Bonus Bananas October 21, 2011

1. The Money Pit (Self Evident) - There is a reason this is the Number 1 Bonus Banana today: it is simply the best explanation of municipal bankruptcy I've ever read. It tells the story of Harrisburg, PA and how they got into the mess they're in. You absolutely will not believe the staggering extent of the incompetence in government there. This is the one true MUST READ of the week. Enjoy.

2) Not with a Bang, but a Whimper: BofA’s Death Rattle (The Big Picture) - You might not have noticed this, but BofA is getting itself into some murky regulatory waters with respect to its handling of derivatives. In a nutshell, the brouhaha is about junk derivatives from Merrill Lynch being transferred to the FDIC-insured retail division of BofA. Bill Black, who famously gave his two cents to Playboy about my Tank-A-Bank plan, explains how this might be the end for BofA.

3) Millionaires Control 39% of Global Wealth (Wall Street Journal) - For those who think massive wealth disparity is just an American problem, this article will put the lie to that notion. The top 1% of humanity controls 39% of the world's wealth, up from 35.6% last year. It's good to be king.

4) The Original Koch (Ed) Scorches the GOP, Praises OWS and Wants to Jail the Banksters (The Nation) - The OWS movement has picked up some high-profile supporters over the past couple weeks, but I have to say I was pretty surprised to see former NYC mayor Ed Koch throw in with them. I'm on board with his view that someone at the top of the banks needs to go to jail, though.

5) Anarchists Hijack Rome Protests (The Daily Beast) - Speaking of OWS, their sister rally in Rome turned ugly last week when the "black bloc" of anarchists moved in and started hurling molotov cocktails. Most Americans don't realize how out of hand these protests get in Europe. A Greek protest led to the burning of a bank - WITH THE BANK EMPLOYEES INSIDE IT. Among others, a woman who was 4 months pregnant burned to death. Let's hope this kind of extremism stays on the other side of the pond.

6) America must manage its decline (ft.com/intl/cms/s/0/0c73f10e-f8aa-11e0-ad8f-00144feab49a.html#axzz1bPYI30yX">Financial Times) - This one probably deserves a blog post all its own. Is America in denial about its decline? And does America have a responsibility to go quietly into that good night to minimize the impact to the rest of the world? Gideon Rachman opines that the US should realize the party is over and prepare for an orderly transition to the next world power (most likely China) in much the same way the British empire came to a quiet close 100 years ago.

7) New York City Parents Find Nothing Stylish About New Tattooed ‘Barbie’ Doll (CBS New York) - Speaking of America's decline, New York parents are in an uproar over a new Tokidoki (really?) Barbie, a Barbie doll with all-over-body tatoos. No longer satisfied with a demure tramp stamp, today's pre-pubescent girls want some real ink on their slutty dolls. I weep for the future.

8) Your Cheating Heart: iPhone App Finds Wife With Another Man (Good Morning America) - File this one under "Ain't Love Grand". Apple's new "Find My Friends" app is having some unintended consequences. A New York man bought his wife a new iPhone 4 and surreptitiously installed the app. Then he called her and asked her where she was. She said was with friends in the East Village, when in fact her phone revealed that she was under some dude uptown. Hurray for technology!

9) The Role Non-Monogamy Will Play in the Future of Marriage (The Atlantic) - While we're on the subject of marriage, I thought you guys might find this one interesting. I've only ever personally known one "open marriage" to go the distance, but maybe there's something to this. Keep in mind though that 40% of Americans, myself among them, believe that marriage is becoming obsolete, and the number rises every year. So rather than going to all the trouble of getting married and convincing your spouse it's okay to fool around, smart money says you just don't put yourself through the hassle.

10) Sean Parker: Facebook Power Users Have Gone to Twitter or Google+ (Mashable) - It shouldn't come as a surprise to anyone under 35 that all the cool kids are leaving Facebook in droves. Now former Facebook president Sean Parker admits it. When asked about the perception that Facebook has become "a little creepy", Parker waffled a bit and then answered, "Look: There's good creepy and there's bad creepy. Today's creepy is tomorrow's necessity." Yeah, I think I'll go ahead and pass on creepy, period. You can find me and the rest of the cool kids on Twitter.

The Video of the Week this week is an interview with Michael Lewis about his new book Boomerang: Travels in the New Third World. I'm going to do a full review of the book in the next week or two, but you should definitely read it if for no other reason than it will make you feel good about being American. Sometimes it's easy to lose sight of the things we do right when everything in the media is so negative. But some of these other countries are really screwed up. And of course Lewis makes it funny and eminently readable. Enjoy:


Let me know what you think about this week's bananas, and have a great weekend guys!

 
David_Puddy:
jmdude:
I personally dont know anyone who has switched to google+... FB is still god. my 2 cents

Has it occurred to you that maybe your not one of the "cool" kids?

It's sad that comments like these are the reason I visit WSO.

 

9)

I was a Biology major in college, and had a particular interest in hormones and their role in human behavior. One course I took was fully dedicated to hormones and behavior, and many others touched on the subject.

Many scientists contend humans are not meant to be monogamous, well males anyway. Studies show that male humans have proportionately larger testes than other primates, which strongly suggests that monogamous practice was not designed for human lifestyle. Instead, male humans are supposed to have harems of females in which they reproduce with all of them.

By nature, it is would be harder for human males to be in a strictly monogamous relationship. Obviously this does not align with societal views, and we have the ability to stay in monogamous relationships, but it does seem to explain a lot.

no way kimosabe, this is my house now --Brennan Huff
 

A good response to the BofA article...

Where to start: “The scam is always the same when it comes to abusive deals with affiliates – they transfer bad (or overpriced) assets or liabilities to the insured institution. ”

  • Question: what is the evidence that the derivative positions are mis-marked?

“Second, the senior managers of B of A acceded to the transfer, apparently without protest, even though the transfer poses a severe threat to B of A’s survival. Their failure to act to prevent the transfer contravenes both their fiduciary duties of loyalty and care and should lead to their resignations.”

  • What absolute hyperbole. How does having a derivatives book marked appropriately “pose a severe threat to B of As survival”? In fact, it is probably safer to have the derivatives book in a more regulated part of the institution, and in a part of the institution that has access to central bank liquidity. It also may logically allow better management of positions (imagine that ML is long a position while the bank is short: collateral flows out of one arm of the company, but into another, and you well know liquidity is not perfectly fungible across entities).

“…how they can be used to create a “sure thing” of record fictional profits, record compensation, and catastrophic losses. ”

  • Are you alleging this is ongoing at BACML? Do you have any proof?

Prof. Black is taking this strictly from the point-of-view of the FDIC. If BAC (the whole firm) fails, yes it is possible that the FDIC fund will sustain larger losses. But who pays those losses? Assessments on the banks. Big deal. And under Dodd-Frank, Prof. Black knows that the resolution of the entire firm would now be the FDIC’s responsibility.

Finally, if this makes the consolidated BAC more able to withstand a financial storm, and thereby lessen the systemic risk, isn’t this a good thing? Isn’t preventing a systemic collapse (and the collateral damage it would cause to other financial institutions and consumers and businesses that would face limited accss to credit) now officially part of the mandate of every agency (FDIC included) that is part of the Financial Stability Oversight Council? (Hint: yes it is).

 

Huh? I know ONE person who has genuinely switched to Google+ and she has, unsuccessfully, attempted to get people to switch. Facebook's most recent update just hammered Google+. And twitter is legitimately the dumbest tool ever conceived by mankind. @!6twitter_dude haha :} dd5

I find it mind boggling that twitter has survived as long as it has. Despite its code sophistication it looks and feels like a tool from the early 1990s. The ONLY redeeming quality of Twitter is from an SEO standpoint. Other than that it's legitimately moronic.

Array
 
Virginia Tech 4ever:
Huh? I know ONE person who has genuinely switched to Google+ and she has, unsuccessfully, attempted to get people to switch. Facebook's most recent update just hammered Google+. And twitter is legitimately the dumbest tool ever conceived by mankind. @!6twitter_dude haha :} dd5

I find it mind boggling that twitter has survived as long as it has. Despite its code sophistication it looks and feels like a tool from the early 1990s. The ONLY redeeming quality of Twitter is from an SEO standpoint. Other than that it's legitimately moronic.

I'd have to respectfully disagree. I recently deactivated my Facebook account and started using my Twitter exclusively. At first, I shared your sentiments on Twitter. Why would I want to know who (insert your favorite celebrity) was eating a cheeseburger but it's much more than that. Yes. You'll have your stupid tweets but isn't that the same when someone posts a status update saying "getting shit faced tonight" or a picture of a beer?

Within my group of friends I also find the trend to be shifting away from Facebook to Twitter. Although this isn't a representative sample to make a conclusion FB will be the next Myspace, it is an indicator that it might not be as prevalent as it once might have been.

For example, how did I find out of Bin Laden's death? Not through the television or radio, but through the trending topics on Twitter. I just had walked out of the movies, logged on, checked the trending topics and saw the RTs (retweets) and his death as the number one trending topic. Additionally, the Egypt unrest can partially credited to Twitter for releasing information and letting people on the "outside" know what was happening.

 
Best Response

With regard to wealth disparity, I saw a CNN interview with Pat Buchannan yesterday. I had never really thought about this until he said it--with wealth inequality comes greater personal freedom and individual politial liberty. He pointed out that he visited China in the 1970s as a representative of Richard Nixon. China in the 1970s was one of the most equal societies ever conceived. There were virtually no wealthy people and everyone had the same clothes and worked for government. It was also one of the most totalitarian states of a totalitarian 20th century. Today China has many millionaires and billionaires and relatively large wealth disparities but also has made a sharp turn toward personal freedom.

His point was that huge wealth gaps are not necessarily indicative of a corrupt society; rather, huge wealth gaps may be an indication that a society has moved to individual liberty.

Array
 

Look, there's NOTHING you can do on Twitter that can't be done better on Facebook. I found out about the death of bin Laden on Drudge Report and then secondly on Facebook. Maybe it's just my group of friends, but only about 10 of my 300 facebook friends use twitter regularly. It's just an inferior product. The only way it would be gaining steam is if people are sick of using the same medium (facebook). But on its own merits, it is an inferior product.

Array
 

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