COUNTERCOLUMN: All Your Bias Are Belong to Us

A commenter who writes in with the nom de plume of "occupiers out of Iraq" writes:

The Iraqi shot in the field was apparantly [sic] a farmer cutting his grass with a sickle. If it was [sic] a legitimate kill then they wouldn't have needed to plant the wire spool on his body.

Wrong on both counts. Or, at least, you cannot make that determination from the information available. Regarding the first assertion: We are, if you haven't noticed, fighting an insurgency. Really. Do try to keep up, ace. And since we're fighting an insurgency, we're not fighting a uniformed army of full-time professional warriors.

That means that many of the combatants will actually have day jobs.

What's more, when we're fighting in farmland, a certain number of them are going to be farmers.

Therefore, the fact that he was a farmer cutting his grass with a sickle is dispositive of nothing. It means only that he was cutting grass with a sickle.

The people who were at the scene had a visual on him. (That's how he was shot.) They recognized him as someone they had seen engaged in a firefight against Iraqi police shortly beforehand. True, they have a vested interest in lying. But no one, to my knowledge, is alleging that. If you didn't notice, ace, murder charges were dropped. Why? Because there was insufficient evidence - despite an investigation and the collection of statements from witnesses and a trial - to determine that this soldier was lying about the sickle-wielder being a known combatant.

But somehow, you, from the safety of your living room, privy to none of the evidence, know better.

Right.

Second assertion: Just because it was a legitimate kill does not mean that the soldiers would not have felt the need for a throwaway piece of evidence on the body (although if they were my troops, they'd have to do better than just a spool of wire to fool me.)

The soldiers in question could have felt that they would not be adjudged fairly by their chain of command for a variety of reasons, regardless of the facts on the ground. The decision to plant the evidence was a wholly separate question from whether or not this grass cutter was a combatant. He could have been Osama Bin Ladin himself, and if the command climate was paranoid or overly legalistic (i.e., CENTCOM), then the soldiers still would have felt the need to plant some evidence to deflect even false charges.

I'm not saying we should tolerate it. I'm just saying that's what you get once a command has a reputation for stupid witch hunts against honest soldiers, or allows their JAGS to override the reason judgments of commanders.

Again, just because the soldier planted a spool of wire on the grasscutter's chest, it does not follow that he was not a combatant - a legitimate target under the rules of engagement and the law of land warfare.

Back to the commenter:

As for the other one, he did accidentally stumble into the snipers' hide, but as came out in the court martial of Sandoval (and reported in the Washington Post on 28 September), the man "was not armed and had his hands in the air when he approached the soldiers. Hensley "asked me if I was ready [said Vela]". I had the pistol out. I heard the word 'shoot'. I don't remember pulling the trigger"... Vela said that as the Iraqi man lay convulsing "Hensley kind of laughed about it and hit the guy on the throat and said 'Shoot again'. After he [the Iraqi man] was shot, Hensley pulled an AK-47 out of his rucksack and said "This is what we are going to say happened" Vela said."

So that's cold-blooded murder of an unarmed man who had his hands in the air and who by dumb luck happened to stumble on the snipers' hide. Nothing to be proud of, and (as if any further proof was needed) vividly illustrates why the military is not at all capable of investigating itself any more than O.J. Simpson would be of investigating himself for the murder of his ex-wife and Ron Goldman.

Dude. Were you born this stupid? Or did you have to take lessons?

The military did, in fact, investigate itself, and is still pursuing charges against Vela. Nobody is arguing that Sandoval killed this unarmed man. Not even the prosecutors argued that Sandoval killed him. They were arguing that Sandoval, the junior soldier on the team, didn't do enough to stop someone else from shooting the man.

And yet the drooling morons on the prosecution team - rather than get his testimony against Vela as a witness, tried to get him on premeditated murder anyway.*

Maybe he had a chance to stop Vela, and maybe he didn't. I rather doubt that he did. In either case, though, Sandoval was not guilty of murder.

And that's exactly what the jury found.

You may feel differently. If you support that logic, you probably also support the vigorous prosecution of Yoko Ono on capital murder charges because she failed to stop Mark David Chapman from shooting John Lennon.

Moron.

Anybody still wonder why the U.S. military has no credibility whatsoever?

I think it's pretty well established that the Army has substantially more credibility with the American people than it's elected overseers in Congress.

The military has much more credibility with the public than laywers and journalists, as well.

Seeking credibility with half-wits like you would be a colossal waste of energy.

Splash, out

Jason

*You may have a point about the military being unable to investigate itself. I mean, with JAGs this bad, it's a wonder they can file a brief without strangling themselves on the elastic band.

Labels: Army, soldiers' issues

John Coltrane and Eric Dolphy. India.

Labels: Music

Army of Duped.

Too bad, 'cause I like the guy and he's usually got a terrific blog.

Labels: Media, milbloggers

The Washington Post looks at efforts to neutralize IEDs.

Really, when it comes to anything having to do with SIGINT and Electronic warfare, the less that's said, the more's the better.

It's not the public's business what we might be jamming or not jamming. But check out the whole article, because there's more to it than that, and it's definitely worth a read. (Unfortunately, it might be worth the read if you're a moojie, too).


My take on counterIED war: If you have to jam, you're already too late.

The best counter IED technique isn't jamming signals; it's the cordon-and-search raid on good intelligence.

The second best is a skilled sniper with a well-adjusted scope.


Splash, out

Jason

Labels: Army, soldiers' issues, Warfighting

CBS, the pride of the American news media, breathlessly reports:

REPORT: Countrywide CEO Cashed Out.

The CBS report is merely following up on a much more detailed LA Times report.

Both fail utterly to get to the root of the story.

The problem isn't that Mozilo cashed out a lot of stock options. That's entirely legitimate, and no one is alleging that he failed to disclose his trading in accordance with company policy and the law.

This is the most widely predicted and predictable bubble in a generation. Mozilo would be a fool not to have lightened up (though he still should have maintained a significant long position out of principle. My issue is that as far as I can tell, he has no long position.)

The real problem is that even as Mozilo was quietly unloading his own shares, Countrywide was loading up the company with debt to buy by back millions of shares at prices management obviously thought were inflated (around 40 bucks).

Actually, that buyback program was initiated almost exactly at the same time that Mozilo began selling.

Oh, and you also read it here on Countercolumn.

I am not long Countrywide, except via Weitz Value.

It's tempting. It trades at 5x official earnings (I mentally adjust that to more like 8 to 9 times "real world" earnings, and trades at 20 to 30 percent off book value. It is less than 10% into subprimes. It is about 40% into adjustables, but those adjustables are spread across the United States, and not concentrated in California (in contrast to someone like Wells, which is a western franchise, and even Washington Mutual, which is overexposed to California, which surprised me to learn.)

Countrywide also recently executed a large buyback of shares around the 40 dollar mark last year. Shares are now trading at around 18.

It's very tempting - with a nice dividend in the meantime to pay me for waiting for a recovery.

But I look at their CEO, and he is selling shares as fast as his options vest. He doesn't seem to be retaining any of them personally, and therefore I distrust him as an owner-manager.

I know. Please. Try not to gush.

What's more, it is this seeming mismatch between the CEO's own trading actions and the COMPANY BUYBACK ITSELF that will expose Mozilo and the directors to legal liability. The buyback is a key option, because it's the buyback, not the insider sales, that arguably represent a violation of fiduciary duty to shareholders.

Both the LA Times and CBS completely miss the story. But it was all in the insider trading filings and the 10K filing with the SEC, clear as day.

It doesn't take a lot of visual acuity to perceive a lightning bolt. Mozilo's stock sales and cashless option exercizes have been a matter of public record since the day they began.

Further, Countrywide's been a staple of financial news for months.

The fact that the LA Times and CBS are just now waking up to the fact that the CEO has been selling like crazy - and STILL somehow blows the real story - ought to be a screaming hint about why you shouldn't trust the drive-by-media for business news.

Splash, out

Jason

Labels: economy, investing, Media, Real Estate

PTSD, credit card bills, a guy with too much house for the money, the son of an immigrant, a sex scandal, and even a quote from Paul Reikhoff.

Yeah, go figure.

Oh, and John Murtha makes an appearance, too, at the end of the article.

I'm not sure why, but my bullshit alarms are sounding off all over the place on this one.

Labels: Media, soldiers' issues, VA, veterans

...and it seems to me that the Politico gets it exactly wrong.

Frankly, I don't understand this ruling at all, and I wouldn't be surprised if it is appealed by the Justice Dept. and/or House general counsel's office on behalf of Murtha. Murtha, who can say some inappropriate things once in a while, was clearly acting in his capacity as a lawmaker when he made the comments and is thus protected by the Speech or Debate Clause from any type of prosecution for official acts.

Therefore, this case should have been dismissed, and I hope it will be. It's not that I agree with what Murtha said. I don't know enough about the incident to have an opinion whether Wuterich or the other Marines did anything improper or illegal. But Murtha has a right to say what he did under the Speech or Debate Clause, even if he was wrong about what happened. When we start restricting what members and senators can say in the performance of their jobs, then we are really in trouble as a country.

As Stormin' Norman would say, that's a bunch of bovine scatology.

If those Marines can demonstrate damages, then Murtha committed a tort, and may properly be held liable for those damages.

It is not neccessary to have committed a crime in order to commit a tort. People are held liable for noncriminal negligence all the time. And O.J. Simpson, famously, was held liable for a tort even after being acquitted of the criminal charge of murder.

Further, there's nothing in the law that provides lawmakers extra-special immunity when besmirching, slandering, libeling or defaming citizens to the press. And that's not just me talking. That's the Supreme Court of the United States.

Indeed, they weren't exactly amorphous about making the point:

2. The Speech or Debate Clause does not protect transmittal of information by individual Members of Congress by press releases and newsletters. Pp. 123-133.

(a) There is nothing in the history of the Clause or its language suggesting any intent to create an absolute privilege from liability or suit for defamatory statements made outside the legislative Chambers; precedents support the conclusion that a Member may be held liable for republishing defamatory statements originally made in the Chamber. Pp. 127-130.

(b) Neither the newsletters nor the press release here was "essential to the deliberation of the Senate" and neither was part of the deliberative process. Gravel v. United States, 408 U.S. 606; Doe v. McMillan, 412 U.S. 306. P. 130.

(c) The newsletters and press release were not privileged as part of the "informing function" of Members of Congress to tell the public about their activities. Individual Members' transmittal of information about their activities by press releases and newsletters is not part of the legislative function or the deliberations that make up the legislative process; in contrast to voting and preparing committee reports, which are part of Congress' function to inform itself, newsletters and press releases are primarily means of informing those outside the legislative forum and represent the views and will of a single Member. Doe v. McMillan, supra, distinguished. Pp: 132-133.

3. Petitioner is not a "public figure" so as to make the "actual malice" standard of proof of New York Times Co. v. Sullivan, 376 U.S. 254, applicable. Neither the fact that local newspapers reported the federal grants to petitioner for his research nor the fact that he had access to the news media as shown by reports of his response to the announcement of the Golden Fleece Award, demonstrates that he was a public figure prior to the controversy engendered by that award. His access, such as it was, came after the alleged libel and was limited to responding to the announcement of the award. Those charged with alleged defamation cannot, by their own conduct, create their own defense by making [443 U.S. 111, 113]

That's about as clear as it gets.

The decision? 8 to 1. Or 7 to 2 depending on how you slice Justice Stewart, who filed a separate opinion concurring in part and dissenting in part.

Slam dunk.

Splash, out

Jason

Good grief! I almost forgot about the Navy's contribution to the "phony soldier" phenomenon, Amorita Randall!

Labels: Army, The Left

Looking at the newspaper on my lap right now, the acquittal of the sniper I referenced in my last post seems to be referring to a different incident than the one the Purple Avenger excoriated me over last week.

The acquitted sniper, SPC Jorge G. Sandoval, was originally accused murder, but was convicted instead of planting a coil of copper wire on one of his kills, near Iskandaria. The jury found him guilty of this offense, which is different than murder.

The Iraqi who was shot was cutting grass in a field using a scythe when he was killed, and was thought to be an insurgent who had disguised himself as a farmer after battling Iraqi soldiers just minutes earlier, according to the New York Times.

In another incident, some Iraqi walked into the sniper hide position. Another sniper, SGT Evan Vela, shot and killed him. Sandoval was charged with murder because he did nothing to stop Vela from shooting him. Vela is charged with murder.

Again, I have no opinion about the facts in these particular cases; I leave the fact finding up to the commanders and members of the military jury, where it properly belongs.

It's wrong to use 'throwaway evidence' by planting weapons or contraband on corpses of people killed while unarmed. But why are our soldiers going into battle with a coil of copper wire in their pockets to use as a throwaway?

I'll tell you why: Because they no longer trust their commands and JAGS to use any prosecutorial discretion and common sense.

Splash, out

Jason

Labels: Army, law

I'm glad.

I expressed some reservations a few days ago on this blog, because I'm not too cool with the notion of greasing even terrorist scumbags once they were in police custody already, but I was content to let the fact finding run its course.

It has. The charges were dropped.

Even better, so was the terrorist scrote.

Splash, out

Jason

Labels: Army, law

So Rush Limbaugh's in trouble for using the term "phony soldiers" on his radio show, in a dialogue with a caller.

Here's the source material.

I read the transcript. And I also heard the exchange, via a radio replay today.

Rush was right. The Media Matters take is simply dishonest. There's no other way to put it.

It was clear to me that neither the caller nor Rush were referring to real soldiers who have come out against the war, but to fakes who have come "out of the blue," in the caller's words. Fakes who were either never in Iraq or Afghanistan in the first place, or who were in Iraq but whose stories are demonstrated to have been false.

There is controversy over Rush's use of the plural "soldiers." The idiot wing of the Democratic party - which is pretty much all of them, these days, argues that Rush could not have been referring to Jesse MacBeth, the most recent and outrageous example of a phony soldier now sentenced to jail time for falsifying VA benefit claims, because he used the plural term.

But for those of us who have been having fun at these scumbag's expense for a while, it was easy to recognize who Rush was talking about. And MacBeth was not the only one, by a long shot.

It was clear to me that Rush wasn't referring just to MacBeth, but also to Micah Wright, who also traded on a phony status as a Ranger Battalion veteran in creating anti-war propaganda (which, amusingly, backfired on the weasel on Michele Catalano's wonderful blog, in a hilarious faux micah remix photoshop contest, which, alas, has been taken offline.

There are also people who are real veterans, but whose stories have been demonstrated to be phony, such as Scott Thomas Beauchamp and -- remember this guy? James Massey.

Then there are the phony British soldiers depicted in the Daily Mirror hoax, for which the editor was sacked.

I had no problem grasping whom Limbaugh and the caller were referring to, because the left has an embarrassing habit of embracing these cretins, feteing them, and awarding them cushy book deals in the process of soiling themselves.


I also have no problem grasping the intellectual dishonesty of Media Matters for America. Greg Brock was a scumbag when he was a conservative, and he's a scumbag now.

Splash, out,

Jason

Usually the news laugh line of the day comes from the New York Times. But today it comes from the Wall Street Journal. Specifically, the Journal reports that America's ratf**k bankers, having mismanaged credit underwriting with disastrous results, are now moving to claim their heavily marked down debt - debt marked down as a result of their own mismanagement - as a credit on the earnings statement.

While the bond market mess made the earnings reports for the big investment banks feel like a game of roulette, there was one area where they were almost guaranteed to win: the falling value of their own debt.

This allowed the firms to book hundreds of millions of dollars in profit, helping to offset multi-billion-dollar charges they had to take on commitments to fund leveraged buyouts.

The Wall Street Journal, of course, knows where their bread is buttered: By the den of thieves known as Wall Street and their big ticket financial industry advertisers, such as CitiGroup, Bank of America Corp., and J.P. Morgan Chase - named in the article as among those banks claiming the collapse of their own bank-issued debt as earnings. And so the Journal takes their side:

"The brokers and banks are doing nothing wrong or improper in booking such gains. The accounting rules as they stand allow the practice."

Only then do they report that some investors are crying foul.

Count me among them.

To illustrate the absurdity of this practice, suppose I took out a credit line for 500,000 at the bank. I then proceeded to miss payments, load up on other debt, and drive my income prospects into the ground, so that my credit score plummeted, and the bank thereby considered me a seriously impaired risk.

So impaired, as a matter of fact, that when I called them up to settle for twenty cents on the dollar, they heaved a sigh of relief to take me up on the dollar.

Suppose further that I then filled out a mortgage application, and claimed that $400,000 that they lost in capital losses as income. Would these very same banks loan me money against that income?

Hell no. 1.) Because it's not income, and 2.) Because it's not sustainable anyway.

These bastards know that full well. This is a gross abuse of accounting rules.

Let's look at it another way: If this fall in the value of their crap debt is income, then let every company issue a special dividend reflecting the per share allocation of this gain. Now sit back and watch these shysters raid their surplus accounts and loss reserves to make the dividend.

Here's a hint: If you have to raid loss reserves to pay the dividend, it ain't earnings.

Let's look at it another way:

Suppose I aquired control of a publicly traded corporation. Suppose further that I was a total incompetent who blew my reputation with customers and vendors such that future sales prospects were almost nil, and earnings from operations were zero.

Suppose further that I leveraged the company to the hilt - it doesn't matter what I did with the bond proceeds. Let's suppose I turned it all into cash and then set the pile of bills on fire.

If I leverage the company enough, my earnings actually go UP!!!! Why? Because the credit markets would figure out what was going on and mark down my debt to Enron levels, worth just pennies on the dollar.

But if the debt level were large enough, I could claim the difference between issue value and market value as earnings. And the dumber I was, and the more money I literally burned, the more debt would be marked down, and the more earnings I could claim.

This is another reason why we should be hanging bankers from lampposts all up and down Wall Street.

Benjamin Graham, author of Security Analysis, the classic work on business and stock analysis first published in 1934, anticipated this ridiculous practice. From page 360:

At times a substantial profit is realized by corporations through the repurchases of their own senior securities [bonds or preferred stocks] at less than par value. The inclusion of such gains in current income is certainly a misleading practice, first, because they are obviously nonrecurring and, secondly, because they are at best a questionable sort of profit, since they are made at the expense of the company's own security holders.

Amen.

To add insult to injury, by claiming the reduction in debt values as income, shareholders will almost certainly be, indirectly, forced to pay the corporate income tax rate (35%) on these nonexistent earnings.

Worse, unless the bonds are actually repurchased, the company's shareholders actually gain nothing: They are still required to make coupon payments and interest payments on time.

Now, most retail investors wouldn't think to dig that deep into income statements. And these cretins are hoping you don't. The insider, then, is given an unfair trading advantage.

What kills me is these green eyeshade types know full well what they are doing. Most of them probably had to read Graham's book in college.

There is simply no reason to allow banks, or any other publicly traded company, to claim the results of their own lousy underwriting as earnings. If the securities are retired early, to the companies advantage, earnings statements will eventually reflect higher earnings, in the form of interest payments no longer paid.

The balance sheet will also reflect the difference, in that the balance sheet will no longer list that bond as a liability. Both cases are true if, and ONLY if, these bonds are actually repurchased and retired.

What these banks want to do is claim the benefit of future earnings unencumbered by debt service payments, AND simultaneously and perversely claim an undeserved profit in the current earnings statement arising from their own crappy underwriting and lousy risk management.

The same dollars are therefore accounted for twice - and if the debt is actually retired, they'll claim the same dollars a third time on the balance sheet.

Cretins.

Splash, out

Jason

Labels: investing

Ace:

"It’s disgusting that President Mahmoud “Stumpy” Ahmadinejad was invited to speak at Columbia University at the same time that he is sending troops and arms into Iraq to fight and kill American troops. It’s even worse because Columbia doesn’t want ROTC and recruiters from the United States military on their campus. Apparently, if your policy is “Don’t Ask, Don’t Tell,” then Columbia thinks it’s too dangerous to allow the students to be exposed to your wild and crazy point of view. However, if you engage in the torture and public execution of homosexuals, then you’re welcome to stop by anytime."

Yep.

They couldn't even be honest about why.

New York said "yes," but we said "no." Why were the U.S. Marines denied permission to film a recruiting commercial on the streets of San Francisco?

San Francisco is, once again, the center of a controversy over how city leaders treat the U.S. military. This time, it involves an elite group of Marines who wanted to film a recruitment commercial in San Francisco on the anniversary of 9/11.

The tension has been building in the two weeks since the city turned away members of the Silent Drill Platoon, and it boiled over Monday afternoon at a meeting of the San Francisco Film Commission.

The U.S. Marine Silent Drill Platoon performed Monday morning in New York's Times Square. They filmed part of a recruitment commercial through the start of the morning rush hour -- something they could not do in San Francisco on the anniversary of 9/11.

"It's insulting, it's demeaning. This woman is going to insult these young heroes by just arbitrarily saying, 'no, you're not going to film any Marines on California Street," said Captain Greg Corrales of the SFPD Traffic Bureau.

Captain Greg Corrales commands the police traffic bureau that works with crews shooting commercials, TV shows and movies in the city. He's also a Marine veteran and his son is serving his third tour of duty in Iraq.

He says Film Commission Executive Director Stefanie Coyote would only allow the Marine's production crew to film on California Street if there were no Marines in the picture. They wound up filming the empty street and will have to superimpose the Marines later.

"Ms. Coyote's politics blinded her to her duty as the director of the Film Commission and as a responsible citizen," said Captain Corrales.

We asked Stefanie Coyote why they're not allowing the Marines to shoot on California Street. She wouldn't answer our questions.

I think the best thing to do is to stop having conventions there.

Maybe the Marines could have snarled up a federal highway.

No. I've known silent drillers. They're too classy for that.

Splash, out

Jason

Males, caucasians hardest hit.

Labels: economy, Humor

Only outlaws will have horse meat!

Purple Avenger, over at Ace's, lets me have it with both barrels, in the comments section.

I was kind of proud of the "long shot" pun at the end. Get it? Snipers? Long shot? HAR!!!

A couple of points I'd like to bring out:

1.) It may not have been necessary to kill this insect to take him off the battlefield. He was already called out and was in the process of being questioned by police when he was shot.

2.) We don't know what the rules of engagement were. (The specifics would be, properly, classified, and if I knew what they were, I wouldn't discuss them here.)

3.) We don't know what the orders were.

4.) It's not a team of lawyers bringing the charge - it's a commander. Longtime readers will be aware that I have long been vigilant, rhetorically, about protecting the authority and freedom of action of commanders at every level.

5.) Longtime readers are also aware that I have been rhetorically vigilant about enforcing the law of land warfare among our ranks. In fact, my oath requires me to do so.

I'm not saying this three star isn't wrong. He may well be. I'm just not willing to jump to a conclusion of bad faith on anyone's part at this point. I'd rather ascertain the facts in a courtroom than the comments section at Ace of Spades.

Splash,

Labels: Army, law, Leadership, soldiers' issues

Britain, apparently, has hung out its Iraqi interpreters to dry.

It is six weeks since the Government promised an “urgent review” of the situation of Iraqis whose lives are in danger because of their work as interpreters for the British Army. During that time, the 5,000 British troops have pulled back from central Basra to the airport, mainly for their own safety. Nothing has been done for the interpreters. Several have already been tortured and killed. Some have received death threats from militia thugs who accuse them of collaboration. Their homes are unprotected and their families live in terror. Out of loyalty and honour, they remain at their posts, helping British troops understand the dangers and the confusion. In return, they have been contemptuously brushed aside, as though they were trouble-makers demanding special favours. This is utterly shameful.

Indeed.

This is a decision no soldier would make.

If the British have no stomach for this fight, let them depart. But they have an obligation, if they leave, to provide for those who have risked everything, including the most brutal and sadistic treatment imaginable for themselves and their families, in order to ensure success.

If the British cannot be trusted, the US should immediately hire these 91 interpreters, and consider asylum for them and their immediate families here, after the US pulls out.

Interpreters talk to each other. It's a small community. If it is clear that bureaucrats in the Coalition cannot be trusted, we will have fewer interpreters - and they are already a critically scarce commodity.

At best, interpreters will refuse to leave base, where their identity could be compromised.

If this report is accurate, it's outrageous.

As the British pulled out of Basra and could no longer work to protect these families, arrangements should have been made to move these families out of the country. Not even neccessarily to the UK - we could have worked with anyone in the Arabic-speaking world to arrange somewhere safer to live for them.

As it stands, in the future, the UK will get the host nation linguistic support it deserves.

Splash, out

Jason

Amazing collection of new photographs from Auschwitz at the New York Times.

Click the slide show.

THIS Dumb!

A pastor in Australia who recently pled guilty to raping two of his teenage daughters said he only did it in order to teach them how to be good wives:

The man told the court the sex was not about fulfilling his desires but about teaching his daughters how to behave for their husbands when they eventually married, as dictated in scripture.

Just a thought--how far off is this from Purity Balls?


After all, it's all about fathers owning their daughters' sexuality and preparing them to be "good wives." And while incest isn't explicit in the purity ball madness, it sure is implied. Thoughts?

Yes, Jessica. I have a thought. You're a moral retard.

You can't tell the difference between the self-serving sexual exploitation of children and young women by an authority figure on one hand and a loving act of devoted fathers on the other?

This is the kind of discernment it takes on the left to get a book deal and a bunch of fawning media appearances from chuckleheaded news producers at CNN?

Conservatives have to be intellectual .400 hitters to get the media exposure this benchwarming doofus gets.

Shit, if I were a surrender monkey liberal, Countercolumn would have been getting 70,000 hits a day back in 2004/2005 when I kept up the place better, and I'd be on MSNBC every stupid week, getting fawned over and invited to deliver the Democratic response to the weekly radio address and shit.

Splash, out

Jason

Labels: Media, The Left

Tonight we're gonna party like it's 5099.

Shalom,

Jason

From the National Association of Homebuilders


This year’s financial market turmoil is based heavily on deep credit problems in the U.S. subprime mortgage market, and large losses are being taken on mortgage-related securities around the globe.

These experiences have reminded the investment community of credit risks in other parts of the financial markets, kicking off a broad-based flight to quality.

Some credit markets have virtually shut down in the process — the asset-backed commercial paper market is a good example — and quality spreads have opened up in most markets, including the corporate bond market.

Fortunately, the flight to quality also has driven down the entire Treasury yield curve. This has kept rates on things like prime conventional conforming mortgages and high-grade corporate bonds close to levels prevailing before the most recent round of turmoil, despite considerable widening of spreads to comparable maturity Treasuries.

But most other rates have risen in absolute terms — including rates on subprime, Alt-A and jumbo mortgages as well as rates on lower-rated corporates.

These changes definitely are cutting into housing market activity and overall economic growth.

Labels: economy, investing

Longtime readers are aware that I've been watching the increasing constriction of liquidity in the credit markets for some time. In March of this year, I wrote "Is this the beginning of the end of the bull market in bonds?"

Also in March, I posted "This is a terrible time to buy a house."

In December of last year, I wrote:

I have been quietly making a few rebalancing moves on the edges of my very meager portfolio; With the dollar back down near all-time lows against the Euro, I sold off some holdings in foreign stock funds (mostly European) and brought them back into US equities - effectively buying cheap US assets with (hopefully) overpriced Euros. Foreign stocks have had a beautiful run, relative to US equities, and I took a little money off the table.

Further, the expansion seems to be getting a little long in the tooth. I'm not bearish, but I think the economy will not continue to expand at the pace it has. I have moved some money from the Vanguard Total Stock Market index into a large-cap growth and income fund -- effectively selling a modest number of small- and mid-caps, which are more sensitive to slowing economies, as well as selling a few no-dividend large-cap growth stocks.

The bet I'm effectively making is that if the economy slows, dividends will play a comparatively greater role in future returns - as compared to earnings growth - than they had previously.

I'm also building a small margin of safety, as I see potential short-term losses in equities as greater than my expectations for economic growth this year.

P/E's seem fairly reasonable to me, still. Not cheap, but not psycho crazy, either.

Fair weather ahead, with a few scattered squalls.


Unloaded some REIT ballast, with foreclosures peaking up in key markets.

Trimming sails slightly.

In December, I did not foresee the Dow's movement to 14k, but I didn't think that level was sustainable at the time, and pulled some money off the table then, and began looking for other options.

In March, a commenter, Red A, asked for a suggested strategy going forward. I apologize I did not have time to post a coherent response then. I'm not sure if I could have fully articulated my own views at that time, but my ideas are coming into clearer focus now. Here are my thoughts:

1.) While I have always been an adherent of the idea that markets are very efficient, and have therefore invested almost exclusively in low cost index mutual funds (I use Vanguard, but the Spartan funds offered by Fidelity, and the comparable offerings by T.Rowe Price, TIAA-CREF, and even USAA are excellent choices as well), I am now officially moderating my somewhat militant Bogleheaded views. Why? See paragraph 2.

2.) It seems clear to me that there are substantial inefficiencies in certain areas of the market Markets are fearful, and there is terrific uncertainty in the credit markets. There are substantial swathes of assets being unloaded at absolutely fire-sale prices. Why? See paragraph 3.

3.) Mortgage companies have to raise cash to operate. Which means they have to borrow heavily from more diversified institutions and sell off mortgages on reasonable terms to Fannie and Freddie. Servicing these loans can be a profitable business, but many companies have no appetite for the additional outlays in labor and facilities it would take to diversify into this area. They're regretting it now, because a healthy servicing arm is a handy diversifier against a pure mortgage, sell, and mortgage some more business model, because the stream of revenue you can get from good mortgages you keep on the books can offset the reduction in book value on the mortgages themselves - a reduction in book value which affects the market price of good debt as well as bad. Which brings us to:

4.) As the book price of existing pools of mortgages fall, these mortgage companies are having raise cash quickly to make margin calls against their debts secured by these assets. As a result of the time pressure, they are being forced to sell these pools to other buyers prematurely, and at pricing very advantageous to buyers with some cash to invest.

5.) Consider the contrast in the positions between the mortgage originators and the aftermarket buyers active today: While the mortgage originators were enthusiastically recruiting Americas Most Clueless to beef up their sales force and rack up sales volume, they created a perverse system that compensated idiot, unprofessional mortgage brokers for sheer volume by paying them for the deal, without regard for the provision for the safe return of capital to the bondholder.

The result: A dramatic increase in the "liar" coefficient of "liar loans," which of necessity increased with the price of real estate assets, and a general and well-deserved loss of faith in the integrity of the credit underwriting process. The first line of defense simply did not execute their risk management responsibilities, because they were not at all compensated for so doing.

This was idiotic, and I think shareholders in mortgage outfits ought to be lynching their CEOs and credit officers and directors for this foolishness.

The contrast: shrewd investors who acted responsibly in the last few years have been rewarded with an opportunity to purchase these mortgage pools from desperate sellers - the mortgage-pure companies struggling to avoid default and bankruptcy. These secondary buyers have the opportunity to do so after having made the appropriate discount for credit-worthiness and margin of safety.

Enter the Dragon.

No one is shrewder in this market than Warren Buffett, the chairman and brain of Berkshire Hathaway. Absent a mega catastrophe which would put a severe crimp on Berkshire's insurance obligations, the incoming premiums from General Re, GEICO, and several other insurance companies generate a mountain of cash, which Warren has been allowing to accumulate - to the tune of nearly $1,000 per B share, which are now trading just under $4,000.

In order to generate book value for his investors, Warren needs to put that money to work somewhere, and fast -- IF he can do so to advantage.

Character Counts

Buffett is a master bridge player, and has a well-deserved reputation for being able to keep a secret. Everyone in the market knows that Berkshire has billions in cash looking for a home. I believe this is Buffett's market. Because of his ability to make quick decisions and keep them under wraps until his next report, Buffett is getting the pick of the litter. His phone in Omaha has, no doubt been ringing with opportunities in the aftermarket. I have no special insight into exactly how the man is doing business, but I am confident he is now putting his cash surplus to work buying up assets that few others would even have access to.

Moreover, there are mounting opportunities in the publicly traded sectors for Buffett to pick up shares of common stock in financial companies now trading at 20% to 30% discounts off their book value, trading at 6 to 10 times earnings, and in many cases, generating healthy dividends. Buffett, the former chair of Salomon and longtime investor in American Express and Wells Fargo, understands the financial market very well.

My own finger-in-the-air assessment: Financial stocks are now priced as if half of their assets are subprime. But many of these companies, Countrywide and Washington Mutual among them, have less than 10% of their assets in subprimes. The wildcard is in the adjustables.

In these markets, I would look for a healthy diversification across the country, without overexposure to the frothy markets in Florida, California and Arizona.

Meanwhile: Homebuilder stocks have taken a pummelling - and there is nothing at all wrong with them. Pulte, Lennar, and Centex are all fantastic companies. Pulte has a reputation for terrific quality. Lennar and Pulte both have fabulous brand names.

But Pulte is currently trading at a 40% discount to book value. Book value, for a homebuilder!!! It's worth 1.2 times book value, and traded there in the late 1990's. (I'm discounting the even higher valuations it received vis. book value during the housing boom of the 2000s).

Lennar, another homebuilder, is trading at 30% below book value. I think it's easily worth 1.2-1.3 times that. Meanwhile, it's paying a 2.5% dividend to wait.

Centex is also trading at 30% below book. But in the late 90s it traded at over 4 times book value, and stayed at 2x book value throughout the 2000s.

These are compelling values, and you won't get a substantial piece of them for indexing.

Again, Warren Buffett has already acquired homebuilders - and happily so. He did learn a painful lesson with Oakwood a few years back, after having bought up junk bonds from them. Buffett has admitted he had underestimated the scumminess of the loan underwriting process in the prefab home world. I doubt he will be inclined to make the same mistake again.

Buffett has already recently acquired shares of Bank of America in a recent large common stock transaction. B of A is diversified, and its exposure to bad mortgages is offset by a powerful retail banking operation, an amazing brand name, and the ability to attract deposits to counteract defaults - a capability many pure mortgage plays lack.

I like book value as a measure for evaluating financial companies, but I think the book value of mortgages as carried on annual reports in December of this year are substantially overstated. So I would mentally make a downward adjustment of such assets by, oh, I don't know - 40% for subprimes and maybe 20% for everyone else, and make my own calculations based on that.

I would also not put a lot of weight on earnings over the last few years for these companies.

For me, personally, I don't want dividends outside of my IRA. For one thing, they generate income tax liability. For another thing, I don't have the economies of scale to reinvest my dividends efficiently.

I also don't have the time or expertise to really pull apart the financials of banks, mortgage companies, or homebuilders to determine the relative worth of each.

But Buffett is more than capable of dealing with both.

I have therefore abandoned my all-index, all-the-time strategy of investing - it tends to work against you in bear markets, anyway, because asset cap weightings overexpose you to inflated assets - and have placed a significant amount of my miniscule, pathetic net worth in my first single-stock transaction:

I am long Berkshire Hathaway.

I have taken additional funds available for investment and entrusted them to a disciple of Buffett's, Wally Weitz, manager of Weitz Value, who has a very similar approach.

I interviewed Mr. Weitz several times over the years in my capacity as a dumbass, clueless financial reporter, and was impressed by his clarity of thought and his facility in explaining his analysis of the earning power of underlying corporations. Again, he is quite comfortable in financials and homebuilders as well, and I think he will be finding a number of opportunities in the weeks ahead. Indeed, I think he already has, and will be busily going to work with any funds he has incoming.

I think it will take a couple of years for this strategy to bear fruit to the upside. But I am comfortable with the wait, and have a tremendous amount of respect and admiration for Buffett and Weitz alike.

If the bull market continues in stocks, I will lag for a while. I don't think I will lag forever. If stocks enter a bear market, I will lose less with Weitz than in a broader index (unless Countrywide goes bankrupt - but I trust Weitz, who holds the stock, with assessing those odds reasonably). I should do better with Berkshire.

I am not long Countrywide, except via Weitz Value.

It's tempting. It trades at 5x official earnings (I mentally adjust that to more like 8 to 9 times "real world" earnings, and trades at 20 to 30 percent off book value. It is less than 10% into subprimes. It is about 40% into adjustables, but those adjustables are spread across the United States, and not concentrated in California (in contrast to someone like Wells, which is a western franchise, and even Washington Mutual, which is overexposed to California, which surprised me to learn.)

Countrywide also recently executed a large buyback of shares around the 40 dollar mark last year. Shares are now trading at around 18.

It's very tempting - with a nice dividend in the meantime to pay me for waiting for a recovery.

But I look at their CEO, and he is selling shares as fast as his options vest. He doesn't seem to be retaining any of them personally, and therefore I distrust him as an owner-manager.

It also seems clear to me that Countrywide is depending on the goodwill of others in order to raise liquidity. It has a substantial retail base, as well, and has a nice operation in mortgage servicing which diversifies its exposure. But apparently, it's insufficient in the short term. I cannot assess its exposure to put backs from loan pools previously sold to Frannie and Freddie, as defaults from adjustables deepen if the economy weakens and interest rates rise. If the situation worsens, and Countrywide is faced with substantial forced repurchases of its previous loan sales, I think there is a real chance I'd place it at about 20% if any such thing is knowable - that Countrywide will go under.

In other words, Countrywide is cheap for a reason.

Countrywide has a wonderful appeal for speculators. But because of the uncertainty of the safe return of capital, I don't see it as a good choice for the small investor right now. I think they will rely on Buffett and other aftermarket purchasers to raise cash, and will be among the desperate sellers. They already are.

But Countrywide is as much a speculation as it is a reasoned investment at this stage. I have carefully considered it, and passed for now.

Let me know if you think I'm stupid.


Splash, out

Jason

Labels: investing

Finance types should know that cheap money, credit on demand, and endless leverage aren't the cure for a hangover caused by too much cheap money, leverage, and credit on demand.

Labels: economy, investing, Real Estate

Liquidate them.

They make far too much money that should be going to shareholders and pensioners.

Glen Reynolds points to this truly outstanding article by Robert Kaplan.

I met Bud Day in September 2005 at the Jacksonville Naval Air Station where Navy flyers had lined up to buy his book, for which he had to take payments in cash. I thought it demeaning that he had to sell his book this way. It says something about the blind spots of a Manhattan-based publishing industry that Day had to go to what is essentially a vanity press. The publication of Coram's book is, therefore, a welcome event.

The relative obscurity of Day's autobiography and other books like it about Vietnam constitutes a lesser-known aspect of our civilian-military divide. The books to which I refer should be part of our recollection of Vietnam, but they generally aren't. They aren't so much stories that soldiers tell civilians as those that soldiers tell each other. Of course, there are exceptions: most famously James Webb's Fields of Fire (1978), a book that overlaps with this category and which, in fact, did become a bestseller. But there is a range of books of lesser literary merit, yet of equal historical worth, that either have small readerships or readerships consisting overwhelmingly of military personnel, active duty and retired. The authors of these lesser-known books include marines and Green Berets (Army Special Forces) who were involved in counterinsurgency operations. Their writing reveals a second divide—that between professional warriors and conventional, citizen soldiers—which is but another facet of the warrior's alienation from the civilian world. To explore this second divide, I must also bring into the discussion a French writer and a British soldier, whose legacies include not only Indochina, but Algeria and pre-World War II Palestine—scenes, too, of messy, irregular warfare. Thus, my notion of another Vietnam library goes beyond the subject at hand.

Reading habits are influenced by the people you meet. If I hadn't had the opportunity to embed with professional warriors, I would never have heard of some of these books. For example, I learned a great deal about Bud Day and Duty Honor Country from Air Force Captain Jeremiah Parvin of Rocky Mount, North Carolina, a young A-10 Warthog pilot with a "Misty" patch on his arm. The A-10 is essentially a flying Gatling gun. Its pilots hover low to the ground and loiter over the battlefield at great risk. Even as they disdain the rest of the Air Force, marines and Green Berets consider A-10 pilots true warriors. A-10 pilots feel the same bond toward combat infantry. It is a trait of professional warriors that they feel closer to those in other armed services who take similar risks than toward men and women in their own service who don't. Being in the military is not enough for these men: To earn their respect, you had to have joined in order to fight—not to better your career, or your station in life.

The article is difficult to exerpt. But among Kaplan's points is this: The stories that warriors tell that gain exposure through our mass media outlets are very different than the stories that warriors tell each other. Kaplan brings into stark relief the cultural divide between our mass media and our warrior class that has been the central theme of Countercolumn since this blog's inception in November of 2003.

Bud Day is a hero among warriors. A legend and a beloved figure, who continued to serve the military community for decades after his retirement.

But click here to read the treatment Bud Day gets in the pages of the Los Angeles Times, whos writer, Rosa Brooks, characterizes Day as "an unprincipled, right-wing extremist."

There is a reason that there are certain stories that warriors only tell each other.

If we tried to tell them to the likes of Brooks, we'd wind up wanting to bitch-slap them, instead.

Splash, out

Jason

I'm involved in an amusing exchange over in the comments to this post at Balloon-Juice.

Scroll down a bit.

My favorite bit:

And what do you know about being a warrior, Van Steenwyk? Your service in the Army certainly didn’t teach you much about it, apparently.

Labels: Democrats, flame wars

...The Miami Herald, with "Casualties Drop Despite U.S. Build-up."

Despite? Hmmm. You think there might be a cause and effect relationship there somehow, scoop?

Wasn't that the whole purpose of the surge?

Fucking moron.

My criticism is directed more at the editors of the Miami Herald than at the reporter, McClatchy's Nancy Youssef, who does a reasonable job explaining the different theories explaining the reduction in U.S. casualties.

She also includes one very interesting metric:

Most agree that a second reason for the decline is the dramatic change of conditions in Anbar province, where former Sunni insurgents have teamed up with American troops to rid the province of the group al Qaeda in Iraq. About one-third of U.S. casualties have been in Anbar province, but that has shifted since the troop increase began. In August, about 10 percent of U.S. casualties occurred there, compared with 30 percent in January, when the buildup began.

Perhaps someone with more time on their hands than I have at the moment can do a bit of number crunching and assess what percentage of the US casualty decline is explained by the improvement in the Al Anbar province?

Did Baghdad and the surrounding areas note similar results?

I notice that Al Qaeda has no more appetite to stand and fight against U.S. forces as they did in Fallujah. As has been pointed out, the dumb ones are already dead.

My own theory is this: In counterinsurgency, the initiative is everything. You will have lower casualty rates if you are on the offensive all the time. The more raids you do, the more you attack, the lower your casualties will be. Attack, Attack, ATTACK!!!

There is no substitute for closing with and destroying the enemy.

Finding him is the hard part. But the offensive generates intelligence. You find one safe house, you will find information on the whereabouts of 1.3 more, on average.

Whereas if you rely on the defense, you will gain no intelligence on anything except where the last bomb went off killing your own troops.

For a fuller discussion (by me) of the logic of the offensive and why it is superior to a defensive posture, click here.





Splash, out

Jason

Labels: Media, Warfighting

Neptunus Lex is flying the Bravo Sierra flag on the U.S. Navy version of Scottie "Walter Mitty" Beauchamp -- and does such a thorough job, that even Kos threw in the towel on that one.

Labels: Media, The Left