Wednesday, November 26, 2014

Law Professors Producing Value?

I readily admit I pay little attention to what legal academics are doing.  There are a few exceptions, and they all involve professors who actually come down from the ivory tower and rub elbows with us grubbies (the folks over at Credit Slips, for example).  A recent example is John Pottow, the bankruptcy professor at my alma mater the University of Michigan (An aside here: Christopher Brumm, senior counsel for Major League Baseball and also a UM grad, recently remarked that he regretted not having taken a bankruptcy course.  When I was at UM, there was no such animal.  Too low class.  Respectable corporations didn't discuss such things.  Now bankruptcy is just another management tool.).  About three years ago, the SCOTUS made complete hash of bankruptcy law (which it does about every time it decides a bankruptcy case) in Stern vs. Marshall, which threatened to gut the bankruptcy courts' power to rule on any issue involving state law (Frankly, this decision was just part of the right side of the Court's ongoing effort to restrict judicial powers using Scalia's curious [some might call it "cherry-picking"] approach to original intent.  Needless to say, I don't agree with this reasoning, but I'll leave it for another day, or two, or three.  It would be nice, though, to get bankruptcy courts to at least look at jurisdictional issues with regard to standing in improperly securitized mortgage cases.).  In EBIA vs. Arkison, Professor Pottow handled the appeal and got the Supremes to back away a bit from the precipice they had created.  So kudos.

Also at UM, Professor Carl Schneider has recently co-authored a book that offers hard evidence of what many of us have believed for some time: Disclosure statements don't inform anybody about anything.  Whether it's informed consent at the doctor's office, a securities prospectus, or the multiple disclosures in real estate closings, it's too much and too convoluted, and the "discloser" rushes the disclosee through at warp speed.  Professor Schneider advocates adopting real, behavioral regulations instead of pretending there is value to disclosure.  Professor Schneider also advocates that we drop the disclosures now regardless of whether the new regulations are being passed.  I'm not convinced that's a good idea, and I'm doubly not convinced any disclosures will fall by the wayside.  This is because of another campaign based on Scalia's cherry-picking, the attack on protections against adhesion contracts.  Adhesion contracts are biased contracts crammed down the throat of the weaker party by the stronger party, usually in consumer transactions.  Scalia and his camp, in true Lochner fashion, see no problem with this and routinely override efforts to balance contracts, holding that if it's in the contract and you signed it, you're bound.  Given that backdrop, I expect companies to keep "disclosing" 50 pages of agate type in five minutes and then arguing later that the buyer was fully aware of any risks.  Sorry, Carl, it's Contracttown.

Slaps on the Wrist

US, UK, and Swiss regulators have slapped fines against Chase, Citi, Bank of America, UBS, RBS, and HSBC for turning forex trading into a fraud factory for their own benefit.  The fines total US$ 4.3 billion, trumpeted as the heaviest penalties in history.  The traders involved have been shown the door, along with one of the forex chairs at the Bank of England.  And the fact that this crap is being touted as some sort of regulatory triumph shows just how messed up the system is.

First, this scam went on for years, the players were brazenly communicating their activities with each other, and no one did a thing.  Second, the forex market trades over US$ 5 trillion per day.  Even if these banks took only 0.1% commissions (HA!) and held just 10% of the market (They're well north of that.), the fines would amount to less than two weeks of commissions.  Third, once again only the little people have been punished while the players who make the policies that created these crimes remain in place.  It would be as if Donald Segretti took all the blame for Watergate and everyone else got to stay in the White House.

The game is rigged.  Makes you want to run right out and put your retirement in the market, doesn't it.

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New City Hall

So they've cleared the space for the new  Cottonwood City complex.  Right across the street from Brighton High School.  Am I the only one who thinks this is a less-than-brilliant idea?  I readily admit that the properties were eyesores (although how much of that was caused by the city's condemnation process is an open and probably damning question), but just how is Bengal Boulevard going to handle this?  It has one lane each way with a center turning lane, and that isn't enough to handle the existing morning and afternoon school traffic and the evening special event traffic.  There's also that messy double light at 2300/2325 East.  Put the city offices there, and I expect Bengal Boulevard to start resembling a Manhattan crosstown street.

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Tuesday, November 11, 2014

New Linked In Posting

Just posted on OW Bunker's bankruptcy in Denmark.  Take a look.

Monday, November 10, 2014

Told You

In a recent entry, I took issue with Edmund Phelps in the Financial Times, who opined in true, brainless, right wing fashion that what was making housing unaffordable was regulation.  I pointed out that modern land use regulations encourage affordability.  And to support my position, I need go no farther than...the Financial Times.  Kate Allen has a feature about the downsizing of housing and multi-generational housing designed to take us back to the good old days before the nuclear family.  And these new approaches to residences are being facilitated (and made affordable) by land use planning.  Put that in your pipe and smoke it, Ed.

Friday, October 31, 2014

New Posting on Credit Slips

New discussion on Credit Slips with yours truly commenting.  Topic is the brouhaha over whether Chase Bank is actually a secured creditor in the GM Chapter 11.

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International Bankruptcy?

The Argentine bond default mess and the endless litigation over Argentina's efforts to negotiate some sort of settlement has led a lot of people to renew discussions over creating an international law for sovereign bankruptcy.  In her recent article, Elaine Moore states that a desire for a more orderly process is at the heart of these discussions.  Maybe.  I think it is more likely that a lot of people are looking at the extent to which US courts are being used to apply US law to allow creditors to dictate policy decisions to sovereigns, and they would like an alternative.

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IMF Gets Religion?

The International Monetary Fund (IMF) has long been the global stormtrooper for budget cuts, tax hikes, and radical austerity programs.  The IMF has held country after country hostage to its Austro-Chicago orthodoxy.


Which makes Larry Summers's recent report about the IMF's latest World Economic Outlook a stunner.  It seems the IMF (and Summers for that matter) has finally gotten what anyone with more brains than a turnip has known since the New Deal: If you need to jump-start an economy, the government should borrow money and spend it on infrastructure; you are almost guaranteed a net return.

At last, some sense in economic policy.  We might finally get some alternatives to austerity before we destroy every economy on the planet.  Of course there are still plenty of political prostitutes like Otmar Issing out there preaching the same, old Austro-Chicago Kool-Aid (If Issing wants to see where his "ideas" lead, he need look no further than Hungary and dumpster fire Orban is creating.  But Issing has already done that and isn't going to let reality get in the way of his bought and paid for opinion.  Hence my calling him a prostitute.).  But maybe the light at the end of the tunnel isn't just an oncoming train.

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Friday, September 26, 2014

Mall Sale

DDR has sold the Family Centers in Taylorsville, Midvale, and Orem to Excel Trust, a San Diego REIT.  Excel then flipped the Taylorsville center to Texas-based TriGate Capital.  Excel's purchase price was $225.6 million.

When I first started practicing law, my office was right across the street from the Midvale center.  My building was the only office tower there then, and the Family Center was little more than a strip mall.  Things have changed considerably since then.  Not always for the better.  A few years ago, it looked like the place was going the way of so many other small malls, with anchors leaving and small spaces going and staying dark.  DDR managed to turn things around, though, replacing anchors and bringing in new shops, including local merchants, a move that would give outfits like Taubman a seizure.  Still a lot of question marks, though, such as the future of the Office Max space now that the merger with Office Depot has gone through.  Time will tell.

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Thursday, August 21, 2014

More Neoliberal Crap

Edmund Phelps, in his recent column in the Financial Times, once again trots out the bull pucky that "regulation" is the cause of our economic problems.  Post-WWII regulation slowed down innovation, and that loss of innovation has caused the centrifuging of wealth we have seen over the last 30 years.

First, Ed, the years since WWII have been the most phenomenally innovative in history.  I guess you missed the memos on the space programs, computers, and biotech.  All of which, I would add, were significantly assisted by government money.

Second, Ed, don't you find it at all odd that this centrifuging has focused in the last 30 years, a period of massive deregulation?  Of course facts never get in the way of an Austro-Chicago tool like you.

Bottom line, Ed: The rich and powerful paid to have regulations dismantled and then went out to get a big return on their investment by running roughshod over everyone else.  The result of that deregulation has been less protection for the folks who do the actual production work, less protection for the real innovators (as opposed to the corporations who own them), less protection for ordinary investors, less protection for everyone without a lot of spare cash to buy protection.

Oh, and Ed, the big innovations your deregulation has created have been the financial Frankensteins, the multi-level derivatives and synthetics that have created the bubbole-manic, boom-and-bust system we now have.  Congratulations.

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Hearings

Here's a suggestion I think would improve the system greatly, your honors.  If you don't want to hear the argument I'm making, just say so, and don't hold the hearing.  You save time, opposing counsel saves time, and I save time that my client is going to refuse to pay me for anyway after listening to you snark at me for a half-hour.  Even more to the point, don't keep looking at me like I'm the one wasting everyone's time.  I'm not the one who set the hearing; you are.

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Wednesday, July 30, 2014

Yes, I Know...

...I didn't include any links in yesterday's post.  Given my opinion of those asshat articles, did you really think I was going to give them click-through traffic?