Small is sometimes better

From the Washington Monthly….

Broadway Federal’s story isn’t exceptional. Easily overlooked amid the crisis of big banks today, small-scale financial institutions are, for the most part, holding steady—and sometimes even better than steady. According to FDIC data, the failure rate among big banks (those with assets of $1 billion or more) is seven times greater than among small banks. Moreover, banks with less than $1 billion in assets—what are typically called community banks—are outperforming larger banks on most key measures, such as return on assets, charge-offs for bad loans, and net profit margin.

One reason community banks are doing so well right now is simply that they never became too clever for their own good. When other lenders, including underregulated giants like Ameriquest and Countrywide, started peddling ugly subprime mortgages, community banks stayed away. Banking regulations prevented them from taking on the kind of debt ratios assumed by their competitors, and ties to their customers and community ensured that predatory loans were out of the question. Broadway Federal, for its part, got out of single-family mortgages when they stopped making sense. “A borrower comes and asks, ‘Do you do interest-only, no-down-payment, option ARMs?’ ” recalls Hudson, with a chuckle. “No!” The bank focused instead on expanding its reach to niche borrowers, such as local churches.

This brought to mind something that the Governor of South Carolina said in a recent Wall Street Jouranl editoral called “Don’t Bail Out My State”…

Community bankers tell me that they are now at a competitive disadvantage for being careful about who to lend to, because others that were less disciplined will get a federal bailout.

Is This For Real?

From Epoch Times…

It began on September 3, 2007, when the early morning sun caught the rust-stained hull of a 1,700-ton cargo ship as it slowly steamed into the busy Mediterranean port of Tartous in Syria. From its mast flew the flag of South Korea and the stern plate identified the al-Hamed as being registered in Inchon, one of the country’s major ports.

Watching the ship manoeuvring into its berth from a distance was a man with the swarthy skin of a Kurd or one of the Marsh Arabs of Iraq. He was fluent in both their languages as well as some of the dialects of Afghanistan. He was, in fact, a Turkish-born Jew who had eschewed the life of a carpet seller in the family business in Istanbul to go to Israel, serve in its army as a translator and finally achieve his life’s ambition to work in Mossad.

Fifteen years later, he was recognised as one of its most brilliant operatives. In that time, he had operated in a dozen countries under as many aliases, using his linguistic skills and chameleon-like characteristics to observe and be absorbed into whichever community he had been sent.

Now, for the moment, he was code-named Kamal with a perfectly faked Iranian passport in his pocket. Mossad’s chief, Meir Dagan, had stressed to him the importance of his mission: to confirm the role of al-Hamed in the dangerous relationship which the Syrian regime of Bashar al-Assad had formed with North Korea.

The whole piece has more detail about Israel’s raid on Syra’s nuclear site than I have seen anywhere else. Somebody is either making things up or talking about things they should keep quite about. (H/T The Belmont Club)

This Man Knows How To Trash Talk

From the Wall Street Journal….

Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM’s physical plant during this period was $128 billion, meaning that a net $182 billion of society’s capital has been pumped into GM over the past decade — a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998.

As a society, we have very little to show for this $465 billion. At the end of 1998, GM’s market capitalization was $46 billion and Ford’s was $71 billion. Today both firms have negligible value, with share prices in the low single digits. Both are facing imminent bankruptcy and delisting from the major stock exchanges. Along with management, the companies’ unions and even their regulators in Washington may have their own culpability, a topic that merits its own separate discussion. Yet one can only imagine how the $465 billion could have been used better — for instance, GM and Ford could have closed their own facilities and acquired all of the shares of Honda, Toyota, Nissan and Volkswagen.

Ouch.

An unenforceable order

From Danger Room…

The Defense Department’s geeks are spooked by a rapidly spreading worm crawling across their networks. So they’ve suspended the use of so-called thumb drives, CDs, flash media cards, and all other removable data storage devices from their nets, to try to keep the worm from multiplying any further.

Why don’t they just order everyone to stop using a computer? Maybe there is something I am missing, but this seem really stupid. They would be better off shutting their network down if they are that scared.

Dow Jones Closes Below 8000

From Yahoo Business….

Wall Street hit levels not seen since 2003 on Wednesday, with the Dow Jones industrial average plunging below the 8,000 mark amid a dour economic outlook from the Federal Reserve and worries over the fate of Detroit’s three automakers.

A meaningless number. Posted here only for those who missed it. More interesting is this chart from Calculated Risk comparing the current stock market crash to other historical crashes.

Has the Mandate From Heaven Been Taken Away?

From the Telegraph…

Thousands of rioters used axes, chains, stones and iron bars to attack police, smash local government offices and set fire to cars after a protest in western China went out of control.

From later on in the same article…

Provinces around the country are reporting a surge in strikes, alongside other stand-offs as laid-off factory workers protest over unpaid wages.

The clashes in Wudu, a part of the city of Longnan in the poor province of Gansu, began on Monday. Longnan is not far from the border with Sichuan, the heart of the earthquake zone.

Residents living in temporary shelters after their homes had been demolished to make way for a government development project were joined by thousands of others.

They had been promised the new development would improve local living standards, but that was thrown into doubt when it was confirmed the local government was itself relocating elsewhere.

By Tuesday, crowds had grown to 2,000 according to state media, and several times that according to witnesses, who said a fire engine sent to put out fires started by the protesters was itself hijacked.

Hand-to-hand fighting followed as police used tear gas to try to disperse the crowds.

The New York Times has more.

There have been many riots in China. But they seem to be growing more common. At this rate they will be a real issue soon.

Is The Tabar Lucky Or Good?

From the Economist….

PIRATES do not win every encounter. On the evening of Tuesday November 18th an Indian warship attacked and destroyed a suspected Somali pirate boat in the Gulf of Aden, after the men on board had, reportedly, threatened to blow up the Indian craft. The pirates were said to be armed with guns and rocket-grenade launchers, and some escaped on speed boats. On the same day, however, other pirates in the Gulf of Aden did manage to grab a cargo ship carrying grain to Iran.

One thing the qoute above does not make clear is that the ship the Indians sunk was a mother ship that the Pirates where using to extend their range. The Danger Room has more on the Indian ship that blew up the pirate mother ship …..

This is the Tabar’s third pirate fight in a little more than a week. On November 11th, the frigate received a “frantic distress call from Saudi Arabian chemical and oil carrier NCC Tihama,” the Times of India reports. “Tihamas’ call said two to three high-speed boats, with several armed men, were trying to hijack the ship.”

The post goes on to relate how they received another distress call while they were in the process of rescuing the Saudis.

By my reckoning the INS Tabar has done more to combat pirates then the rest of the international anti piracy fleet put together. Is this because they are doing something right or did they just get lucky?

Edit: The Christian Science Monitor points out that this fight is more personal for Indian then most of the other nations that have ships in the area. They say….

While warships from eight different countries, including India, have deployed to the Gulf of Aden to combat piracy, the issue is particularly important for India.

The nation of 1.1 billion people provides one-sixth of the world’s maritime workers and every month it sends 30 Indian-owned vessels carrying oil and other goods valued at $100 billion through the Gulf of Aden.

Indian shipping firms say they are losing $450,000 a month on cost overruns and delays due to piracy.

“India cannot wait to take action until the Somali pirates hit the coast of Bombay [Mumbai],” says Mr. Bhaskar. “They must be quarantined in their own waters before they cause more damage.”

For most western nations, these attacks are no big deal because they don’t ship much through the Gulf of Aden. Most of the ships the pirates have seized have been going to Asia, Africa, or the Middle East. Maybe India cares more about stopping the pirates then the other nations do.

To Weird To Be True?

From Physorg….

As their first meal, the sea slugs suck out the cellular contents of their algal prey and retain the green chloroplasts in cells lining their digestive gut. With this special type of symbiosis, the sea slugs never need to eat again; instead, they survive for months on sunlight and air – just like a plant – by carrying out photosynthesis.

Rumpho-Kennedy’s work, recently published in the “Proceedings of the National Academy of Sciences USA,” explains the possibility that when the sea slug feeds on its algal prey it not only acquires chloroplasts, but also algal nuclear DNA.

How Bush Saved Georgia

From the Times….

The scene was the Kremlin on August 12, when Sarkozy flew in to persuade Moscow to call off its invasion of Georgia.

Putin: “I am going to hang Saakashvili by the balls.”
Sarkozy: “Hang him?”
Putin: “Why not? The Americans hanged Saddam Hussein.”
Sarkozy “Yes but do you want to end up like Bush?”
Putin, after a long pause: “Ah, you have scored a point there.”

Putin will be lucky to end his political career as popular as Bush is as he is leaving office. But the fool thinks he can save Russia. That is more futile than trying to bring democracy to the Middle East.