June 21, 2006

The Party of “Pump and Dump”?

I know, we’re not supposed to make anything of the following:

  • Daily Kos comrade and “Crashing the Gates” co-author Jerome Armstrong’s history with the SEC that includes charges of forum “touting” (at a place called Raging Bull) of a stock that has proven virtually worthless without disclosing his being compensated for doing so, and anecdotal evidence that there were more examples (my SOB Alliance Post [original source for much of the material is OH02, Tom Maguire with links to docs and to the NY Post story.
  • Jerome Armstrong goes to work for Mark Warner, a “DLC” (Democratic Leadership Council) type who one would expect Kos to despise. Voila! Kos thinks Warner’s at least an OK guy, and maybe then some.
  • The fact that Kos went to the trouble of distributing an e-mail to his followers “requesting” that they NOT blog on the Armstrong matter (“starve it of oxygen”), and warning ominously that he is “exploring legal options” against those who have dared post or link to stories about his and Armstrong’s situation.

Nah, I’m sure it’s all purrrrrfectly innocent (and there’s more at TNR, RedState, RedState again, Ace, Hot Air, a timeline at TKS, and too many others to mention).

It’s just as innocent as it would be, and would “of course” be treated the same by the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media), if someone in the conservative blogosphere had issues in their stock-trading past or was inexplicably shifting his or her loyalty.

UPDATE: Mark in Mexico points out that Kos has a lot of illustrious historical company that would have benefitted from having things “ignored for now.”

Generally Good News: Mortgages Delinquencies and Foreclosures Fell in 1Q06 …..

Filed under: Economy — Tom @ 3:42 pm

….. but there is legitimate reason to be concerned about what the future holds in the subprime market.

This Marketwatch story (requires free registration) follows up on concerns expressed at yesterday’s AM-Coffee post that the higher percentage of subprime mortgages in the mortgage loan mix might be masked in statistics reported in Mortgage Bankers Association’s quarterly survey that was released Monday.

Well, the current news is indeed good:

Foreclosures, delinquencies decrease

….. The seasonally adjusted delinquency rate for mortgage loans on one- to four-unit residential properties dropped to 4.41% in the quarter, down from 4.7% in the fourth quarter of 2005, according to the survey. The rate was up from the same quarter last year, when it landed at 4.31%.

But remove the impact of Hurricane Katrina, and the delinquency rate would have been 4.31% — level with last year, the association said. The destruction and dislocation caused by the storm is still having a significant impact on delinquency rates in Louisiana and Mississippi.

….. The survey also said that the percentage of new foreclosures (loans that entered the foreclosure process during the quarter) was 0.41%, down from 0.42% in the fourth quarter. It also was 0.42% in the first quarter of 2005.

The foreclosure-inventory percentage (the percentage of loans in the foreclosure process at the end of the quarter) was 0.98%, down from 0.99% in the fourth quarter. It was 1.08% in the first quarter of 2005.

The survey found that all adjustable-rate and fixed-rate loans had lower seasonally adjusted delinquency rates compared with last quarter, except for subprime ARMs. The delinquency rate for prime ARMs decreased from 2.54% to 2.30% over the quarter; the rate for prime fixed-rate loans decreased from 2.21% to 2%; and the rate for subprime fixed-rate mortgages decreased from 9.7% to 9.61%. Subprime ARMs increased from the rate of 11.61% to 12.02%.

The results cover more than 41.3 million loans. Of those, 31.4 million were prime loans, 5.6 million were subprime loans and 4.3 million were government loans.

I’ll take the relatively good news compared to what I expected, but it should trouble at least a few people that roughly 1 in every 9 or 10 subprime mortgages (estimated result of combining fixed and ARM subprimes above) is delinquent.

Additionally, this tease to a publication I wasn’t willing to pay $50 for offers this warning as to where the subprime market may be heading:

Trend Toward Lower Credit Concerns MBS Investors

The subprime market’s gradual slide down the credit spectrum in the pursuit of bolstering production volume worries mortgage-backed securities investors gathered at this week’s American Securitization Forum annual meeting in New York.

“Originators had to feed the beast and that opened up credit to people who 10 years ago could not get a mortgage,” said Daniel Castro, partner and managing director at investment firm GSC Partners. …

Translation: Since early 2005, if not before that, subprime lenders have basically been closing deals with anyone having a pulse to keep the deal flow going.

Since it takes time for most loans to go bad, we won’t see significantly negative results, if any, from the recklessness just described for a while. So hold the champagne for at least a few quarters.

Charitable Giving Increased in Real Terms in 2005; AP Finds Its Inflation-Adjustment Calculator

Filed under: Economy,MSM Biz/Other Bias — Tom @ 1:33 pm

An AP report is here, for the PDF-averse.

A 4-page PDF from the Giving USA Foundation lays out more detail, and leads with this:

Giving USA, the yearbook of philanthropy, estimates
Americans gave total contributions of $260.28 billion for 2005, growth of 6.1 percent (2.7 percent adjusted for inflation). The year 2005 saw extraordinary philanthropic response to three major natural disasters. About half of the $15 billion increase in total giving from the revised estimate of $245.22 billion in 2004 is attributable to disaster relief giving. The other half reflects donors’ commitments to other causes that matter to them.

Very roughly, this is 2% of GDP and 3% of after-tax GDP.

It’s interesting that AP was able to locate their inflation adjustment calculator for their article on charitable giving and even graphed real vs. nominal charitable giving, all to remind us that 2005 was the second-best year on record, just behind 2000 in real terms:


But it seems you almost never see the “record-high gas prices” looked at in real terms. When you do, you find that gas prices, even now, are not at a real “record” level.

Carnival of Ohio Politics No. 28 Is Up!

Filed under: News from Other Sites — Tom @ 12:47 pm

And it’s here.

Contrary to “Expert” Predictions, Post-Sarbanes-Oxley Audit Fees Continue to Balloon

Filed under: Economy,Taxes & Government — Tom @ 11:35 am

A subscriber-only link at Investment News has the details, and some eye-popping stats:

Audit fees for SOX compliance on rise
June 20, 2006

Despite predictions that audit fees associated with the Sarbanes-Oxley Act would fall, the cost of corporate governance compliance continues to get more expensive for public companies, according to sister publication Crain’s Chicago Business.

Since federal accounting reforms were enacted in 2002, public companies with less than $1 billion in annual revenue have seen audit fees nearly triple in the past four years, according to a recent study by law firm Foley & Lardner. Audit fees were more than $1.2 million for fiscal year 2005 compared to $332,000 before accounting reforms.

In 2004, public companies with less than $1 billion in revenue spent slightly more than $1 million on audit fees, the study showed.

Sarbanes-Oxley was enacted in 2002 to establish financial reporting standards at a time with accounting scandals rocked corporate America. Companies knew first-time costs would be high to implement the requirements, but many industry analysts expected expenses to decline year after year.

“In general, costs are coming down,” said Patrick Scott, managing director of internal audit for Protiviti consulting firm, which assists clients with Sarbanes-Oxley. “I think most companies probably would say the costs are higher than they would like.”

While the overall cost of corporate compliance fell 16% in 2005 from the previous year, the study showed that continually increasing audit fees are keeping enforcement fees from falling further. Public companies with less than $1 billion in annual revenue paid nearly $3 million in 2005, almost triple the amount before reforms were enacted.

“If you look at audit fees, they went up 16% [from last year] and the reason why we find that interesting is that audit fees are the single-biggest category of costs,” said Thomas Hartman, a partner at Foley & Lardner and the study’s author.

Legal fees were down nearly 40%, corporate governance set-up costs fell nearly 60% and the amount of productivity time lost while people were pulled off regular jobs to work on compliance fell 46%, the study found.

And the smaller you are, the more you’re getting hosed:

After examining more than 850 proxy statements, Mr. Hartman found that audit fees rose 22% for Standard & Poor’s small-cap companies, 6% for S&P mid-cap and 4% for S&P 500 firms.

This is all the more reason to expect this thought process to continue:

Fed up with the SOX cost burden, 21% of companies that responded to law firm Foley & Lardner’s latest study say they are considering going private. Other options respondents are considering include selling the company (10%) and merging with another company (8%).

That’s almost 40% of public companies considering ways to not be public companies in their current form.

When is somebody going to stand up and say that the SarBox busywork just isn’t worth it?

Kelo New London Update: Lots of Reporters Are Already There

Filed under: Economy,Taxes & Government — Tom @ 9:05 am

The Reporters Are Coming There

It’s obviously a coincidence, but there are lots of reporters in New London, CT this week covering the story of a Coast Guard cadet’s court-martial trial on rape charges at the Coast Guard Academy, which has been located in New London since 1910.

This story is a very big deal. Late last night a story about the opening of proceedings, where the cadet pleaded not guilty and the prosecution began its case, had (get this) 453 related items (essentially the same story carried in hundreds of outlets) at Google News:


The New York Times appears to have a reporter assigned to the story, as does The Associated Press, and I would expect that many other news organizations have reporters on hand.

While there will certainly be no shortage of drama in “the first court-martial of a student in the Coast Guard Academy’s 130-year history,” journalists present for the trial could see if Susette Kelo or Mike Cristofaro, who can’t be more than a couple of miles away, have anything to say about their years of trials and tribulations at the hands of their city fathers and our alleged system of justice. They might consider looking up Neild Oldham, co-chairman of the Coalition to Save Fort Trumbull, who, with the help of the One New London Party and concerned citizens, orchestrated a 12-day petition drive that this past Monday dropped 586 signatures (200 more than needed) on New London’s City Council requesting a referendum on whether or not the city should evict the final two Kelo holdouts. If Governor Jodi Rell’s June 22 settlement deadline is missed, eviction proceedings against the holdouts may begin as early as next week. They should really try to find dissident One New London Party Councilman Charles Frink, who Reason Magazine described thusly (and who I expect would be a great interview):

Frink is a pretty fascinating figure himself: a playwright and composer who made his first foray into politics last year, going door-to-door at the age of 77.

So there’s no shortage of interesting newsworthy material elsewhere in New London this week for the journalists who are already there and willing to exercise some initiative.

Bizzy’s AM Coffee Biz-Econ-Life Links (062106)

Free Links:

  • iTunes movies may be coming — There’s a report that “Apple (is) in Talks to Sell Full-Length Movies Via iTunes.” The hangup appears to be the pricing formula:

    Apple’s Chief Executive Officer Steve Jobs is said to want one flat price of $9.99 per movie, whereas studio executives want a range of prices that mirrors videos and DVDs at retail stores which, generally speaking, run from discount titles at a few dollars apiece up to $19.99 or more for new releases.

    I know I’m going to catch heck for this, but just for fun I’ll say it anyway — I support Steve Jobs’ attempts to achieve movie neutrality.

  • Horse manure headline of the week — “Big cities reluctant to target illegals” — The translation is “Big cities refuse to carry out their law-enforcement duties.”
  • Housing news: Housing starts were up, building permits were down, and neither result should be particularly troubling.
  • Another country, Japan, thinks it can make a better search engine. The link questions why governments think they can do better. I find it hard to believe they can in an initial launch, and even if they do, whether could keep it better. I would also be worried that the government would start influencing the objectivity of search results for reasons relating to political correctness, corruption, or both.
  • Potentially bad news for pirates and paparazzi

    White light ‘blinds’ film pirates

    A device that could foil movie pirates who covertly record films in cinemas has been developed in the US.

    The prototype is able to locate the position of a digital camera, before overwhelming it with white light to render any recorded images useless.

    The Georgia Institute of Technology team says the invention could also prevent clandestine photography.

  • Are these things George Bush’s fault too?
    - In New Orleans, Money Is Ready But a Plan Isn’t
    - Crime Rising, New Orleans Asks for National Guard

Positivity: 6 Year-Old Saves Grandmother’s Life

Filed under: Positivity — Tom @ 6:02 am

Brandon Bennett had just received training in how to help his grandmother if she ever had a low blood-sugar collapse. One week later, she did, and nearly died. She lived, because he saved her, and is a 2006 National 911 Hero. Wait til you read exactly what he did:

Monday, June 12, 2006

….. The National Emergency Numbers Association will honor Brandon (Bennett) as the 2006 National 911 Hero for the quick thinking that saved his grandmother’s life.

The association, based in Arlington, Va., lobbies nationwide for technologically enhanced and universal telephone emergency numbers. Members will be at the David L. Lawrence Convention Center, Downtown, this week for the group’s 25th annual convention and trade show.

Brandon was nominated by Allegheny County 911 operators who heard a tape of the call he made May 23, reporting his grandmother was unconscious. Doctors said later that her blood sugar had dropped dangerously low.

At the ceremony, Brandon, of Penn Hills, will be awarded a medal. Allegheny County Chief Executive Dan Onorato will proclaim today as “Brandon Bennett Day.”

“I’m so excited,” said Kathy Dye, Brandon’s grandmother. “He definitely deserves it.”

Dye, who lives four doors down from the boy who calls her “Luvbug,” survived an advanced case of non-Hodgkins lymphoma in the 1980s. Radiation and chemotherapy treatments caused her body to overproduce insulin. At any time, Dye said, she can slip into a coma.

For five years, she’s had her medical-alert dog, Luna, a Samoyed-German Shepherd mix, watching over her. But on May 23, Brandon was Dye’s guardian angel.

Dye was baby-sitting and had given Brandon and his two younger brothers baths. As the tub was draining, Luna entered the bathroom in search of a drink. Her tail hit the door, and she locked herself in.

At the same time, Dye was watching TV in the living room, and the boys were watching a movie in her bedroom.

“I thought I was fine, because Luna always tells me when I’m going to go into a coma,” Dye said.

But the next thing Dye remembers, paramedics were in her house, testing her blood sugar. It was 91 — too high, Dye thought fuzzily, for her to be feeling this way.

It was only after she regained full consciousness that she learned how Brandon saved her life.

With Luna trapped in the bathroom, frantically chewing the door frame apart trying to help Dye, Brandon dialed 911. While he waited for paramedics, Brandon found Dye’s glucose in the refrigerator and gave her a shot.

Only a week before, Dye and his mom, Misty Revino, had sat him down and explained he was big enough to help out if “Luvbug” ever got so sick she couldn’t get up.

“The thing that gets me is that he had to make the shot,” Dye said. “There’s fluid in a needle, and you have to stick it in a bottle, shoot the fluid in there, shake it up until the glucose pill dissolves, draw the fluid back out, get the air out of it and then stick it in. And he got all the glucose out. Even I can’t do that.”

Revino said she, too, was stunned to learn her young son had saved his grandmother’s life.

“He just called me at work and said, ‘Mommy, I couldn’t wake Luvbug up, so I gave her a shot and called 911. She’s OK now,’” Revino said. “I was in shock. I handed the phone to my boss because I didn’t think I was hearing this correctly, but she said no, it was right.”

Brandon, who is looking forward to wearing a new suit for the ceremony, said Sunday that he was born to help his Luvbug.

Brandon and Dye have shared a special bond since his birth, Revino said.

Dye said it might have something to do with the wish she made as she was struggling to overcome cancer.

“My dream, as I was going through chemotherapy, was to live to see my children grown and my first grandchild,” Dye said. “He’s my first. And when he was really tiny, he would tell me that God made him just for me.

“Well, I guess he did make him just for me.”