Showing posts with label stupidity. Show all posts
Showing posts with label stupidity. Show all posts

Thursday, March 31, 2011

Japan Nuclear Update: Fear and Loathing about Fukushima

It hasn't taken very long for the charlatans and plain fear mongers to try to capitalize on the situation in Japan. I recently saw a banner ad on my web site for a company shilling a supplement to prevent radiation injury to Americans. I am not going to link to the company and give them free publicity.



To be very clear:
YOU ARE IN NO DANGER IF YOU LIVE IN ALASKA, HAWAII OR THE CONTINENTAL US.
The EPA agrees with me without using all caps.
professor from Berkeley agrees with me.

Those who have a memory longer than a year may recall two nuclear weapons detonated OVER Japan a few decades ago. The amount of nuclear radiation emitted from those events were several orders of magnitude higher than the current situation yet we didn't have anyone dying in America did we?

This chart from http://xkcd.com/radiation/ has been floating about showing the relative levels of radiation and I think one should really take a look at it to put some of the news reports in context.  One problem is our instruments are so sensitive that its very possible in America to detect the slightly elevated levels of radiation that have made it to our shores.  Then again, getting on an airplane would provide a much higher dose but that doesn't seem to be mentioned at the same time the TV breathlessly tells you the clouds of nuclear radiation are coming this way.

Plutonium:
There's been reports plutonium has been found on the grounds of the Fukushima power plants and we should all hit the panic button  Plutonium is a natural by product of the normal fission cycle which occurs in a power plant. What they didn't mention in the first reports is the scale of the plutonium concentration and that matters a lot. For some sanity I suggest you listen to this interview:
http://georneys.blogspot.com/2011/03/14th-interview-with-my-dad-nuclear.html

Tepco came out with some clarification of the Plutonium and it's not something to worry about
http://www.tepco.co.jp/en/press/corp-com/release/11032812-e.html


Finding people in Japan:
The red cross has another site for finding people in Japan here:
http://www.familylinks.icrc.org/web/doc/siterfl0.nsf/htmlall/familylinks-japon-eng
I mentioned another site run by Google a couple days ago.

Predictions for cleanup taking 30 years:
I ran across a Bloomberg article predicting it will take 30 years and billions to clean this mess up. I link to it so we can see how accurate they are. I find it odd to make such predictions when the smoke hasn't even settled.

There's an interesting presentation by Arevea floating around which appears to give a good timeline of what has happened. Of course this is a theory regarding the damage of the cooling torus but it does look like a possible reason for the elevated radiation readings in the water.
https://docs.google.com/present/view?id=dg4hcz37_289dr9g62f6

I'm not trying to sugar coat the issue in Japan which is still volatile and dangerous but please respond to any positive or negative news reports with a healthy dose of skepticism.

Wednesday, October 14, 2009

Subprime housing mess 2.6


As I have previously posted, the FHA (Federal Housing Administration)  is making loans that are rapidly going bad. 

Here are some more details and snarky commentary from my favorite bunny cannon shooting blogger, Fund my Mutual Fund:  10/14/09 NYT: FHA Problems Raising Concern of Policy Makers


TraderMark provides some additional detail and of course colorful description of the current political and economic situation regading falling home prices and the government's attempt to prop them up.

The graphic at right shows rising default rates for FHA loans made recently as compared to a couple of years ago.  Please read the article, but here's a few juicy bits.

Let's stop right there. 1 in 5 loans made in 2008 via FHA are ALREADY IN TROUBLE. 1 in 4 loans made in 2007 via FHA are ALREADY IN TROUBLE. We are not even 3 years into these mortgages. This is EXACTLY the same data we were presenting in 2007 about subprime loans! And Alt A's! And Option ARMs!
The number of F.H.A. mortgage holders in default is 410,916, up 76 percent from a year ago, when 232,864 were in default, according to agency data.


It's some good stuff...

Tuesday, September 29, 2009

Subprime Housing Mess 2.5

Why is this version 2.5? Because we should have learned.  This one is brought to you with the usual actors only this time they are sitting in slightly different chairs.

The Buyer is the same as before, but instead of exceedlingly loose credit standards, the consumer is helped along by an $8,000 first time home buyer tax credit.

The Provider of the loans is not Wall Street this time, but good old Uncle Sam.  From WSJ Opinion (2009 September 29)

The reason for this financial deterioration is that FHA is underwriting record numbers of high-risk mortgages. Between 2006 and the end of next year, FHA's insurance portfolio will have expanded to $1 trillion from $410 billion. Today nearly one in four new mortgages carries an FHA guarantee, up from one in 50 in 2006. Through FHA, the Veterans Administration, Fannie Mae and Freddie Mac, taxpayers now guarantee repayment on more than 80% of all U.S. mortgages. Sources familiar with a new draft HUD report on FHA's worsening balance sheet tell us that the default rates have risen most rapidly on the most recent loans, i.e., those initiated or refinanced in 2008 and 2009.

All of this means the FHA is making a trillion-dollar housing gamble with taxpayer money as the table stakes. If housing values recover (fingers crossed), default rates will fall and the agency could even make money on its aggressive underwriting. But if housing prices continue their slide in states like Arizona, California, Florida and Nevada—where many FHA borrowers already have negative equity in their homes—taxpayers could face losses of $100 billion or more


So who is buying the mortgages? The very banks in trouble, with a little 'encouragement' from the FDIC. (WSJ, September 10,2009)

Holding Ginnie bonds help banks look better because federal bank-capital  guidelines give the Ginnie securities a "risk weighting" of 0%. That means banks don't have to hold any cash in reserve to protect against losses. By contrast, securities backed by Fannie Mae and Freddie Mac, the two mortgage giants seized by the government, carry a 20% risk weighting, meaning some cash needs to be set aside to hold them, even though most banks and investors think there is scant risk of Fannie or Freddie securities defaulting. Privately issued mortgage-backed securities can receive risk weightings of 50%, while many other types of debt carry 100%.
Because of the different risk weightings, bankers say they are selling relatively safe assets like Fannie securities and replacing them with Ginnie securities. The move doesn't shrink banks' balance sheets or remove their troubled assets. But it reduces their total assets on a risk-weighted basis. That is important because risk-weighted assets are the denominator in some key ratios of bank capital.
"With the pressure for capital, that's really made the Ginnie Maes more attractive," said John C. Clark, chief executive of First State Bank in Union City, Tenn. The bank's holdings of Ginnie securities jumped to $66 million at June 30 from less than $4 million a year earlier.
Like some peers, First State bankrolled those purchases partly with taxpayer dollars that were intended to stabilize the banking industry and jump-start lending. The 32-branch bank used a "significant portion" of the $20 million it received through TARP to buy Ginnie securities, Mr. Clark said. Mr. Clark credits the strategy with helping First State preserve its capital ratios even as loan defaults swelled to $9.5 million on June 30 from $1.6 million a year earlier. During the same period, its total risk-based capital ratio climbed to 11.3% from 10.7%. That gave First State some breathing room above the 10% ratio regulators require for banks to be deemed "well capitalized."
So my friend, whom I'll call Mr. Green and is a banker:  I have my eyes on some nice short term GNMA mbs paper.  (Fortunately your last name makes Mr. Green easier, otherwise I'd use a different color)  Let us load you up on the GNMA's and forget commercial lending.  Good rates, no 'risk' and you can be out to the links even earlier!  As a nice bonus your risk based capital ratios will improve as well.  I can even provide some additonal low cost margin leverage on my end as well.  The banking regulators and your boss will love you!  </end sarcasm>

Unfortunately this party will end like the last one, but we all will be paying the bill again and it will be much larger.  Too late, the bills are already coming due:  Calculated Risk (September 18,2009) -- FHA Cash Reserves will drop below requirement

Ironically, the Federal Reserves focus on purchasing mortgage backed securities from GNMA, Fannie Mae, and Freddie Mac compresses the spread between mortgages and treasury rates.   An artifcially compressed spread crowds out any private market competition, forcing more loans into the gentle loving arms of Uncle Sam.

If I sound a bit annoyed in this post, you are correct.  Collectively we are not learning from our very recent mistakes.