Tuesday, March 11, 2008

SAR #8072

It turns out that the only thing that’s
just as good as cash is, well, cash.
Michael S. Rozeff.

Black / White: Last week, White House spokeswoman Dana Perino downplayed Admiral Fallon’s possible retirement, decrying “rumor mills that don’t turn out to be true.” I was one who repeated the rumor that Admiral Fallon's days were numbered. Today turned out to be day Zero, as his retirement was accepted with “reluctance and regret.” Reports claiming that war with Iran would follow the Admiral's departure are also just rumors.

Cherchez la Femme: Dr. Laura explains: "Gov. Spitzer's wife did not make him feel like a man, like a success, a hero; thus he was very susceptible to the charm of another woman." Must have been that, sure as hell wasn't cheaper.

Pawnbroker of Last Resort: The Fed will now let 'Primary Dealers' ( big investment firms) as well as banks pawn their worthless credit derivative bonds for perfectly good Treasury Notes - $200 billion worth of Notes. Counting previous failures, this ups the ante for the pawnshop's owners - that's us, the taxpayers - to $400 billion, entrusted to the geniuses that got us into this problem. Hasn't worked before, won't now.

Microbacterium hatanonis: Scientists have discovered a new species of bacteria that lives in hairspray. It is a close relative of bacteria found in the blood of leukemia patients, on catheters and in bone marrow. The price of beauty keeps going up.

How High The Moon? Big investors want 15% returns, which is why AAA rated mortgage securities can't be sold for more than 70 cents on the dollar. If ARM resets at 8 or 9% are causing the current havoc, mortgages 'products' at 15% are best whispered about with the lights off. But if returns don't attract capital, no housing gets sold. Greed may not turn out to be quite as good as advertised.

Re-Surge-ance: Iraq has forgotten that the Decider's surge worked and violence is down. Down, boy, Down!

Beaches: Kellogg Brown & Root avoids paying hundreds of millions of dollars in Medicare and Social Security taxes by hiring workers for Iraq through shell companies based in the Caymans. This is a Good Idea because it lets KBR bid less for contracts. In that they don't seem to do the work - Baghdad has little electricity and less water - less pay seems reasonable.

Back To The Future : A newly released report concludes that in order to avert a dangerous rise in global temperatures the world must cease carbon emissions altogether by 2050. No petroleum. No coal. No natural gas. With today's technology, that translates to no cars or planes, no electricity, no heating, no cooking, no factories and 90% of the world's population working on farms. Either that or our grandchildren get to play Trazan all day, every day.

Mother: Credit markets are so wary that banks have been making margin calls on loans backed by US Treasury notes. On lesser quality securities, margin calls can be brutal. Carlyle Capital cannot meet a $400 million margin call and may have to liquidate $16 billion in Fannie Mae/Freddie Mac derivatives at fire sale prices.

Professor Karnac: Recession or just near-recession doesn't matter much. What does is that unlike past recessions, the economy will not dramatically improve 'after' because there is no replacement on the horizon for the internet/tech bubble that lifted the economy in the 1990's or the housing bubble that drove the recent excess. "There is still not a reason for great optimism," UCLA economists said.

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