SAR #7356

If I really have to practice what I preach,

I may just have to quit preaching.

Homerun: I've blathered on about bond insurers going belly up. These things do leave Wall St and come home. Our Regional Health System has $51 million in bonds for a new hospital insured by ACA and thus rated AAA. Now both ACA and our bonds are rated CCC. Higher interest must be offered. Property taxes must go up to pay the added half-million a year for the 20 year life of the bonds. 172,860 municipal bonds have been so affected. Academic, my foot.

Odd Man Out In : Richmond Fed President Lacker "... it is overall inflation that we need to keep down, not just core inflation. If energy prices fail to decline, monetary policy decisions will be that much more difficult in 2008." Lacker keeps voting to raise Fed Rates to fight inflation, not lower them to rescue banks. Didn't get the memo.

Can't make the mortgage? Rent for quick cash! In border state cities, smugglers are renting from distressed owners and using them as 'stash' houses for illegals. This is reasonably profitable until the SWAT team busts the place up making arrests and you get arrested for aiding and abetting. Those in the nation's midsection should check out the profits to be had in meth labs.

The Movies: S&P has begun reducing ratings on Alt-A, Jumbo, and Prime mortgages. The credit problems that were "contained " to the sub-prime market seem to be ambitious. Builder DR Horton's paper was downgraded to 'junk' status. Horton and Levitt are expected to go bankrupt. Thieves Like Us, good movie.

Jawohl ! Der Sicherheit Amt is turning spy satellites on Americans. Without telling Congress what they're up to, other than using satellites which can 'see' through clouds, trees and concrete buildings to spy on citizens and turn the info over to agencies, including law enforcement. Chertoff insists the scheme is legal. Fredo told him so. Warrants will be obtained if ever required. He said so. Got it on tape.

Grrrreat ! General Mills says it expects higher food and energy costs next year. Higher prices for basic ingredients like corn and wheat means reducing costs elsewhere. They've shrunk the box size and increased the price. The company's CEO says consumers did not notice. I noticed.

Finance 101: Banks pledge questionable loans for 'unlimited' cash from the Fed & ECB. In a few weeks they have to buy back their questionable loans with cash. Vacationing at Club Fed does not make bad loans better. They won't even get a tan. Sooner or later these freeloading bums will have to be be written off. Each will take with it a little chunk of bank capital. Total bank capital in the country, $1.1 trillion. A 15% loss on the $11 trillion in outstanding mortgages will translate into the bankruptcy of the system. Say goodnight, Gracie, and don't mention credit card debt.

Clarification: A Mitt Romney spokesperson for explains that George W. Romney and Martin Luther King Jr. marched together in June, 1963 -- just as Mitt claimed, although possibly not on the same day or in the same city. Me, I was in Saigon when it fell. Well, in Bangkok. Does that count?

Sessions In 2006 the FBI used 2,176 FISA court orders to record 27,728,675 phone calls. These numbers has nothing to do with the warrantless wiretaps or the government's data-mining of billions of call records. Each warrant resulted in 12,742 recordings. If they got all of the court orders on January 1st, then each intercept yielded 35 phone calls every day of the year. At 10 minutes a call, that's 6 hours a day. No wonder we're safe - the bad guys spend all their time on the phone.

Consequences: There's a shortage of hops and barley. In the US they've been plowed under to plant corn. Crop failures in Australia and Europe make it harder to replace the shortage. Other price increases add to the pressure, as does the weaker dollar. I hate it when that happens.