Ever since Martin Lukes went away, it just hasn’t been the same.

Starting with the ad hoc categories she inherited from Yang and Filo, Srinivasan began slowly and deliberately steering Yahoo!’s ontology toward completeness. Mainly, it’s been a matter of adding new categories and reorganizing hierarchies as the Web evolves from containing only specialized, technical information to containing content from every field of knowledge. But she’s also set up certain guidelines to ensure consistency. For example, every regional Web site is now put in the regional hierarchy, and a cross-link to the site is placed under the appropriate topic. So a Florida real estate company is listed under Florida, with a cross-link from real estate.

A few months ago, Srinivasan told me, she was adding categories and making changes to the ontology almost every day. Now major adjustments are becoming much more infrequent. She pointed to this as support for Yang’s assertion that “at some point, our scheme will become relatively stable. We will have captured the breadth of human knowledge.”

A cross-linked Florida real estate company.

According to the FT article [“Bank co-ops keep US afloat”], the top 10 FHLB loans as of 30 Sep 07 are:

“Member”                 Advances       % of tot
Citibank                 98.7bn         12.0%
Countrywide Bank         51.1bn          6.2%
Washington Mutual Bank   43.7bn          5.3%
World Savings Bank       24.2bn          2.9%
RBS Citizens             21.9bn          2.7%
Sovereign Bank           21.1bn          2.6%
Bank of America [RI]     19.6bn          2.4%
World Savings Bank (Tx)  17.3bn          2.1%
Bank of America [Cal]    14.8bn          1.8%

The FT article follows.

Bank co-ops keep US afloat [link]

By Krishna Guha in Washington, Saskia Scholtes in New,York and Gillian Tett in London

Published: December 12 2007 02:00 | Last updated: December 12 2007 02:00

A little-known network of government-sponsored bank co-operatives founded during the Great Depression is playing a critical role keeping the private sector US mortgage industry open for business—and some mortgage lenders out of financial trouble—in spite of the brutal slump in the housing sector.

The Federal Home Loan Banks are pumping hundreds of billions of dollars into the mortgage industry in the form of loans against mortgage collateral at a time when purely private sources of finance are offered only at punitive terms for many lenders.

In doing so they have cushioned the impact of the credit squeeze and ensured that mortgage lending in the US has not come to a sudden stop.

The scale of the cash infusion by the FHLBs vastly exceeds the few billion dollars of cash lent to banks by the Federal Reserve through its direct lending facility.

Indeed some officials privately admit that the FHLBs have, in effect, replaced the US central bank as the lender of last resort for the financial system in the credit crisis.

By making vast amounts of cash available on a routine basis against a wide range of mortgage securities, with none of the stigma associated with going cap in hand to the Fed, the FHLBs have reduced the risk of a liquidity crisis at the most stressed institutions.

Analysts say this is one reason why the US has avoided a bank run of the kind that crippled Northern Rock, the crisis-hit UK mortgage lender. The FHLB move is attracting intense interest in Europe, where policymakers are waking up to the fact that the securitised market-based model of US housing finance was imported without the quasi-public safety valves of the US system.

“The Federal Home Loan Banks have been leading a minor revolution in the financing of the US commercial banking system, providing funding for mortgages when other markets have been closed,” said Steven Abrahams, head of liquid products research at Bear Stearns.

The latest Fed flow of funds data shows that FHLBs issued new loans at an unprecedented annualised rate of $746bn (€508bn, £366bn) in the third quarter, up from practically nothing in the second quarter.

FHLB loans helped depository institutions ramp up their acquisition of mortgages by almost $190bn, annualised to $312bn. This—along with record purchases of mortgages by better-known government sponsored enterprises Fannie Mae and Freddie Mac—offset a large part of the $512bn annualised decline in mortgage purchases by special investment vehicles (SIVs) conduits and other issuers of asset-backed securities at the epicentre of the crisis.

As a result, US mortgage lending continued to grow right through the credit squeeze, increasing at an annualised rate of $732bn in the third quarter.

Michael Feroli, an economist at JP Morgan, said: “It is almost like the socialisation of housing finance.”

Like Fannie and Freddie, the FHLBs have no formal state guarantees but the market believes the US government would step in if the system got into trouble, allowing the FHLBs to raise funds at very low rates against an AAA credit rating, despite being very highly leveraged.

There is no statutory bar on how much money the FHLBs can raise, though there are limits on how much they can lend to any one institution. In November alone, the FHLBs (which raise funds collectively) issued $210bn in new debt.

However, experts worry about “moral hazard”—the FHLBs’ ability to issue vast amounts of debt to aid member banks with an implicit taxpayer subsidy.

The FHLBs are traditionally regarded as bearing little credit risk because their loans are overcollateralised, borrowers post de facto margin deposits, and it has priority claim in bankruptcy.

The Office of Finance says they accept as collateral only securities that have an ascertainable market value.

However, in normal times the 12 FHLBs have roughly 40 per cent of their assets in direct mortgage holdings and investments.

The mortgage holdings are in high-credit-score, low loan-to-value programmes, and virtually the entire investment portfolio is AAA rated. However, the FHLBs have made losses on investments in the past. In 2003, the New York HLB lost $183m on a bond that was originally AAA-rated but was heavily downgraded.

As their role in the financial system balloons, the FHLBs can expect to face greater scrutiny.

Copyright The Financial Times Limited 2008

[I]n a Maine convenience store, an Associated Press reporter saw a sign inviting customers to join a betting pool on when Obama might fall victim to an assassin. The sign solicited $1 entries into “The Osama Obama Shotgun Pool,” saying the money would go to the person picking the date closest to when Obama was attacked. “Let’s hope we have a winner,” said the sign, since taken down.

Odds are very good indeed that the author of this sign was inspired by Jim Bell. Will the Feds come down as hard on the sign’s author as they did on Bell? Or have they developed some sort of sense of humor in the decade since? Either way, an enterprising Secret Service investigator might have a chat with AP writer Jerry Harkavy in Standish, Maine, “who contributed to this report,” to see if he snapped a pic of the sign. Harkavy might not like it, but a sign on public display is hardly a confidential source.

See also: “Assassination media.”

AFP (“Swiss Fear More Pressure on Bank Secrecy after Obama Victory,” 10 Nov ’08):

Switzerland is likely to come under further pressure from the United States over its prized system of banking secrecy after the election last week of Barack Obama, key sector players predicted. The newly-elected US president, who formally takes office in January, is known for his hard line on fiscal evasion, having jointly presented a “Tax Haven Abuse Act” to the Senate back in 2007. Switzerland was one of 34 countries listed as a potential site for tax evasion by US clients in the bill and observers said that while that particular piece of legislation is unlikely to see the light of day, it could yet inform the new president’s policy. “American legislation can move very quickly and laws can get passed speedily,” said Martin Navillle, head of the Swiss–US Chamber of Commerce. “The United States is looking for more fiscal receipts” to finance its massive bailout plan for Wall Street giants battered by the global economic crisis, he added.

Felix Salmon (“Who Would Bail out Switzerland’s Banks?”, Market Movers blog, Portfolio, 11 Nov ’08):

Richard Baldwin of VoxEU gives us a sneak preview of a new article by Jon Danielsson:

In this crisis, the strength of a bank’s balance sheet is of little consequence. What matters is the explicit or implicit guarantee provided by the state to the banks to back up their assets and provide liquidity. Therefore, the size of the state relative to the size of the banks becomes the crucial factor. If the banks become too big to save, their failure becomes a self-fulfilling prophecy.

This seems right to me. And also very scary, because of one country: Switzerland. UBS has a $2 trillion balance sheet; Credit Suisse has another trillion on top of that. Call it $3 trillion between the two of them, which is about ten times Switzerland’s GDP of $300 billion or so. Now that’s what I call too big to save. Oh, and did I mention? At the end of 2007, Credit Suisse was levered by more than 40 times; UBS was levered by more than 64 times. A 16% fall in UBS’s assets would wipe out not only all of its equity but 100% of Swiss GDP on top.

IHT (Browning, “UBS executive indicted in US,” 12 Nov ’08):

A senior Swiss executive at the banking giant UBS has been indicted in a widening criminal investigation of the bank and its offshore private-banking services for wealthy Americans, U.S. prosecutors said Wednesday. The executive, Raoul Weil, oversaw the lucrative cross-border private banking operations of UBS from 2002 through 2007. In a move that could spell bigger trouble for UBS, the indictment also referred to unindicted co-conspirators who “occupied positions of the highest level of management within the Swiss bank.”

“Banking secrecy” will soon be renamed “banking opacity.”

Viacom?

Street with a view.

Google Maps hasn’t quite heard of Mountain House:

Ths sponsored link homegain.com links to findmeaforeclosure.com…

…which has the same registrant as tracyrealestate.com:

(Both sites’ “Community” links are blank.)

Repeat ad nauseam nationwide.

This year, however, Mr. Obama ran on a platform of guaranteed health care and tax breaks for the middle class, paid for with higher taxes on the affluent. John McCain denounced his opponent as a socialist and a “redistributor,” but America voted for him anyway. That’s a real mandate.

Well put. A mandate is defined not only quantitatively, by the margin of victory, but qualitatively, by the clarity of the contrast with the alternative.

Prof Garicano said afterwards: “The Queen asked me: ‘If these things were so large, how come everyone missed them? Why did nobody notice it’?”

Her Royal Hghness must’ve been awfully upset to ask “How come”; but, then, losing lots of money does cause some to lose their composure.

Is it the US manufacturers who are stupid? I don’t think so. You have to recognise that the consumer makes the call here … and we are reacting.

So how does Detroit “react” when consumers stop buying cars?

Rove’s leadership role suggests quite strikingly that any and all White House decisions and pronouncements regarding the recovery from the storm are being made with their political consequences as the primary consideration. More specifically: With an eye toward increasing the likelihood of Republican political victories in the future, pursuing long-cherished conservative goals, and bolstering Bush’s image.

Digby elaborated (“Katrina: Slow as Molasses,” 25 Aug ’07):

Louisiana has been a swing state for some time, in which Democrats were dependent on the black majority in the state’s largest city to win. It was not lost on Rove that all of those poor New Orleans African Americans—and their children—being dispersed throughout the nation could only be good for Republicans. As of now, only about 66% have returned, not enough to keep the state swinging (in more ways than one.) It looks very likely that the state will have a Republican Governor and two Republican Senators in 2008. Experts in the area estimate that the congressional delegation advantage for Republicans will be five to one by 2012. There is little doubt that the Katrina diaspora finally turned the state blood red.

Let’s see.

Below is a map from the NYT (5 Nov ’08) showing “Differences between support for the major parties between 2008” and 2004 (“Voting shifts” option), where the darkest blue indicates +~15% for Dems and the darkest red indicates +~15% for the GOP:

Rove’s strategy according to Froomkin’s and Digby’s analysis certainly seems like it could be correct. Below is a detail of Louisiana: at left Katrina damage (from the State Library of Louisiana), at right party shifts (+19% GOP):

There are notable differences. However, “evacuees” (basically, refugees who haven’t [1] crossed a national border and [2] received UNHCR imprimatur) don’t just disappear, they move—and are often resented for disrupting life in the areas where they resettle.

So where did Katrina refugees go? Below is a map of the “Hurricane Katrina Diaspora” (according to gongol.com) as of 1 Sep ’05 (left) and 3 Sep ’05 (right):

Southern detail of NYT vote-shift map:

Again, there are notable differences (for example, the blue shifts in Missouri, southern Illinois, and southern Indiana). But it’s possible—strictly in local, “tactical” terms—that the Bush administration’s sustained negligence in the wake of Katrina paid off twice for the GOP: first, by driving Dem-leaning black populations out of southern Louisiana, and second, by fostering a racist backlash in the surrounding region most heavily affected by Katrina evacuees’ migrations and resettlements. Of course, the big picture is that the administration’s inept handling of Katrina played a decisive role in the collapse of public support for the administration. But if there is in fact a correlation between evacuees’ migration and the GOP’s regional electoral gains, some of the reddest areas of the South in yesterday’s election may be less resistant to the overall bluing of the nation than generic analyses (e.g., “Bible Belt”) would suggest—and, instead, that they might have voted based in part on a racially tinged experience of social and economic dislocation that the rest of the nation never experienced so directly.

See also: Wikipedia, “Political effects of Hurricane Katrina: Political effects of population displacement”; fivethirtyeight.com, “Road to 270: Louisiana” (14 Oct ’08); and Mike Davis, “Who Is Killing New Orleans?”, The Nation (23 Mar ’06).

OK this is simple, there is risk that can’t be hedged by everyone.

Leonard Cohen’s version:

There is a crack
in everything.
That’s how the light gets in.

Mr Bloomberg, addressing a securities industry gathering, said he was already seeing a direct impact of the financial crisis. He said he had dinner on Monday night in a usually full Italian restaurant in Brooklyn in which only three tables were being used. “People are afraid,” he said, adding that most people would not lose their jobs or their homes, but it was a difficult task to restore confidence. “There is a need for psychologists rather than economists.”

Cf. Phil Gramm, of course.

This isn’t all that different from GWB’s “faith-based” procedure:

1. I will something.
2. It fails.
3. Posit forces that are challenging my will.

Call it Occam’s Rogaine. It’s a lifestyle drug, and the R&D process that led to it is symptomatic of the subordination of science to marketing.

See also: “2000–2008 in brief.”

Strange genre.

[Added: A better approach:

A page from Tom Phillips’s A Humument.]

I [“A-”-list blogger] immediately turned to the chapter [of Will Terrorists Go Nuclear?] on black markets, where [Brian] Jenkins [Wikipedia] quite sensibly argues that we should flood the zone with fake purveyors of nuclear weapons, materials, and technology to make it harder for terrorists to connect with actual merchants of death. The flip side of that, unmentioned by Jenkins but directly parallel to undercover activity in the illicit drug markets, is to flood the zone with fake buyers as well, so that the Russian sergeant who manages to steal a weapon is likely to wind up selling it to a fake terrorist group rather than a real one. Given the small number of actual buyers and actual sellers, the cost of making virtually impossible for them to find one another should be modest.

By the same token, the cost of making perverse results probable—genuine materials, components, and techniques needed to establish the bona fides of official fakes leaking; stings stinging stings; blowback; Nation X peddling Nation Y’s materiel to promote obscure crypto-strategic machinations; and so on—would be very immodest.

In any event, the CIA, among others, have been muddying these waters (if not exactly “flooding this zone”) for decades now. Maybe very well, maybe very poorly—it’s hard to tell, because they allegedly arranged for the evidence of their handiwork to be destroyed.

(A. Q. Khan demos nuclear “football.”)

See also: “Protecting sources and methods” and “Rollup.”

He puts the lie to the stone-faced doom-mongering and martial mummery right-wing cowards are forever hiding behind.

When we were conducting our final reporting back in March, I researched Urs Friedrich Tinner—the one of the three considered most deeply involved in [A. Q.] Khan’s illicit enterprise—through the electronic database Accurint. I was astounded at the time to see that his U.S. address was that of the Central Intelligence Agency in Washington DC. His given phone number was the CIA switchboard in Langley, Virginia. His title was “Agent.” This seemed so outlandishly brazen at the time that I didn’t trust it, that such a secret could be hidden in such full sight (with the help of a subscription to Accurint). Congratulations to Broad and Sanger for confirming the long and extraordinary story behind that address.

See also: “Rollup.”

(nieman watchdog)

the architect and cyber keymaster of George W. Bush election websites including GeorgeWBush.com and GWB43.com, the site Karl Rove used for 95-percent of his email communication…is also the CEO of Govtech Solutions, the company responsible for building and managing congressional email servers and firewalls. [emphasis added]

Rove’s “genius”: wiretapping Congress.

Different federal branches should use different IT vendors unless doing so is absolutely impossible—which, in itself, could be a sign that vendors should be broken up into independent competitive entities (e.g., RIM).

See also: “What do you mean ‘we’, kimosabe?”

Fortunately, the article is a pedestrian prologue to the suggestion that Halliburton and its circle of friends has indulged in similar hijinks under Bush:

What about the forensic economics of the Bush administration? Researchers have already estimated what it’s worth for Republican-connected companies to have George W. Bush in the White House by looking at what happened to the stock prices of companies with former Republican lawmakers on their boards when Al Gore gave up his fight for the presidency on Dec. 13, 2000 (they went up; Democratically connected companies’ prices went down).

If and when the story behind the U.S. invasion of Iraq becomes public, researchers will surely also be analyzing the share prices of the many companies that profited from a U.S.-occupied Iraq. None will see greater scrutiny than oil services giant Halliburton, whose former CEO Dick Cheney left the company to become vice president in 2000 and undoubtedly took part in the invasion’s planning. (Some say he was pivotal in the decision to invade.) In the Iraq war’s aftermath, Halliburton received billions in no-bid reconstruction contracts, boosting its profits and leading to accusations of corruption.

Halliburton’s stock price jumped 7.6 percent the day the Senate authorized the use of force in Iraq, so investors clearly anticipated that war would be good for the company. Did insiders also profit from advance notice of these sweetheart deals to come? Conspiracy theorists will no doubt be interested in what happened to Halliburton stock on days when less-public meetings took place. Cheney himself certainly could not have traded on any inside information—monitoring of insider trades and stock transactions is much more sophisticated now than it was in the 1950s. But perhaps others in the V.P.’s office or at Halliburton (or their cousins, or their cousins’ cousins) might have been able to do some trading on the sly. If so, they may have left tracks in the data for researchers to follow.

For researchers to follow.

Added 1 Nov: Surowiecki, apparently unclear on the concept, concludes: “It’s like a deleted scene from ‘The Good Shepherd.’” Sure. If you regard Damon/Jolie vehicles as an authoritative overview of mil/intel history.

Intelligence Agencies Face Austerity

Body:

Spending on intelligence operations increased by some 9 percent last year, to $47.5 billion, Mike McConnell, the director of national intelligence, said on Tuesday. That figure includes most intelligence spending, including the budget for the National Security Agency, the Central Intelligence Agency and the operations of spy satellites, but it does not include several billions that the military services spend annually on intelligence operations.

When the military spending is included, the new figure confirms that the American intelligence budget has doubled over the past decade, primarily to meet the demands of wars in Iraq and Afghanistan and a worldwide campaign against Al Qaeda. In 1998, the last time until 2007 that the intelligence budget was publicly disclosed, it stood at $26.7 billion; at that time, there were more F.B.I. agents working in New York City than C.I.A. officers operating around the world.

Yet current and former intelligence officials said that some belt tightening has already begun because of the current economic crisis, and that further large increases in the budget are unlikely, no matter who becomes the next president. They said discussions currently under way to determine the 2010 budget reflect White House demands for greater spending restraint.

“Everyone senses we’re reaching the end of growth for the intelligence budget,” said Mark M. Lowenthal, a former top C.I.A. official and Congressional intelligence staff member.

Mr. Lowenthal said the intelligence budget might be vulnerable to cuts in future years, and could be more politically vulnerable than the budget for homeland security, which contains dozens of pork barrel projects that lawmakers are loath to part with. [emphasis added]

Then again, maybe not.