Wednesday, October 24, 2007

Rich Uncle Pennybags


Amongst the news items of the day was this gem, home sales hitting 8 year lows. Congress is talking about potential bail-outs for the poor mortgage holders who are facing escalating payments soon as their rates are reset. Foreclosures are escalating to unhealthy levels. I think I have to credit Jim Grant of The Grant's Interest Rate Observer for this observation. I think I might have come across it in one of his writings from year ago, but I'm not sure. One of the things that might have kept us out of this mess, both borrower and lender was a remembrance of the basic tenets of the old Parker Brothers Monopoly game.


Take a few minutes and pull out the old Monopoly board and the stack of property deeds. The two most valuable properties on the board, Park Place and Boardwalk sell for $350 and $400 respectively. Here's the lesson however. Let's say you want to mortgage these properties. On each Monopoly deed a Mortgage Value was printed. The Mortgage Value for Boardwalk is $200 and for Park Place $175. No negative-am, 90-100% loan to value here. Real-estate was traditionally understood to be an illiquid, risky asset and banks were hesitant to lend against it. That's why even the most prized Monopoly properties would only get you a 50 % loan to value.


Borrowers and lenders would both be much better off today if they had only adhered to these same principles. The game dates back to the early 1900's. It's true, there really is nothing new under the sun--- we should have paid attention.

Wednesday, October 3, 2007

Murder in Baghdad?

Every now and then I come across an article that is so disturbing that I want to make sure I don't forget it. That happened this morning as I browsed the NY Times. This piece by James Glanz and Allison Rubin made me sick. Imagine if this sort of thing happened on an American street in a major urban center.

From Errand to Fatal Shot to Hail of Fire to 17 Deaths
By JAMES GLANZ and ALISSA J. RUBIN
Published: October 3, 2007

BAGHDAD, Oct. 2 — It started out as a family errand: Ahmed Haithem Ahmed was driving his mother, Mohassin, to pick up his father from the hospital where he worked as a pathologist. As they approached Nisour Square at midday on Sept. 16, they did not know that a bomb had gone off nearby or that a convoy of four armored vehicles carrying Blackwater guards armed with automatic rifles was approaching.
Moments later a bullet tore through Mr. Ahmed’s head, he slumped, and the car rolled forward. Then Blackwater guards responded with a barrage of gunfire and explosive weapons, leaving 17 dead and 24 wounded — a higher toll than previously thought, according to Iraqi investigators.
Interviews with 12 Iraqi witnesses, several Iraqi investigators and an American official familiar with an American investigation of the shootings offer new insights into the gravity of the episode in Nisour Square. And they are difficult to square with the explanation offered initially by Blackwater officials that their guards were responding proportionately to an attack on the streets around the square.

The new details include these:
¶A deadly cascade of events began when a single bullet apparently fired by a Blackwater guard killed an Iraqi man whose weight probably remained on the accelerator and propelled the car forward as the passenger, the man’s mother, clutched him and screamed.
¶The car continued to roll toward the convoy, which responded with an intense barrage of gunfire in several directions, striking Iraqis who were desperately trying to flee.
¶Minutes after that shooting stopped, a Blackwater convoy — possibly the same one — moved north from the square and opened fire on another line of traffic a few hundred yards away, in a previously unreported separate shooting, investigators and several witnesses say.

But questions emerge from accounts of the earliest moments of the shooting in Nisour Square.

The car in which the first people were killed did not begin to closely approach the Blackwater convoy until the Iraqi driver had been shot in the head and lost control of his vehicle. Not one witness heard or saw any gunfire coming from Iraqis around the square. And following a short initial burst of bullets, the Blackwater guards unleashed an overwhelming barrage of gunfire even as Iraqis were turning their cars around and attempting to flee.

As the gunfire continued, at least one of the Blackwater guards began screaming, “No! No! No!” and gesturing to his colleagues to stop shooting, according to an Iraqi lawyer who was stuck in traffic and was shot in the back as he tried to flee. The account of the struggle among the Blackwater guards corroborates preliminary findings of the American investigation.
Still, while the series of events pieced together by the Iraqis may be correct, important elements could still be missing from that account, according to the American official familiar with the continuing American investigation into the shootings.

Among the questions still to be answered, the official said, is whether at any time nearby Iraqi security forces began firing, possibly leading the Blackwater convoy to believe it was under attack and therefore justified in returning fire. It is also possible that as the car kept rolling toward the intersection, the Blackwater guards believed it posed a threat and intensified their shooting.

Blackwater has said that its guards were fired upon and responded appropriately.
Witnesses close to the places where most of the Iraqi civilians were killed directly facing the Blackwater convoy on the southern rim of the square all give a relatively consistent picture of how events began and unfolded.

The Blackwater convoy was in the square to control traffic for a second convoy that was approaching from the south. The second convoy was bringing diplomats who had been evacuated from a meeting after a bomb went off near the compound where the meeting was taking place. That convoy had not arrived at the square by the time the shooting started.
The events in the square began with a short burst of bullets that witnesses described as unprovoked. A traffic policeman standing at the edge of the square, Sarhan Thiab, saw that a young man in a car had been hit. In the line of traffic, that car was the third vehicle from the intersection where the convoy had positioned itself.

“We tried to help him,” Mr. Thiab said. “I saw the left side of his head was destroyed and his mother was crying out: ‘My son, my son. Help me, help me.’”

Another traffic policeman rushed to the driver’s side to try to get her son out of the car, but the car was still rolling forward because her son had lost control, according to a taxi driver close by who gave his name as Abu Mariam (“father of Mariam”).

Then Blackwater guards opened fire with a barrage of bullets, according to the police and numerous witnesses. Mr. Ahmed’s father later counted 40 bullet holes in the car. His mother, Mohassin Kadhim, appears to have been shot to death as she cradled her son in her arms. Moments later the car caught fire after the Blackwater guards fired a type of grenade into the vehicle.

The taxi driver was a few feet ahead of Mrs. Kadhim’s car when he heard the first gunshots. He was aware of cars behind him trying to back out of the street or turn around and drive away from the square. He tried frantically to turn his car, but ran into the curb.

Unable to escape, he pulled himself over to the passenger side, which was the one not facing the square, opened the door and crawled out, flattening his body to the ground.
“The dust from the street was coming in my mouth and as I pulled myself out of the area, my left leg was shot by a bullet,” he said.


Accounts in the initial days after the event described Mrs. Kadhim as holding a baby in her arms. It now appears that those accounts were based on assumptions that the charred remains of Mrs. Kadhim’s son were mistaken for an infant.
By then cars were struggling to get out of the line of fire, and many people were abandoning their vehicles altogether. The scene turned hellish.
“The shooting started like rain; everyone escaped his car,” said Fareed Walid Hassan, a truck driver who hauls goods in his Hyundai minibus.
He saw a woman dragging her child. “He was around 10 or 11,” he said. “He was dead. She was pulling him by one hand to get him away. She hoped that he was still alive.”
As the shooting started in earnest Jabber Salman, a lawyer on his way to the Ministry of Justice for a noon meeting, described people crying and shouting. “Some people were trying to escape by crawling,” he said. “Some people were killed in front of me.”
As Mr. Salman tried to drive away from the shooting, bullets came one after another through his rear windshield, hitting his neck, shoulders, left forearm and lower back. “I thought, ‘I’m sorry they are going to kill me and I can do nothing.’”

Iraqi investigators believe that during the shooting Blackwater helicopters flew overhead and fired into the cars from above. They say that at least one the car roofs had bullets through them. Blackwater has denied that its helicopters discharged any weapons.
Minutes after the first shootings, a Blackwater convoy arrived at the other side of the square, where civilian traffic was also backed up, and shot into cars, according to an Iraqi official who is a member of the investigation committee set up by the Iraqi government.
“I found three people from that incident in Khadimiya hospital,” the Iraqi official said. “One died and two were injured. Why is the private security shooting again in this area?”
Two weeks after the events that claimed the life of Mrs. Kadhim and her son, her husband, Haithem Ahmed, her daughter Mariam and her younger son, Haider, are still bewildered.

“My son was very gentle, very clever,” Mr. Ahmed said, looking down at the floor of the police investigation center where he had come to give more details at the request of Iraqi investigators. “He was easy to be around. He planned to be a surgeon.”

“She is a beautiful woman,” he said of his wife, speaking as if she were still alive.
Then he looked at a picture of his son, captured on a memorial video made by a friend and stored on Haider’s cellphone camera. Seeming to forget there was anyone else in the room, he spoke to the video image.
“I am waiting to meet you in paradise,” he said.

Qais Mizher contributed reporting