Thursday, November 24, 2011

El Chiño

Like an El Niño, China is turning up the heat in the Pacific Ocean.

Is this just another ratcheting of the South China Seize (Guambat's copyrighted pun), or mere Super Power Posturing?

China navy to carry out Pacific exercises
Japanese defence officials reported seeing six warships sailing in international waters near the country's southern Okinawa prefecture.

The Chinese defence ministry said the drills were routine and were not targeting any specific country. A short statement on the defence ministry's website announced the exercises late on Wednesday.

"This is an annual, planned, routine drill. It is not directed at any specific country or target and is in keeping with relevant international laws and practices," said the statement.

"China's freedom of navigation and other legal rights should not be obstructed."

A Pentagon spokesman said the US had no problem with the naval exercises. Captain John Kirby said that China was "entitled to exercise their military in ways they deem fit".

Jaswant Singh: Asia's Giants Colliding at Sea?
While returning in late July from a goodwill visit to Vietnam in waters recognized as international, an Indian naval ship was 'hailed' on open radio and advised to 'lay off' the South China Sea.

Why did China attempt to interfere with a ship sailing in open seas? Was this 'merely' another of China's unwarranted assertions of sovereignty over the whole South China Sea, or was something more malevolent afoot?

At China's Foreign Ministry, a spokesperson explained: 'we are opposed to any country engaging in oil and gas exploration and development activities in waters under China's jurisdiction.'

Is the two countries' argument merely about who will develop the South China Sea's untapped energy resources, or are we dealing with the beginning of a struggle for spheres of influence?

To find an answer requires confronting civilizational norms, which are reflected in the intellectual games that the countries favor. India has traditionally favoured the game of chaupad (four sides), or shatranj (chess), concentrating on contest, conquest, and subjugation. China, on the other hand, has wei qui (known in Japan as go), which focuses on strategic encirclement. As Sun Tzu advised many centuries ago, 'Ultimate excellence lies...not in winning every battle, but in defeating the enemy, without ever fighting.'

For India, the sense that a struggle for regional mastery is occurring has become increasingly keen. Chinese activity in Pakistan and Myanmar, the expansion of China's port agreements in the Indian Ocean (the so-called 'string of pearls'), and heightened Chinese naval activity in the Indian Ocean have jangled India's security antennas. Indeed, the official Chinese publication Global Times, altering its previous stance, recently called for putting a stop to India's energy plans in the region. 'Reasoning may be used first, but if India is persistent in this, China should try every means possible to stop this...from happening.'

The same article then threw Tibet into the stew of accusations. 'Chinese society,' it continued, 'has...been indignant about India's intervention in the Dalai problem,' cautioning India to 'bear in mind' that 'its actions in the South China Sea will push China to the limit.' According to Global Times, 'China cherishes the Sino-Indian friendship, but this does not mean China values it above all else.'

Military and Security Developments Involving the People’s Republic of China
2011 (USDOD Report to Congress)
Section 1246, “Annual Report on Military and Security Developments Involving the People‟s Republic of China,” of the National Defense Authorization Act for Fiscal Year 2010, Public Law 111-84, which amends the National Defense Authorization Act for Fiscal Year 2000, Section 1202, Public Law 106-65, provides that the Secretary of Defense shall submit a report “in both classified and unclassified form, on military and security developments involving the People‟s Republic of China. The report shall address the current and probable future course of military-technological development of the People‟s Liberation Army and the tenets and probable development of Chinese security strategy and military strategy, and of the military organizations and operational concepts supporting such development over the next 20 years. The report shall also address United States-China engagement and cooperation on security matters during the period covered by the report, including through United States-China military-to-military contacts, and the United States strategy for such engagement and cooperation in the future.”
The United States welcomes a strong, prosperous, and successful China that reinforces international rules and norms and enhances security and peace both regionally and globally.

China’s 2010 Defense White Paper asserts that China’s "future and destiny have never been more closely connected with those of the international community". Nonetheless, China’s modernized military could be put to use in ways that increase China’s ability to gain diplomatic advantage or resolve disputes in its favor.

Over the past decade, China’s military has benefitted from robust investment in modern hardware and technology. Many modern systems have reached maturity and others will become operational in the next few years. Following this period of ambitious acquisition, the decade from 2011 through 2020 will prove critical to the PLA as it attempts to integrate many new and complex platforms, and to adopt modern operational concepts, including joint operations and network-centric warfare.
China has made modest, but incremental, improvements in the transparency of its military and security affairs. However, there remains uncertainty about how China will use its growing capabilities.

China’s leaders characterize the initial two decades of the 21st century as a "strategic window of opportunity". They assess that during this period, both domestic and international conditions will be conducive to expanding China’s "comprehensive national power" (zonghe guoli—综合国力), a term that encapsulates all elements of state power including economic capacity, military might, and diplomacy. Speaking in December 2010, PRC Defense Minister Liang Guanglie asserted that ―making the country prosperous and making the armed forces strong are two major cornerstones for realizing the great rejuvenation of the Chinese nation.

China’s leaders anticipate that a successful expansion of comprehensive national power will serve China’s overriding strategic objectives, which include perpetuating CCP rule; sustaining economic growth and development; maintaining domestic political stability; defending national sovereignty and territorial integrity; and securing China’s status as a great power.

Rather than challenge the existing global order, China has adopted a pragmatic approach to international relations and economic development that seeks to strengthen the economy, modernize the military, and solidify the CCP’s hold on power. This approach reflects Beijing’s assumption that great power status over the long-term is best achieved by avoiding confrontation in the near-term. China’s leaders routinely emphasize the goal of reaching critical economic and military benchmarks by 2020 and eventually becoming a world-class economic and military power by 2050.

Historically a continental power, China increasingly looks to the maritime domain as a source of economic prosperity and national security. China’s evolving "maritime consciousness", as reflected in senior-level rhetoric and resource allocation, has potentially far reaching consequences in the Asia Pacific region and beyond. Many PRC officials and citizens view maritime power as a prerequisite to becoming a "great power".

In its 2010 "China Ocean’s Development Report", China’s State Oceanic Administration (SOA) proclaimed, "building maritime power" is China’s historic task for the 21st century, and the decade from 2010-2020 is the key historic stage for realizing this task. Although China appears to lack an official maritime strategy, PRC officials, military strategists, and academics are focused on the growing relevance of maritime power to China’s interests.

China’s expanding economic interests, including both maritime commerce and the exploitation of marine resources, have affected Beijing’s perception of maritime power as it relates to national interests. Speaking in 2007, President Hu asserted that, "to develop maritime issues is one of the strategic tasks to boost our national economic development". China looks to the oceans as a critical resource, providing fish and potentially large oil and gas reserves.

The oceans also serve as a vital artery for trade and support China’s economic health, with approximately ninety percent of China’s imports and exports transiting by sea. A net oil exporter until 1993, China now imports over half of the oil it consumes, over 80 percent of which transits the Malacca Strait and South China Sea.

Until General Liu instituted the PLA Navy’s "Offshore Defense" strategy in 1986, the PLA Navy was focused mainly on "resisting invasions and defending the homeland".

Although not defined by specific boundaries, Offshore Defense is generally characterized by the maritime space within China’s Exclusive Economic Zone (EEZ) or sometimes by the "first island chain", including the Yellow Sea, East China Sea, and South China Sea.

In recent years, the PLA Navy has begun emphasizing missions in the so-called "far seas", an area loosely defined by the "second island chain", which stretches from Northern Japan, through the Northern Mariana Islands, through Guam.

From the perspective of Beijing, these so called "near seas" constitute a security buffer and hold potentially significant oil and gas resources. The PRC has attempted to use legal pronouncements, civilian enforcement, and naval assets to advance PRC interests within this buffer zone.

In 1992, China’s National People’s Congress passed the Law of Territorial Sea and Contiguous Zones, which proclaimed the South China Sea as PRC "historic waters." Beijing has crafted a series of laws that codify PRC claims to regional territory and proscribe special restrictions on foreign activities in China’s EEZ.

China has attempted to apply security restrictions to the EEZ, which are inconsistent with customary international law as reflected in UNCLOS.

Around the time President Hu Jinto articulated the "New Historic Missions" in 2004, Chinese officials and scholars began openly discussing the extent to which China should expand its maritime power.

The term "yuanhai fangwei" (远海防卫) which translates to "distant/far sea defense," began appearing with increasing frequency in Chinese publications. Authors associated with the Naval Research Institute (NRI) called the "shift from offshore to open ocean naval operations" an "inevitable historic choice" for China noting that naval power must "match the expansion of China’s maritime interests." [Does "Manifest Destiny" or "Monroe Doctrine" ring any bells?]

Navy deployment trends in recent years underscore China’s interests in a limited "far seas" capability. Some PRC commentators advocate a sustained shift from an "Offshore Defense" strategy to "Far Seas Defense."

Recently, several Navy officials and commentators have broached the once-taboo topic of overseas military basing.

The DOD report is quite long and filled with side bars and maps and other useful information. It, and all linked art, should be read for better understanding (and making sure it's presented right here in context).

Further reading:
China’s Near Sea Policy Provoking Regional Instability – Analysis

China’s mix of historical and legal claims in the South China Sea are inconsistent, says Frank Ching. Beijing can’t have its cake and eat it.

The idea that the United States should abandon Southeast Asia to China is misplaced. Asia isn’t another Georgia, says James Holmes.

And in related (?) news: NK issues 'sea of fire' warning against South
The warning came a day after South Korea staged exercises near Yeonpyeong Island to mark the first anniversary of the North's deadly shelling of the South Korean border island.

If South Korea dares "to impair the dignity of (the North) again and fire one bullet or shell toward its inviolable territorial waters, sky and land, the deluge of fire on Yonphyong Island will lead to that in Chongwadae and the sea of fire in Chongwadae to the deluge of fire sweeping away the stronghold of the group of traitors," the command said in a statement, carried by the official (North) Korean Central News Agency (KCNA).


Wednesday, November 23, 2011


President Obama's mid-night ride through Guam left Guambat feeling somewhat distant. Indeed, he is. Washington DC is about 7930 miles away from Guam as the crow flies, according to the Free Map Tools websites' "How Far is it Between" utility (which you can play with here).

Guambat is closer to almost every capital city and major city of every country in Asia, Oceania, Southeast Asia, Europe and much of the Middle East and Subcontinental Asia.

Tokyo 1550 miles, Manila 1600

Shanghai 1920 miles, Seoul 1990

Darwin 2030 miles, Pyongyang 2115

Beijing 2510 miles, Hanoi 2615

Jakarta 2935 miles, Kamchatka 2940

Bangkok 2970 miles, Kuala Lumpur 3025

Mongolia 3220 miles, Myanmar 3255

Sydney 3300 miles, Honolulu 3805

Auckland 4215 miles, Colombo 4425

Anchorage 4595 miles, Mumbai 4755

Kabul 4880 miles, Karachi 5075

Juneau 5100 miles, Diego Garcia 5165

Vancouver 5610 miles, Oman 5610 also

San Francisco 5800, Tehran 5865

Moscow 6100 miles, Kuwait 6165

Baghdad 6295 miles, Jordan 6785

Tel Aviv 6850 miles, Riadh 6915

Cairo 7100 miles, Athens 7225

London 7480 miles, Rome 7555

and Washington DC ... 7930 light years away

Apologies if this didn't line up well with your browser. It seems to work for some better than others.

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Thursday, November 17, 2011

And Guam is America's keyhole, or something like that

US President Obama says Asia-Pacific is key to future
Speaking to the Australian parliament in Canberra, Mr Obama said the US was now turning its attention to the region. [Now?]

"Let there be no doubt: in the Asia-Pacific in the 21st century, the United States of America is all in," he said. [Except we still treat Guam and the CNMI as foreign.]

"As a Pacific nation [at least as far as Hawaii] the United States will play a larger and long-term role in shaping this region and its future by upholding core principles and in close partnership with our allies and friends." [Allies and friends like the Guamanians and Northern Mariana Islanders. They may be US Citizens but only the "core principles" of the Constitution will follow our flag that far into Asia.]


BREAKING NEWS: Obama lands on Guam for refueling stop; leaves without meeting local community
Guam Delegate Madeleine Bordallo confirmed at 12:28 a.m. today that Obama has made a brief refueling stop on Guam en route to Washington, D.C.

Guam residents have been hoping for a visit by Obama after the then-presidential candidate appealed for Guam Democrats to support him over Hilary Clinton in the Democratic Party presidential primary. His campaign aired ads on Guam emphasizing his roots as an "island boy."

By the time the confirmation was made, the president was well on his way back to the White House aboard Air Force One -- with Bordallo on board.

"The congresswoman was invited to accompany the president back to Washington on Air Force One, and she greatly appreciates the invitation. She intends to convey the ‘Team Guam’ approach to issues important to our island if she has a meeting with the president, ensuring that our voices will be heard and our concerns will have his personal attention during the flight back to Washington, D.C.," according to Bordallo.


Wednesday, November 16, 2011

Not quite all along the watchtower

The US President and his Secretary of State have been hopping all over Pacific Asia of late, and hopping right over Guam, the most eastern point of American sovereignty in the Pacific.

Clinton in Manila amid ASEAN row over South China Sea

Obama's Asia trip: China's territorial assertiveness rises as key topic

Obama Goes ‘Down Under’ to Boost U.S. Influence in Pacific

Obama in Hawaii, Australia and Indonesia: Briefing

Obama to vow bigger Asia footprint on Pacific tour

Here's a map Guambat posted a almost a couple of years ago. The radius of the circle on the map, centered on Guam, is the distance between San Francisco and Hawaii. The circle pretty pretty much covers the relevant footprint of the President's visit.

The circle begins at the Pacific side of the international date line. Hawaii is way out of the circle, almost as far again to Guam as San Francisco is from Hawaii.

America's Asian footprint is in Guam's waters. Guam is where East meets West. It is The Crossroads of the Pacific, north to south, east to west.

America has a toe-hold on Asia, but, evidently, that is not part of the footprint. The President is just cruising past as though its Colors were as insignificant as, say, Nauru's.

Guambat wonders if the fact that Guamanian US citizens have no vote is a factor in in the Administration's
$trategic geographic amnesia? After all, it's not like a US President passes by this neck of the Pacific just every day.
Guambat will return to his Burrow over the Bay to nurse his eye. It feels poked.

UPDATE: It's being reported that the President will possibly be putting down on Guam on his way Stateside. For fuel. Behind the fences of the air base. No public. Might not even put foot on ground. Guambat's other eye is now feeling sore, too.
Meanwhile, notwithstanding the shallowness of his interest in things Guamish ...

Obama, in Australia, Vows Deeper Regional Ties

But... is this a sign of support for more domestic defense spending (Guam is domestic, Senator/Congressman/woman), or just more foreign aid?:
Budget Won’t Constrain U.S. Pacific Plans: Obama
(On a side note, Obama is cementing what is implied to be some kind of new arrangement whereby USAF planes will have closer working relations with the RAAF in Darwin. Guambat remembers personally leading a delegation of Darwinian Dignitaries on a tour of Guam about 25 years ago as part of what was then a well established "sister" base relationship with the US Guam base and the Australian Darwin base. So, what's new and how is the world treating you?)


SEEK and ye shall find ... Taliban?

The Taliban Got the Biometric Border Blues
When Osama bin Laden was killed in Pakistan on May 2nd, it was reported that his body was quickly identified and confirmed. That was done using biometric technology developed during the last decade, and applied widely in Iraq and Afghanistan.

Called SEEK (Secure Electronic Enrolment Kit), this is a portable electronic toolkit that collects biometrics from people. This includes fingerprints, eye (iris) scan and photos of suspects, which are stored electronically.

The fingerprints are particularly useful, because when they are stored electronically, you can search and find out immediately if the print you have just lifted from somewhere else, like off the fragment of a car bomb, is in there or not.

While DNA tests (which take hours to perform, on not-so-portable equipment) are the best form of ID, if you have fingerprints, iris scans and a photo, you are nearly as certain. Even just fingerprints and the face scan/photo, is pretty convincing. Because of the reporting on SEEK after the bin Laden raid, there were few Pakistani officers or government officials who were unaware of what biometrics was and what it could do.

In Afghanistan, the government this year used SEEK kits to collect data on nearly two million Afghans, so that these people could be issued very secure (hard to fake) ID cards. For the government, this makes it more difficult for criminals, Taliban and Islamic radicals in general to infiltrate the government, or just operate freely.

The U.S. has long collected biometrics from those they arrest, or otherwise encounter and want to positively identify. This database now has nearly a million people in it.

It only takes about two minutes per subject to use SEEK to take the biometric data, so any suspicious characters are quickly added to the master database. Now, after several years of this, raiding parties know to grab any guy who seems to panic at the sight of the biometrics equipment coming out. The terrorists know that biometrics is bad news for them, and they fear it.

The equipment for this was installed at border posts near Quetta (the capital of Baluchistan province, which forms Afghanistan's southern border) five years ago. But after a few days, thousands of armed, and angry, tribesmen forced the border posts to shut down until they got rid of the biometric gear. The Taliban, and drug gangs, knew that this biometric stuff was being used with great success in Afghanistan to identify and track Islamic radicals and all sorts of criminals.

Pakistan, under pressure from the United States and Afghanistan, has agreed to resume using biometric (fingerprinting, photos and iris scans) of people using the roads between Pakistan and Afghanistan. It is believed that this new attempt will be equally short-lived and unsuccessful. But the Pakistanis are under pressure to show the Americans and Afghans that they are not partners with the Taliban.


Thursday, November 10, 2011

Oh, yeah. 50,000+

Guambat has noticed that his hit-o-meter has broken the 50,000 mark since his debut in 2005. Of course much of that is due to his habitual logging in to see what the current hit rate is, and to his seemingly fruitless attempts to prevent the hit-o-meter from registering such ego-oriented and deceiving statistics.

The hit-o-meter was also deceptively boosted along by some pranksters who were miffed (actually viciously agitated) several years ago by Guambat's innocent if not non-culpable practice of "borrowing" imagery from other posting around the web. Coincident with a few threats and nasty accusations, they somehow hacked his url or other identity so that all of his imagery, from whatever source, got high marks from search engines looking for images, so that many of the hits are not substantive but pictorial. It skews the hit stats terribly, but not so bad if Guambat ever decides to "monetize" this diatribe (not a chance).

The other big factor, of course, are his two readers. Thanks Captain Jack and Son of a Guambat, and I have not forgotten you either, Davo. The readers, Guambat thinks, reflect the eclecticism of the blog. But then Guambat thrives on his own adulation. Get it where you can.

Cheers everyone.



Of limp "enforcement"

Really, this is just all too much.

Too big to fail is now too big to flail. If this is the new normal in corporate oversight, there is no abnormal.

Guambat says, bring out the cat-o-9-tails and put the whip to some humans here. At the very least, how about applying the "3 strikes and you're out" rule, assiduously applied to small potatoes, to the Big Spuds in Cow Town?

All these "settlements" settle nothing.

Promises Made, and Remade, by Firms in S.E.C. Fraud Cases
When Citigroup agreed last month to pay $285 million to settle civil charges that it had defrauded customers during the housing bubble, the Securities and Exchange Commission wrested a typical pledge from the company: Citigroup would never violate one of the main antifraud provisions of the nation’s securities laws.

It also was not the first time the firm was making that promise.

Citigroup’s main brokerage subsidiary, its predecessors or its parent company agreed not to violate the very same antifraud statute in July 2010. And in May 2006. Also as far as back as March 2005 and April 2000.

Citigroup is far from the only such repeat offender — in the eyes of the S.E.C. — on Wall Street. Nearly all of the biggest financial companies, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Bank of America among them, have settled fraud cases by promising the S.E.C. that they would never again violate an antifraud law, only to do it again in another case a few years later.

A New York Times analysis of enforcement actions during the last 15 years found at least 51 cases in which 19 Wall Street firms had broken antifraud laws they had agreed never to breach.

On Wednesday, Judge Jed S. Rakoff of the Federal District Court in Manhattan, an S.E.C. critic, is scheduled to review the Citigroup settlement. Judge Rakoff has asked the agency what it does to ensure companies do not repeat the same offense, and whether it has ever brought contempt charges for chronic violators.

The S.E.C. said in a court filing Monday that it had not brought any contempt charges against large financial firms in the last 10 years.
Guambat has never run the numbers, but he's pretty sure, by the wet finger in the wind test, that he's quite squarely in the 99% crowd. And he's a bit pissed off, too. He's certainly not eased by the rest of that story:
prior violations are plentiful. For example, Bank of America’s securities unit has agreed four times since 2005 not to violate a major antifraud statute, and another four times not to violate a separate law. Merrill Lynch, which Bank of America acquired in 2008, has separately agreed not to violate the same two statutes seven times since 1999.

Of the 19 companies that the Times found to be repeat offenders over the last 15 years, 16 declined to comment. They read like a Wall Street who’s who: American International Group, Ameriprise, Bank of America, Bear Stearns, Columbia Management, Deutsche Asset Management, Credit Suisse, Goldman Sachs, JPMorgan Chase, Merrill Lynch, Morgan Stanley, Putnam Investments, Raymond James, RBC Dain Rauscher, UBS and Wells Fargo/Wachovia. Two others, Franklin Advisers and Massachusetts Financial, said that their two settlements were made simultaneously and therefore one incident did not violate a previous cease-and-desist order.

But some experts view many settlements as essentially meaningless, particularly since they usually do not require a company to admit to the accusations leveled by the S.E.C. Nearly every settlement allows a company to “neither admit nor deny” the accusations — even when the company has admitted to the same charges in a related case brought by the Justice Department — so that they are less vulnerable to investor lawsuits.

In 2005, Bank of America was one of several companies singled out for allowing professional traders to buy or sell a mutual fund at the previous day’s closing price, when it was clear the next day that the overall market or particular stocks were going to move either up or down sharply, guaranteeing a big short-term gain or avoiding a significant loss.

In its settlement, Bank of America neither admitted nor denied the conduct, but agreed to pay a $125 million fine and to put $250 million into a fund to repay investors. The company also agreed never to violate the major antifraud statutes.

Two years later, in 2007, Bank of America was accused by the S.E.C. of fraud by using its supposedly independent research analysts to bolster its investment banking activities from 1999 to 2001. In the settlement, Bank of America without admitting or denying its guilt, paid a $16 million fine and promised, once again, not to violate the law.

But two years later, in 2009, the S.E.C. again accused Bank of America of defrauding investors, saying that in 2007-8, the bank sold $4.5 billion of highly risky auction-rate securities by promising buyers that they were as safe as money market funds. They weren’t, and this time Bank of America agreed to be “permanently enjoined” from violating the same section of the law it had previously agreed not to break.

In fact, the company had already violated that promise, according to the S.E.C when it was accused last year of rigging bids in the municipal securities market from 1998 through 2002. To settle the charges, Bank of America paid no penalty, but refunded investors $25 million in profits plus $11 million in interest. And, the bank promised again never to violate the same law.

The S.E.C. allowed the bank to settle without admitting or denying the charges, even though Bank of America had simultaneously settled a case with the Justice Department’s antitrust division admitting the very same conduct.

Companies routinely argue that while they may be settling multiple violations of the same law, the facts of each case are different — and therefore not exactly a repeat offense.
Guambat calls enough BS on this stuff.

These are serious offenses, by orders of magnitude much more serious than the offenses of "common" criminals who pay with much more jail time and other deprivations of liberty than any of the banks or other financial institutions have ever paid.

Guambat joins with those in the OWS crowd who say, we will accept the holding of the Supreme Court that corporations are persons too, with all the liberties accorded real people, when one of them is strung up.

Hang 'em high.

Otherwise, as Barry points out, "
moving our money is an effective step towards reclaiming America."

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OWS let the Gini out of the bottle (with a boost from T Party?)

Barry Ritholtz' blog has a regular contributor, Invictus, who posts this:

Meritocracy vs. Plutocracy
As Barry has described it, “there is an unfocused financial rage in the United States” — and you see it in both the Tea Party and the OWS movement. Rather than mischaracterize why so many Americans — on the Left and the Right — are unhappy, let’s go to the actual data to see what is underlying this negative general sentiment.

Let’s start with the Gini Index, “the degree of inequality in the distribution of family income in a country.” Here’s our place in the world: [USA is in league with the dislikes of Mozambique and Uganda -- go read his post for details].

Well, How’d the Gini Index Get So Out of Whack?

In brief (footnotes removed):
In recent decades, CEO pay has grown dramatically in the United States. Between the 1930s and the 1970s, CEOs of the largest companies received approximately $1 million in total annual compensation (adjusted for inflation in year 2000 dollars). During this period, the ratio of CEO-to-worker pay narrowed as workers’ wages grew and CEO pay rose modestly. By the 1990s CEO pay grew dramatically. Business Week estimated that CEO pay at the largest companies grew from 42 times the average worker’s pay in 1980 to 531 times the average worker’s pay in 2000. In 2010, large company CEOs received $11.4 million, or 343 times worker pay, according to calculations by the AFL-CIO’s Executive Paywatch website.
A $1MM reduction in a CEO’s pay could be used to fund 13 jobs at $75k/year; nothing too complex about that math.

Meanwhile, while CEOs and other executives have feathered their nests — largely by exploiting overly-friendly relationships with all-too-compliant boards to negotiate outrageous compensation and severance packages — things have not been going quite as well for the rest of the country, as those at the top continue to rise while the remainder continue to drift

There is plenty of other data and commentary that follows, so be sure to click the link: Read the rest of this entry ».


Like yelling "Print Money!" in a movie house

US Stocks Tumble As Italy Debt Troubles Escalate

European shares hit as Italian debt risk surges

What's Killing Morgan Stanley Today? Italy
Morgan Stanley‘s bets on Europe are hammering its shares this morning.

What’s hurting Morgan exactly? Well, a quick look at its European debt exposure shows its got loads of Italian debt on its books relative to its exposure in Greece. Morgan’s net exposure to Italy, after its hedged positions, is $1.79 billion, according to its third quarter regulatory filing.

That net exposure includes includes obligations from sovereign governments, corporations, clearinghouses and financial
institutions. Without its hedged positions Morgan’s exposure to Italy is $4.5 billion.

The irony here is that Morgan shares suffered drastic losses in September when there was speculation about its exposure to French banks. In September financial blog ZeroHedge said Morgan’s exposure to French banks was 60% greater than its market cap and more than half its book value. That sent Morgan shares under $13.

The moves in its shares prompted an internal memo from CEO James Gorman who attempted to quell rumors. “In fragile markets, where fear triumphs over common sense, these things are bound to happen,” Gorman wrote. “It is easy to respond to the rumor of the day, but that is not usually productive.”

Italy Bond Attack Breaches Euro Defenses, Contagion Worsens
“The house is on fire,” said Dante Roscini, a lecturer at Harvard Business School and former chief executive officer of Morgan Stanley in Italy.
“The ECB needs to print money and buy Italian bonds, it’s the only way to put the fire out.”

Is Morgan Stanley the next MF Global?

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Real estate is still bottoming

Well, thank god the real estate market mayhem has been contained and is now behind us.


US Home Prices Fall In 75% Of Metro Areas
The median price for previously occupied homes sold in the July-September quarter fell compared with last year in 111 out of 150 areas tracked by the National Association of Realtors, the trade group said Wednesday. Prices rose in 39 metro areas.

The results were roughly even with the second quarter, in which median prices fell in 109 out of 151 cities tracked by the real estate trade association. The national median price for single-family homes sold in the third quarter was $ 169,500, down 4.7% from the same quarter a year earlier.

"Home sales need to recover first, only then can prices stabilize," said Lawrence Yun, the Realtors' chief economist, in a statement.
Seems about right to Guambat. Now there's an economist worth his salt.

On a related note ....:
How a Financial Pro Lost His House


Reflecting market or blinding it?

FSA hits Dubai-based investor with £4m fine [Well, actually, 6million pounds including the disgorgement order.]
Rameshkumar Goenka manipulated the closing share price of Reliance on the London Stock Exchange in 2010, as part of a ruse to avoid losing nearly £2m.

The 66-year-old trader had acquired an investment product from an unnamed European bank that paid out if Reliance's shares reached a pre-determined level by a certain date. But when the investment looked as if it would go sour, Goenka swung into action.

According to the FSA "[he] had arranged for a pre-planned series of substantial and carefully timed orders to be placed in the final seconds of the LSE's closing auction.

The FSA ordered him to remit £2m to the bank and fined him a further £4m. The fine would have been even higher, £7.7m, had Goenke not settled early and benefited from a 30% discount.

Tracey McDermott, acting director of enforcement and financial crime at the FSA, said: "Goenka's structured product was an investment that would have made him a considerable profit had it been successful. When he saw that it was not going to produce the desired result, Goenka manipulated the market to avoid a substantial loss.

"The impact of such behaviour goes far beyond one counterparty. Market confidence will suffer if participants cannot be satisfied that the price of quoted securities reflects the proper interplay of supply and demand."

As usual, there's more to this story and you should consider at least reading it on the link above.

But Guambat remains impressed that someone some place is sticking with the rather quaint idea that markets are what you trade and not how you trade. Guambat is quite certain that no one has told that to the black boxes, algorithms and other creatures inhabiting the deep seas of the closing and opening half hours of the global markets. Where does market manipulation begin and market regulation end if not in efforts to make a gain or avoid a loss? And does that matter to sharks?

Guambat is not inclined very much to swimming in those channels any longer.

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