-time lows.

Australia actually raised interest rates yesterday because of inflation worries.

Here in the U.S., we don't count increased food and energy costs as inflation so we don't have to worry about inflation.

That's why the Fed can continue to cut rates and stoke increases in commodity and equity prices.

Inflation, what inflation?

Enjoy the rate cuts. I know I am. My bank cut my savings rate by 50 basis points today.

Since I get paid in dollars, my savings isn't worth all that much anyway.

I guess the message is clear.

Borrow and spend, borrow and spend, borrow and spend.

What the hell, the dollar's not worth anything anyway.

From the Washington Post:

Republican presidential candidate Fred Thompson has been crisscrossing the country since early this summer on a private jet lent to him by a businessman and close adviser who has a criminal record for drug dealing.

Thompson selected the businessman, Philip Martin, to raise seed money for his White House bid. Martin is one of four campaign co-chairmen and the head of a group called the "first day founders." Campaign aides jokingly began to refer to Martin, who has been friends with Thompson since the early 1990s, as the head of "Thompson's Airforce."

Thompson's frequent flights aboard Martin's twin-engine Cessna 560 Citation have saved him more than $100,000, because until the law changed in September, campaign-finance rules allowed presidential candidates to reimburse private jet owners for just a fraction of the true cost.

Martin entered a plea of guilty to the sale of 11 pounds of marijuana in 1979; the court withheld judgment pending completion of his probation. He was charged in 1983 with violating his probation and with multiple counts of felony bookmaking, cocaine trafficking and conspiracy. He pleaded no contest to the cocaine-trafficking and conspiracy charges, which stemmed from a plan to sell $30,000 worth of the drug, and was continued on probation.

Thompson's campaign said the candidate was not aware of the multiple criminal cases, for which Martin served no jail time. All are described in public court records.

The Thompson campaign whines in response to the story that "There's not a campaign in the world that has the ability to research every one of its supporters going back more than 20 years."

Can you image if HRC used that excuse about Norman Hsu instead of giving back the $800,000 that Hsu raised for the Clinton campaign?

Can you imagine if HRC was flying around in a plane paid for by a coke dealer?

Oh, the hand-wringing and teeth-gnashing that story would engender in the usual Beltway CW crowd.

I wonder if this story will even get mentioned by Tweety Bird, Pumpkinhead and the rest?

So far they've managed to ignore the "Rudy knew Kerik was a made guy in the mob" story while doing all they can to expose the "corruption" of the Clintons.

I guess we're going back to the future - the Clinton Rules are back in session.

If the Clintons do it, it's a crime; If Saint Rudy or Good Ole Boy Fred Thomspon do it, it's just a mistake.

Mayor Bloomberg always says how business holds people accountable for their actions and we need to add some of that accountability to public education.

I wonder if he means this kind of accountability?

A crisis at Bear Stearns Cos. this summer came to a head in July. Two Bear hedge funds were hemorrhaging value. Investors were clamoring to get their money back. Lenders to the funds were demanding more collateral. Eventually, both funds collapsed.

During 10 critical days of this crisis -- one of the worst in the securities firm's 84-year history -- Bear's chief executive wasn't near his Wall Street office. James Cayne was playing in a bridge tournament in Nashville, Tenn., without a cellphone or an email device. In one closely watched competition, his team placed in the top third.

As Bear's fund meltdown was helping spark this year's mortgage-market and credit convulsions, Mr. Cayne at times missed key events. At a tense August conference call with investors, he left after a few opening words and listeners didn't know when he returned. In summer weeks, he typically left the office on Thursday afternoon and spent Friday at his New Jersey golf club, out of touch for stretches, according to associates and golf records. In the critical month of July, he spent 10 of the 21 workdays out of the office, either at the bridge event or golfing, according to golf, bridge and hotel records.

Mr. Cayne evidently didn't court business on the links, as some CEOs do. "The golf course for him was an escape," says John Angelo, a hedge-fund client and frequent golf partner. Another golf partner, talk-show host Maury Povich, says: "Believe it or not, many words are not exchanged about business." During the bridge event, at a time when Bear's executive committee in New York was meeting almost daily, Mr. Cayne took part by phone, then played bridge most of the afternoon.

...

Attendees say Mr. Cayne has sometimes smoked marijuana at the end of the day during bridge tournaments. He also has used pot in more private settings, according to people who say they witnessed him doing so or participated with him.

After a day of bridge at a Doubletree hotel in Memphis, in 2004, Mr. Cayne invited a fellow player and a woman to smoke pot with him, according to someone who was there, and led the two to a lobby men's room where he intended to light up. The other player declined, says the person who was there, but the woman followed Mr. Cayne inside and shared a joint, to the amusement of a passerby.

And of course when it came time to hold somebody accountable for the hedge fund melt-downs, it wasn't Jimmy Cayne who took the fall.

Oh, no - other guys got fired while Jimmy Cayne played bridge and golf and got high.

Heckuva job, Caynie!

Makes the Bush administration guys seem professional.

POSTSCRIPT: Bear Sterns co-president Warren Spector took the fall for the hedge fund. meltdown.

Oil hit more than $96 a barrel in overnight trading and Bloomberg News says traders are betting it's going to go as high as $100 or $125 a barrel before the end of the year:

Nov. 1 (Bloomberg) -- Oil traders increased bets that December futures will reach $125 a barrel because of possible disruptions to Middle East supplies and rising demand.

Traders held call options to buy 2,526 contracts, each representing the right to buy 1,000 barrels, of December oil at $125 in New York as of Oct. 29, from 1 lot on June 29, New York Mercantile Exchange data show. Bets on $100 oil are also surging: Traders held options to buy 49.7 million barrels of December oil at that price on Oct. 30, up from 30 million barrels on Jan. 2.

Crude oil for December delivery rose to a record $96.24 a barrel in New York today, the highest since the futures began trading in 1983. Prices have soared 19 percent the past month as demand pared inventories, a weaker dollar spurred investors to switch into commodities, and political tension in Iran and Iraq attracted speculative buying.

``A few years ago, when triple-digit oil was talked about, it was tempered by negative responses,'' said Anthony Nunan, deputy general manager of risk management at Mitsubishi Corp. in Tokyo. ``Slowly, it's becoming a reality. It's not crazy anymore, it's a reasonable target.''

The Fed says don't worry energy inflation isn't really inflation.

But when you look at the price of oil, don't you think it's going to cost a lot more to heat homes and businesses this winter?

Won't businesses be passing on the higher energy costs to consumers, as Procter & Gamble and some other companies promised they would this week?

Isn't that inflation?

The Fed says no.

Apparently to the Fed, only higher wage costs count as inflation.

No wonder they keep saying we've been in a low inflationary period - most people haven't seen real wage growth since Georgie and Dick overthrew the Gore administration back in January '01.