Wednesday, March 5, 2008

SAR #8066

Knowledge and wisdom are two very different things

The End: The gist of Bernanke's latest proposal: Nationalize US Housing; absorb Fannie Mae and Freddie Mac into the FHA. Have the FHA buy up all of the mortgages in the US, paying them all off to keep Wall Street happy. Lease the houses to the occupants, with the rent being deducted from wages. Just kidding, but Mr. Bernanke is very, very worried.

Seconds? The head of Dubai International Capital fund, with $13 billion on hand, says it would take "a lot more money" to rescue Citigroup, with a shrug that suggested it was out of his price range.

Harvest: Barclays says everything will be just peachy-keen if the big banks can raise another $143 billion. That's if someone figures out how to actually save the bond insurers.

Horse's Mouth: The National Association of Home Builders says housing "is in its deepest, most rapid downswing since the Great Depression" and that the downturn is accelerating. Sales of new houses are expected to be 55% less than in 2005, New construction is set to drop to 40% of the 2005 peak. Currently there are over 2 million vacant houses for sale. But not in my neighborhood.

Thoughtful Food: The Saudis are planning on turning the country into a completely solar-electric based nation. Well, they should know.

Silly Season: The Port Authority of New York and New Jersey owns and operates bridges, bus terminals, and airports. Not exciting, but if you go to NYC, one way or another it is going to get a couple of your nickels. A measure of our current panic is that it had to pay a 20% interest rate to borrow money last week. Usually it's more like 4.5%. Fear is a fearful thing; so much for the economists 'rational man'.

Cannibals: The biggest problem with using nuclear generation to meet much of our future energy needs is that the rate of construction required - one every few weeks nearly forever - the energy produced will be consumed in building the next and so on. No net gain. And it takes a lot of fossil fuel to build the plants, too.

Half Time: US households are only halfway through the current set of rate resets. The second act to this farce is set in 2010 - 2011.

Shh! Don't Say That: 70% of municipal auction-rate bonds failed this week. These are government, tax-free bonds. 'Failed' does not mean that no one wants them, it means that no one has the money, not even the banks that underwrote the bonds and pledged to support them. Money speak: "Debt destruction has removed liquidity from the financial system." Truth: The banks are not solvent.

Freedom, Ltd. The US Treasury can, and does, shut down any website simply by telling the 'domain name registrar' to disable it. No judge, no evidence. Even if you are English, operating a Spanish travel agency, hosted in the Bahamas. If they close down your site (which they simply do, no notice or such) and you finally figure out what happened (the registrar is constrained under the Patriot Act not to tell you), you can appeal to the very same office that already found you guilty.

Non-Ducks: It does not walk like a duck, quack like a duck, or look the slightest like a duck, yet we use the strangest bunch of ways to select delegates who may or may not vote for whomever they are pledged to, and then have a convention (using secret super-delegates) to select the person to run for President of a democracy. Why not just count the votes? Nationwide? All at once or seriatim, but winner gets the winnings. Oh, yeah, that would let the people decide. Bummer.

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