Thursday, February 28, 2008

SAR #8059

Nobody loved Cassandra.

Rosebud: The 42 room Hearst Mansion on Florida's Jupiter Island went for $22 million at a foreclosure sale at the Palm Beach County Courthouse. The owner, William Randolph's widow, defaulted on $40 million in loans secured by the property. There goes the neighborhood.

Medal of Freedom? Moody's reaffirmed MBIA's AAA rating today, and kept Pfizer's investment rating at Aa1. MBIA's return on equity is a -35%, while Pfizer actually makes a 12% profit. MBIA lost -$15.22 a share, Pfizer made $1.20 a share. Moody's existence is based on the ratings it gives MBIA, Pfizer pushes pills. For service to the US financial sector above and beyond any sense of propriety, Moody's should be given George Tenant's Medal of Freedom.

Photo Finish: In January, California foreclosures just exceeded home sales, 19,821 to 19,145 .

Depreciation! Has oil really gone up in price? Two weeks ago oil was 65.3 euro /$94.05 a barrel and Tuesday it was $100.82 a barrel but only 67.6 euro a barrel. Up 7.2% in greenbacks, but only half as much, 3.5%, in euros. Is the problem expensive oil or a cheap dollar? Is it Exxon or our massive debt that is driving up the cost of imports?

English 401: Define the following: Sub-prime, Alt-A, Interest Only, Liar's Loan, Credit derivative, Credit swap, ABS, MBS, Special Investment Vehicle, Sovereign Fund, Special Purpose Vehicle, Variable Interest Entities, Auction Bonds. Answer: Bad Ideas.

Gospel: U.S. home foreclosures for January increased 57% from a year earlier, only 8% higher than the prior month. Like our budget deficits, the rate of increase is decreasing even though the rate itself is still increasing. According to the government, this is good news.

Q&A: In an interview with U.S. News, Bill Gates, CEO of PIMCO, the world's largest family of bond funds was asked: Is it necessary for the government to subsidize mortgages? To which this captain of capitalism replied simply: "Yes." Here endeth the lesson.

Observation: To date the governments attempts to bail out the bankers and mortgage investment leaders have been about as successful as any other 'Save the Whales" campaign.

Cradle of Civilization: As recently as 1929 there were only about two billion people on the planet. That's the number that scientists say the planet can support. If we want to meet reasonable goals for human society, nine billion people are too many.

Savior? Fannie Mae, the largest source of monehy for US mortgages, lost $3.2 billion on credit derivatives in the last quarter. This is the agency that is going to bail everybody on Wall Street out? Seems like just another greedy investor chasing higher yield into the dumpster.

Things Could Be Worse: Citigroup admitted that the investment geniuses in their trading department lost $100 million or more in a single day on 15 different days. Morgan Stanley lost $390 million in one day's trading. Flipping a coin gives a 50/50 chance and is a lot cheaper than these guys' salaries.

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