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Lisa Scheer took this pic recently in GSO.

From Leveraged Losses: Lessons from the Mortgage Market Meltdown, a report from the US Monetary Policy Forum, sponsored by the Rosenberg Institute of Global Finance at Brandeis University's International Business School and the Initiative on Global Markets at the University of Chicago Graduate School of Business:

Our best (very uncertain) guess is that the losses will total about $400 billion, with about half being borne by leveraged U.S. financial institutions. We then highlight the role of leverage and mark-to-market accounting in propagating this shock. This perspective implies an estimate of the eventual contraction in balance sheets of these institutions, which will include a substantial reduction in credit to businesses and households. We close by exploring the feedback from credit availability to the broader economy and provide new evidence that contractions in financial institutions balance sheets’ cause a reduction in real GDP growth. [emphasis added]

UPDATE: More here, and another link in the comments below.

My brother-in-law's late grandfather lived a long and full life. He would have celebrated his 25th birthday today.

Sullivan on the difficulties faced by AIG in valuing its own portfolio and the risk it covers: "We are in uncharted waters...We could not find observable data points in this highly disrupted and  illiquid market to value the protection we provide." (starts about 9:00 of call)

He also announced that the head of the unit with the huge loss, Joe Cassano, "has decided with our concurrence that he would like to pursue opportunities outside of AIG."

UPDATE: You really need to listen to the whole call to get a sense of the complexity of this business. These slide shows will help.

UPDATE: An AIG exec uses my favorite word: "I don't think the opacity of the market has clarified any further since [year end], in fact I think it's probably even less liquid and more opaque than it has been." (just after 2:21:00)

AIG chief executive Martin Sullivan on United Guaranty: "We expect operating results [...] to continue to be challenged...Our best estimate is that future premiums on the existing in-force book [...] will exceed future losses incurred. However, losses will likely emerge in advance of premiums earned, and we expect that negative operating results will persist throughout 2008 as a result of continued weakness of the U.S. housing market." (UGC remarks begin at 4:30 of earnings call.)

Translation: that half-billion in red ink flowing out of Greensboro is just the beginning.

This is a big local story, and one that provides a view onto a huge national story. Perhaps the local media will cover it.

UPDATE: More from the call. In response to an analyst question (about 2:00:00) UGC boss Billy Nutt says, "The housing indicators are all trending negative...at an accelerating pace...and likely to continue to do so...the housing market is going to continue to experience a lot of stress through '08, and probably will not bottom out until the first half of '09, if then...quite a bit of stress on our domestic portfolio...we would anticipate that operating loss [for 2008] would be somewhere in the range of where we were in '07 to somewhat higher than that." [emphasis added]

Ouch.

Clinton and Obama pander on NAFTA, but there's more to the story.

Canada and Mexico, however, already subscribe to the core standards of the International Labor Organization. Mexico has subscribed to 70 ILO conventions, and Canada has adopted 28 of them.

The United States has agreed to only 14. That's eight fewer than the number of global labor agreements accepted by China, the source of most U.S. job dislocation.

Jobs flow to places with lower costs, which promise higher returns on capital investment. NAFTA lowers costs in this hemisphere, making it somewhat more competitive with Asia.

We talk a good game in this country when it comes to capitalism, but then we turn around and embrace things like the "startlingly redistributive" stimulus plan. It's almost as if life is more complicated than an Econ 101 textbook or a curve drawn on a cocktail napkin.

UPDATE: More NAFTA game-playing?

The single most important issue in this election:

United Guaranty gets a paragraph in the WSJ's coverage of AIG's horrible quarter, which ledes: "The credit crunch hit American International Group Inc. with brute force, as the global insurer reported a $5.3 billion fourth-quarter loss largely because of a write-down that exceeded many analysts' expectations. It was by far the worst quarterly loss the company has reported in its history, which dates back to 1919."

Bloomberg on the Greensboro company: "The unit, which reimburses lenders when borrowers don't pay their loans, may not regain profitability until 2009."

Given the direct link between the housing bust and UGC's performance, it's going to be morbidly fascinating to see how high the losses -- $563 million in the second half of 2007 -- climb this year.

AIG reports Q4 earnings. Local results quite unpretty.

"United Guaranty Corporation (UGC) reported an operating loss of $348 million in the fourth quarter of 2007, compared to operating income of $27 million in the fourth quarter of 2006. Continued deterioration in the U.S. housing market adversely affected losses incurred in both the domestic first- and second-lien businesses."

That's well over a half-billion dollars in losses in the last six months for the GSO insurer. Our local housing market may have avoided the worst of the meltdown, but not all of our local companies can say the same.

Previously.

Endorsement from controversial minister bites presidential candidate, who isn't enough of a real American for some folks in the first place.

Pew Center on the States:

[M]ore than onein every 100 adults is now confined in an American jail or prison. According to figures gathered and analyzed by the Pew Public Safety Performance Project, the number of people behind bars in the United States continued to climb in 2007, saddling cash-strapped states with soaring costs they can ill afford and failing to have a clear impact either on recidivism or overall crime.

For some groups, the incarceration numbers are especially startling. While one in 30 men between the ages of 20 and 34 is behind bars, for black males in that age group the figure is one in nine. Gender adds another dimension to the picture. Men still are roughly 10 times more likely to be in jail or prison, but the female population is burgeoning at a far brisker pace. For black women in their mid- to late-30s, the incarceration rate also has hit the 1-in-100 mark. Growing older, meanwhile, continues to have a dramatic chilling effect on criminal behavior. While one in every 53 people in their 20s is behind bars, the rate for those over 55 falls to one in 837.

More here.

Joe Wilson v Don Vaughan in NC Senate race.

Should be entertaining.

UPDATE: Don't know where Joe's blog went, it was working when I linked it.

Thoughts from our breakfast table: You can party down, and you can party it up, and either direction can get you sideways.

It is not entirely correct to say that banks and oil companies run the world, but they certainly have some seats at the table.

More here.

A celebration of the big addition to Haw River State Park, Tuesday, March 4, at 5pm, Summit Environment Education Center.

Dignitaries in attendance. Worth going anyway.

Weigh in while you still can on protest petitions for GSO at the N&R YVATT blog.

Mission Accomplished, and it paid for itself!

And don't forget how cheap gas is now, too.

UPDATE: Vanity Fair has an excerpt from the book.

N&O:

North Carolina election workers are bracing for a wave of new voters -- many of them young people casting their first ballots -- who may inundate polling places during the May 6 primary.

"We are going to be registering new folks the likes of which we have never seen before," said state elections director Gary Bartlett. "I've not seen this level starting out of the gate."

Bartlett recently cautioned county election workers that they need to be ready for a turnout that could top 50 percent if the Democratic presidential contest between Illinois Sen. Barack Obama and New York Sen. Hillary Rodham Clinton is still alive when North Carolina holds its primary. North Carolina typically sees a top turnout of about 30 percent in primaries.

Possibly relevant.

Some readers have asked if the allegations about destroyed police files were discussed with City Council members in a recent closed session. So I asked Robbie Perkins, who responded: "Unequivocally, no."

He said he heard about it for the first time the night before the press conference.

Gerson: "I have seen the future of evangelical Christianity, and it is pierced. And sometimes tattooed. And often has one of those annoying, wispy chin beards."

More: "[T]here is something essentially countercultural about Christianity that should make evangelicals restless in any political coalition. Christianity indicts oppressive government -- but also the soul-destroying excesses that sometimes come in free markets and consumerism. It teaches enduring moral rules -- and an emphasis on justice for the least and the lost. It is often hard where liberalism is soft, and soft where conservatism is hard. If evangelical Christianity were identical to any political movement, something would be badly wrong."

Springboard is a new blog from Action Greensboro.

Bernanke speaks to Congress.

Some reactions. Essentially, the FOMC's strategy is to "cut and hope", trusting that lower short term interest rates will help the economy regain its footing, and that incipient inflation pressure will prove to be short-lived. –-Joshua Shapiro, MFR Inc.

Lisa Scheer took this pic recently in Rockingham County.

NYT on the William F. Buckley, who died today: "Mr. Buckley's greatest achievement was making conservatism — not just electoral Republicanism, but conservatism as a system of ideas — respectable in liberal post-World War II America."

Carney: "If it's a day that ends in the letter y, it's probably time to learn about problems in another dark corner of the credit markets."

Variable interest rate entities, or VIEs, are the bogeyman. They might even bite above-it-all Goldman for $11 billion or so -- part of another $88 billion haircut for the industry.

Says Tanya Azarchs, managing director for financial institutions at S&P, "The disclosure on VIEs is hopeless You have no idea of the structure or how that structure works. Until you know that you don't know anything."

A report says North Carolina is "under-lawyered," and recommends allowing graduates of unaccredited schools to practice in the state. (via Dome)

More lawyers and lower standards -- not exactly what you might expect from a document issued by the conservative Pope Center for Higher Education Policy, although breaking the lawyer-factory monopoly might be a Pope issue. Or maybe they think it just makes sense. A related issue -- allowing non-laywers to do stuff traditionally done by attorneys -- has been a hot topic in the legal profession for years (and a focus of one of my favorite lawyers).

The report says of GSO's pride and joy, Elon University School of Law, that "provisional ABA approval is likely before Elon graduates its first class in the spring of 2009."

The housing/credit mess continues to unfold. Mortgage resets haven't even peaked yet. If this thing kicks us into an officially-defined recession, we won't know until July at the earliest. Even Kudlow is admitting that Goldilocks has the flu.

I'm ready for some good news.

Hating Tim Russert.

I couldn't watch another debate. The media tells me it was testy, though.

McCain shows some class.

People are sick of this stuff.

GPD press release:

FOR IMMEDIATE RELEASE: February 26, 2008

CONTACT: Chief T. R. Bellamy
Chief of Police

RESPONSE TO ALLEGATIONS

Today, public allegations were made that during the administration of Former Chief of Police David Wray, a member of the Greensboro Police Department ordered the destruction of police records related to the November 3, 1979 Nazi-Klan murders. The police department has reviewed the anonymous allegations and is discussing them with the Guilford County District Attorney to determine if the nature of the allegations would constitute a criminal violation if substantiated.

In September of 2007, allegations were brought to the attention of Chief of Police Tim Bellamy regarding the possible destruction of documents related to the 1979 incident. Chief Bellamy met with Rev. Nelson Johnson and requested more information or evidence that this had occurred, but no evidence was produced or persons identified that were willing to talk to Chief Bellamy or investigators.

Between August 2005 and February 2006 the Greensboro Police Department provided numerous documents related to the November 3, 1979 incident to the Truth and Reconciliation Commission as requested.They were contained in 49 bound volumes.

Davidson now has the longest active win-streak in D1 hoops.

NYT: "Closing in on a second perfect Southern Conference regular season in four years, Davidson [...] is back on the list of dangerous small programs the big-time teams do not want to face in the N.C.A.A. tournament."

Starring Reese Witherspoon as Hillary Clinton as Tracy Flick:

If Greensboro police officers destroyed files pertaining to the 1979 Klan/Nazi killings after the department received a request for those files from the TRC, it's a big deal.

You can read the statement distributed at today's press conference after the jump.

Lots of other stuff to discuss -- potential illegality of alleged destruction, contents of files, chain of command in ordering the alleged destruction.

Other stuff I'm not sure has to be part of this particular discussion -- institutional racism, for example -- was introduced by the ministers.

For the moment, though, I'm most interested in the question of those files.

N&R letter-writer Will Truslow tells me all kinds of stuff I didn't know: that some folks near Danville are sitting on top of a very large amount of uranium that they would like to dig up and sell, that VA has a moratorium on uranium mining, and that environmental safety concerns have made the possible lifting of the moratorium a hot issue north of the border.

Here's the site for Virginia Uranium Inc.

This blogger leans toward lifting the moratorium. She's got a lot of useful info and posts on the topic. These folks oppose uranium mining. Some big media coverage.

Greensboro makes PopSci's list of Greenest Cities. We're #50 out of 50, the only North Carolina city to make the cut. (Thanks to alert reader ER for the tip.)

We've discussed the general lameness of magazine lists here many times, but it's probably better to be on the positive ones than not to be on them.

From the comments at the site: "This is actually kind of disheartening. Seriously, on a 30 point scale, the 50th cleanest city only has 10 points? And, only 12 cities score in the 20's."

Another commenter, a student from GSO, says the Proximity Hotel and the Haw River Park victory show we are doing pretty well.

Technology Review:

After a two-year rush program by the Pentagon's research arm, the U.S. Defense Advanced Research Projects Agency, or DARPA, troops are now getting what might be described as Google Maps for the Iraq counterinsurgency. There is nothing cutting-edge about the underlying technology: software that runs on PCs and taps multiple distributed databases. But the trove of information the system delivers is of central importance in the daily lives of soldiers.

The new technology--called the Tactical Ground Reporting System, or TIGR--is a map-centric application that junior officers (the young sergeants and lieutenants who command patrols) can study before going on patrol and add to upon returning. By clicking on icons and lists, they can see the locations of key buildings, like mosques, schools, and hospitals, and retrieve information such as location data on past attacks, geotagged photos of houses and other buildings (taken with cameras equipped with Global Positioning System technology), and photos of suspected insurgents and neighborhood leaders. They can even listen to civilian interviews and watch videos of past maneuvers. It is just the kind of information that soldiers need to learn about Iraq and its perils.

Via Nick Carr, who titles his post "Social networking goes to war," and notes that insurgents can and do use many of the same tools.

When you needed more bandwidth, you got cable.

When Google needed more bandwidth, it bought a cable.

Brooks says McCain really does stand up to lobbyists, Marshall says he bends over for them, too. Both seem to be true. The question over time is whether the latter undercuts the image crafted around the former.

McClatchy: "Why isn't immigration a campaign issue in Texas?"

With the nation's second largest population of illegal immigrants behind California , and 1,200-mile long border with Mexico, Texas seemed tailor-made for a bruising confrontation on immigration in advance of the state's March 4 presidential primaries.

But after more than 40 earlier primaries and caucuses, the issue that once threatened to roil the 2008 presidential race has seemingly lost much of its intensity. The three candidates who now dominate the race share similar ideas on how to fix the nation’s tattered immigration system.

As colleagues in the U.S. Senate, Democrats Hillary Clinton and Barack Obama and Republican John McCain supported bipartisan efforts to legalize millions of undocumented immigrants, the most controversial ingredient in failed immigration legislation.

Their past record on immigration, coupled with their campaign pledges, point to a continuation of President Bush's efforts to overhaul the nation's immigration laws, regardless of which candidate ultimately wins.

U.S. to sovereign funds: if you are going to by our financial industry, please promise to play nice.

It's hard to impose terms on people who are bailing you out.

New Hagan campaign manager makes chilly first impression.

A new web site is promised. I know I haven't mentioned this in about five minutes, but they don't need just a web site, they need a web campaign.

Neal calls blogger, blogger digs Neal.

Pew survey:

More than one-quarter of American adults (28%) have left the faith in which they were raised in favor of another religion - or no religion at all. If change in affiliation from one type of Protestantism to another is included, 44% of adults have either switched religious affiliation, moved from being unaffiliated with any religion to being affiliated with a particular faith, or dropped any connection to a specific religious tradition altogether.

The survey finds that the number of people who say they are unaffiliated with any particular faith today (16.1%) is more than double the number who say they were not affiliated with any particular religion as children. Among Americans ages 18-29, one-in-four say they are not currently affiliated with any particular religion.

Reuters: "The United States expects to have 140,000 troops in Iraq in July after withdrawing five combat brigades, leaving a force larger than before it began pouring in troops last year, the Pentagon said on Monday."

Previously.

Received via email:

MEDIA ANNOUNCEMENT:     

PASTORS TO DISCLOSE DETAILS ON THE DESTRUCTION OF APPROXIMATELY 50 BOXES OF GREENSBORO POLICE FILES RELATED TO THE NOVEMBER 3, 1979 KLAN-NAZI KILLINGS DURING FORMER POLICE CHIEF DAVID WRAY’S ADMINISTRATION

Media Representatives are invited to join us on Tuesday, February 26, 2008, 11:30 AM, at New Light Baptist Church, 1105 Willow Road, Greensboro, NC for an announcement related to the matter outlined below.

Based on information from an active duty police officer, three pastors – Rev. Cardes H. Brown, Rev. Gregory T. Headen, and Rev. Nelson N. Johnson – will disclose detailed information about the destruction of approximately 50 boxes of police files during the tenure of Former Police Chief David Wray.  The materials were related to the November 3, 1979 killing of five labor and community organizers.  The name of the police officer who gave the order to destroy the materials will be shared during the media briefing.  The pastors will also share the circumstances surrounding the destruction of the files and their view of the broader implications of such conduct.  In addition, they will share steps already taken with city official to have this matter addressed.

Nearing the end, The Wire is good again. Not rise-and-fall of the Barksdales good (i.e., great), not kids-in-school good (i.e., Best. Show. Evar.), but back on track after a shaky patch. Below, a reminder from the past -- Omar shows he doesn't need that shottie to take people out.

SI's Stewart Mandel: "In the seven seasons since Duke's last national title (2001), college basketball's most publicized program has almost annually seen its weaknesses exposed at the worst possible time: the end."

The grave-dancing is on a stretch that includes four Sweet 16s and a Final Four, with last year's team the only easy out in the bunch. But Dook is Dook, they're on teevee more than Leave it to Beavah reruns, and the gods of hype are jealous gods.

Lots of variables in this game. If Deng had stayed for more than one year, if McBob had played as well as he thought he did...

The Dook team that came into Chapel Hill in early February was playing pretty damn well. I think a healthy UNC takes the regular season title from them at Cameron in a couple weeks, and Dook goes on to make the Sweet 16 or final 8.

Elon poll question: "Do you plan to vote [for or against] Elizabeth Dole as U.S. Senator from North Carolina?"

AGAINST 24.8
FOR 37.4
TOO EARLY TO TELL (v) 14.2
DON'T KNOW/ NOT SURE (v) 22.5

v = an answer volunteered by the polee, not one of the given responses.

Those don't seem like very strong numbers for an incumbent.

Then again, as Dome points out, "Hagan and Neal have not turned many heads in their bid for the Democratic nomination...both candidates badly trailed 'Don't know' (46.6 percent), 'Too early to tell/Not sure' (34.8 percent) and 'Named someone else/other)' (8.2 percent).

NYT picks up the Josh-Marshall-prize-winning-blogger thing.

"To scores of bloggers, it was a case of local boy makes good."

Scores?

Question of the Week over at the N&R's Your Voice at the Table blog: "Should Greensboro residents have the right to challenge City Council zoning decisions through protest petitions?"

I bet I know how this guy votes.

Interesting to see if blogs and email lists can get a reasonable number of people to weigh in on the question.