About Your Missing Horses....

One of the gnomes of Zurich woke up with a bad limp this morning. How in the world did a Swiss bank get clobbered with a $10 billion loss in subprime mortgages written in the US? A seriously misplaced trust in innovation firmly attached to "respected names" seems to be the main answer. Aside from greed, of course.

One of the "respected names" washes its hands of the matter thusly:

While we realize this was a very limited sample, Fitch believes that the findings are indicative of the types and magnitude of issues, such as poor underwriting and fraud, which are prevalent in the high delinquencies of recent subprime vintages. In addition, although the sample was adversely selected based on payment patterns and high risk factors, the files indicated that fraud was not only present, but, in most cases, could have been identified with adequate underwriting, quality control and fraud prevention tools prior to the loan funding. Fitch believes that this targeted sampling of files was sufficient to determine that inadequate underwriting controls and, therefore, fraud is a factor in the defaults and losses on recent vintage pools. Additionally, Fitch continues to attempt to expand its loan sample to provide further validation of its findings and will provide additional commentary as applicable.

See, it wasn't the credit rating company's fault, and, if you read very carefully and at length, it wasn't even the underwriter's (those folks who pay the credit raters) fault. It was the loan originator's fault and, in particular, the mortgage broker's fault. S & P, Moody's and Fitch were innocent bystanders who extended trust in good faith, although in retrospect, perhaps a tiny bit unwisely.

What utter hogwash.

The increase in default rates was traceable within months of the setup of each of the "deals". Each packaged mortgage "deal" is seasoned and the results are required to be reported monthly. The big banks set up indices to follow "valuation" of how creditworthy groups of deals are that allow one to follow a deal down to about the tranche level. ABX is one such index and Citigroup Mortgage Loan Trust 2007-AMC2 is a sample of a constituent element of the index. Go to the EDGAR CIK search engine, pop in "Citigroup Mortgage Loan Trust" and take a look at the list of deals, open 2007-AMC2 and take a look at the distribution reports. This is a $2 billion, ten thousand loan deal that was set up in February, 2007 and had over ten per cent of its loans at least 30 days past due by August. By December, twenty per cent were at least 30 days past due with half of them moving to the bankrupt, foreclosed or REO status group. My bet is that at least 500 loans out of the 1,000 that were sour in August were outright fraud of a sort that Fitch's report doesn't really identify. It doesn't take more than a shady realtor coupled with a soft appraiser and a "hot" mortgage broker to scam a sucker like Citi.

It might be cheaper for Citi in the future just to leave their vault doors open to the general public one day a year. Maybe they could get Fitch to pick up part of the tab? It couldn't hurt either of their current reputations very much. A sad part of this entire charade is that Citi wasn't anywhere near the worst player. The saddest part is that the reporting on the charade still doesn't identify the fact that the whole thing was driven by cost cutting at the origination level. The originators were driven by the underwriters into substituting simplistic (and easily scammed) FICO scores for "legwork" that really only entailed making a series of phone calls. The "savings" per app couldn't have been more than $200 - and it's not as if the borrower didn't pay for it in the first place.

Wreaths at Arlington

An old friend pointed me to the information that one Morrill Worcester, owner of the Worcester Wreath Company of Harrington, Maine, annually donates 5,000 wreaths to be placed upon graves at Arlington National Cemetery. Not only does he donate the wreaths but he annually drives from ME to Arlington with a group of volunteers to deliver and place the wreaths. Mr. Worcester has expanded his efforts to Wreaths Across America. Thanks for the pointer, Stosh.

This Morning's View

"Garibaldi does not dominate the surrounding landscape, which consists of many high, rugged peaks. Many residents of Vancouver are therefore not aware that there is a volcano closer to the city than the more easily visible Mount Baker in Washington State."—Wikipedia

The Right Coast: Those darn liberal academics Tom Smith

The Right Coast: Those darn liberal academics Tom Smith: "But the most painful thing about being a conservative in the academy is not being discriminated against, but the sheer, awful tedium of having to listen to the cant that passes for reasoning where PC-ness has taken over. If you are a pointy-head, having your intelligence insulted is one of the worst insults of all."

Save the world, buy a Playstation 3

Folding@Home client statistics by OS

OS Type	Current TFLOPS*	Active CPUs	Total CPUs
Windows	173	181694	1867933
Mac OS X/PowerPC	7	9281	108973
Mac OS X/Intel	18	5896	31084
Linux	44	25733	261056
GPU	41	700	4810
PLAYSTATION®3	1053	42454	364448
Total	1336	265758	2638304

Folding@Home is a Stanford project to use home computers to simulate protein folding. It is also comes with the Playstation 3 and can be activated by clicking on an icon. Note that the Playstation 3 network is rated at over a petaflop. This is getting into the range of the human brain, although the brain only uses about 20 watts and is far more connected. The GPU stats are for programs using ATI X1900 class video cards, which can run the computations 20x to 30x faster than a CPU with SSE.

Here is a video snippet from DLTV that also shows simulated protein folding in action.

Dammit, why didn't I think of this?

Well, here's a fine invention from 1963: a spinning hospital bed that uses centrifugal force to facilitate the birth of a child. I'm not entirely sure how it was supposed to work, but I have a mental picture of a doctor standing at its foot with a catcher's mitt to snag the little goober when it shoots out like a cannon ball.

Google patent search 3216423

Newt Gingrich on NBC

Friday Links

The uncrowned king of heroin.


Talkin' 'bout the new generation. (H/T Colin)

Bomb-proofing your clothes with Zetix.

Is CompUSA no more?

The Long March into Africa.

Introducing the MemeBox.


The Nostradamus of the 21st century?

Tuberculosis from half a million years ago.

Roughing up the BBC.

Solar cheaper than coal?

No more Miss Tibet.

The voice of an angel

French perfidity and the Turkmenbashi, a.k.a. everybody's favorite maniac dictator. What could be finer? Too bad I don't speak French.

From No Pasaran: Giving in to their Homoerotic Love of Dictators.

They Don't Ring A Bell

Who will be most disappointed by the end of the mortgage crisis? My bet is that it will be the various and sundry doomsday writers who glibly use "median" in their rationales for the 'end of the world as we know it' summaries on real estate. When mortgage lenders choked off the supply of jumbos in August it didn't take a genius to understand that the 'median' price was going to take a hit. The doomboys apparently can't afford the pixels to mention that. Nor do they appear to possess a sufficiency of pixels to note that the increase in average square footage for SFRs from 2000 and 2006 was 9.5%. Could that account for a say, 9.5%, increase in price? If it does, then it accounts for 20% of the total "exorbitant" increase over the time period. Did you know that the "exorbitant" price increase of the last seven years is actually precisely aligned with the annual increase in price over the past forty years? If you do it wasn't from the doomboys because the doomboys will never speculate on that point, no more than they will ever take a moment to examine the fact that "median" household income today has changed in the same manner that the average house has changed. Except that the "median" household has grown poorer due to its composition. The no spouse (NSP) component of the family household has increased by over 7% in seven years which dragged down the overall increase in family median household substantially. The income of the married couple component hasn't increased at the same rate as the cost increase of the median house but that has something to do with the fact that 25% of the married couple component is over 65.

Take another look at the doomboy chart MHA posted a few days ago. In particular, take a look at previous recoveries from the lows. The big home builder stocks jumped 4% today (average of Beazer, Ryland, Toll, Pulte, Lennar, Hovnanian, Horton and Centex).

Ding. Ding. Ding.

Weekly Links

Bruce Schneier speaks.

The top 100 PC innovations.

The Church of Rome vs. the Church of China.

The reality of Facebook.

The 8 most dangerous roads.

Buy tellurium.

Apple's new iBlade technology.

A dinosaur with meat still on the bones.

Robots learning from babies.

Sex in space.

10 semantic apps.

More cyberespionage.

Power series in Haskell.

Crash 2.0?

... and a PS to Joe Biden

Joe: saying in 2003 that the intelligence says Iran is trying to build nuclear weapons, and then saying in 2007 that new information suggests they stopped, is not a lie.

Saying "I didn't have sexual relations with that woman"? That's a lie.

Saying "I just happened on my one experience with trading options to make a hundred times my investment"? Very probably a lie.

Stealing another politicians speech and using it as you own, without attribution? If not a lie, then the next best thing.

But saying "I have new better information that has changed our understanding"? Not a lie.

Always happy to help.

The NIE

So let me get the straight. Some years ago, Bush said "Iran is making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplommatic means will be less effective."

And the reporting was "Bush threatens War."

Then Bush said "Iran is still making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplomatic means will be less effective."

And the reporting was "Bush threatens War."

Then some sanctions were set up, and Bush said "Iran is making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplomatic means will be less effective."

And the reporting was "Bush threatens War."

Then Ahmedinajiad said Israel should be destroyed and they were the ones to do it, and Bush said "Iran is making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplomatic means will be less effective."

And the reporting was "Bush threatens War."

Then Ahmedinajiad said they were successfully enriching uranium and no one would stop them, and Bush said "Iran is making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplomatic means will be less effective."

And the reporting was "Bush threatens War."

And finally, the new NIE came out and said that under pressure they now believe Iran has stopped an active eapons program, but they still aren't cooperating with IAEA, and Bush said "Iran is making progress on nuclear materials that could be used in nuclear weapons. We need to pressure them to stop, and to open themselves to inspection, and while diplomatic means are the best answer and force is a last resort, we can't eliminate force, or else the other diplomatic means will be less effective. But diplomatic means seem to have been somewhat effective, so we should keep up the pressure and I will continue to do so."

And the reporting is "Bush was an idiot to threaten war."

Have I got that straight?

Horsehockey Stick

Steve McIntyre at Climate Audit provides a nice graph for the idiots assembled at Bali to peruse as they decide how best to slay the dreaded AGW chimera. It will be interesting to watch the World's Greatest Deliberative Body make a collective ass of itself later this week as it, too, jousts in earnest with the dreaded beast. Not that this week will be extraordinarily different than any other week but the graph provides a very nice counterpoint to the dystopians seeking to control the world's economy using a hoax that will eventually be classified as falling between the Piltdown Man and Lysenkoism.

Roger Pielke continues to conduct climate science and has re-opened his blog. He provides another nice counterpoint to the Mannomatic hockey stick replicator (with 4-barrel data enHansenizer) that climatologists find as useful to their "art" as were the charts produced by phrenologists in their hay day.

Picture du Jour

click to enlarge

Back in the bread queue | Samizdata.net

Back in the bread queue | Samizdata.net: "They have a vision of a vastly reduced population living simply on simple foods. A population that is suitably grateful to their beneficent rulers, who, because of the burden they carry, live in air conditioned comfort as they jet from climate conferences in Africa to something else ‘right on’ conferences in somewhere else far a way and interesting."

Egotistical

The man was apparently a bit much, but Mahler's Second Symphony, Resurrection, rocks! Go Baby!

For the orchestration I heard last night, in addition to all the usual suspects, there were 10 horns, 5 trumpets, 6 trombones, and percussionists galore. Tuxedos dashing this way and that. I swear, one of the crescendos made me giggle. Way kewl.

And should you ever have the opportunity to hear the yutes of the Westminster Choir College do their thing, grab it. They're freakin' good, no kiddin'.

Ammo with Attitude

So, I headed down to the range this afternoon to get in a bit of target practice. Buckmark pistol? Check. Box of Federal automatch ammo? Check. I've had good luck with this ammo before, but today was something different: Bang, bang, spiff, Bang, spiff, spiff, spiff, Bang, bang. Wow, it was a veritable symphonic performance, Bartok, I think. Most of the spiffs ejected, which was a wonder, but I have never heard such wild variations before. Time to head off to the internet and try something different.

Okay, I'm in Love

French-Quebecoise-Belgian Chanteuse Lara Fabian

... and my favorite video of her...




Not hard to look at either.