Saturday, March 1, 2008

SAR #8062

When markets are rising, nobody learns anything.

Camping: It has been two and a half years since Katrina. Why are our citizens still in FEMA's formaldehyde trailers?

Horse, Mouth: St. Louis Fed President Wm. Poole: "The Federal Reserve System can deal with liquidity pressures but cannot deal with solvency issues. In assessing the risk of further credit disruptions this year, I would put the GSEs [that's Fannie Mae and Freddie Mac - the giant mortgage agencies] at the top of my list of sources of potentially serious problems."

Vive la difference! In Great Britain the government has given up trying to 'save' failing banks and is simply taking them over. We don't do that. We insist that the banks be taken over by foreigners.

Tasseled Loafers: Friday afternoon hedge funds began liquidating assets to cover margin calls from their bookies banks. For example, UBS must reduce its balance sheet by $600 billion. And that's just one of a cast of thousands. The big problem is that in the rush to the fire escape, prices are being trampled. Good thing it was Friday afternoon or the market would have been down a lot more than 270 points. The shoes are dropping.

Fertile Plains & All: Bernanke wants banks to raise more capital so they can do more lending. He never bothered to ask this simple question: For What? Do we need another Pizza Hut, Wal-Mart, nail salon or U-Store It?

Market Rules: It took Republicans (including Clinton I) 30 years to dismantle the regulations imposed in the 1930's to prevent speculative bubbles like the one that became the Great Depression. The full and free expression of greed market forces we see about us today is the result. Aren't you proud of them?

Refreshing: The 2005 Clos d'Ambonnay champagne is retailing for $3,500 the bottle, but clever shoppers may find it in the discount bins for only $3,000. But you might want to consider the 2005 Romanée-Conti at $3,650 to $4,300. Locally, I've found the Franzia Merlot for as little as $17.50 a box, with the senior discount.

Check's In the Mail: 115 companies, including foreign majors, have registered to compete for oil extraction and service contracts to help develop Iraq's oil reserves. Two notes: 'foreign' means non-US, and 'help' means exploit.

Forecast: The USDA report on hard red winter wheat crop conditions: Texas, 61% rated poor or very poor compared to 23% last year. Oklahoma 29% this year, 19% last. Kansas 25% vs only 7% last year. Wheat you see is wheat you get.

Reagan Miracle ? Tax receipts are a function of overall economic growth. Reagan, the fiscal conservative, never balanced a budget. How did Reagan pay for his tax cuts? Federal debt. Saint Ronnie tripled the national debt. George has only doubled it, but he's got a year to go.

Best Of Times: The Bank of Montreal, headquartered in Toronto, missed a margin call and is writing off about $500 in 'assets'. It is facing another $500 margin call may be forced to abandon its $14 billion role in rescuing $33 billion in 'stranded asset-backed commercial paper' that no-one has bid on since last August. The bank says "We are struggling to hang on."

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