Wednesday, November 5, 2008

SAR # 8310

America won.

Perception: Newt Gingrich has already begun to spin the loss, claiming the voters were "tired of Bush" and did not reject the Republican Party. "This is a performance election, not an ideological election."

Come On In, Water's Fine ! "We believe we are in the worst earnings recession of the last 40 years, expecting a 43% earnings recession ending at the end of 2009" So says Morgan Stanley. Then they add: "Prudent investors should not be short equities, and long-term investors should average in."

Whirlwind: In just six weeks, the total credit in the US banking system doubled, from $900 billion to $1,800 billion. It took 95 years to reach $900 billion. Double your money!

Mr. Rogers Neighborhood: Investor Jim Rogers on current oil prices: "The world knows there's not going to be any oil anymore and this (the oil price fall) is making it worse... "

Run, Don't Walk: Data collected since the IPCC's 2007 report indicates that disasters are likely. Abrupt, large-scale shifts in the climate system, collapse of ocean circulation, massive heat waves, and the collapse of the West Antarctic Ice Sheet will accompany a global temperature rise of 4.5°C at best and most likely 6°C by 2100. Toast.

Take A Deep Breath: Imagine the US government having to borrow nearly $3 trillion next year. Now imagine how much it will cost. Worse, imagine that the Saudis and the Chinese and the Japanese "just say no." Now imagine how many suitcases of dollars it'll take to buy a loaf of bread.

So Much For Location: Commercial property sales in NYC are down 61%, year to date.

Snake Oil: JP Morgan Chase has launched a massive PR campaign to convince the Congress not to mess with mortgages, citing their own plan to modify the terms on up to $70 billion in mortgages into loans that would allow Morgan to continue to drain money from the debtors for a while longer.

Balanced Budget: The Treasury anticipates a $988 billion "shortfall" in the current fiscal year, and that doesn't count spending hundreds of billions the wars.

A Cold Day In... CDSs for Iceland's Landsbanki have been written down 96.625%. That'll come to about 1.3 billion Euros in payments. But we'll be told it was a total of $17.46 because everybody was counter hedged and all. Except AIG.

Another One Bites the Dust: VeraSun Energy, the second-largest producer of corn-based ethanol in the United States has filed for bankruptcy protection.

Smart Money: Goldman Sachs's Investment Partners hedge fund started up in January with $6 billion in 2-year lock-in investments. By September it had lost a billion and no, you can't get your money back. If there's any left after two years, and you ask nicely...

Open Secret: LBO paper is due for a crash. Pass it on.

Problem, What Problem: None of those gathering for the financial summit in Washington were prescient enough to foresee the housing bubble/credit crisis. There is a fear that the meetings may result in an attempt to regulate the larger abuses. Unlikely.

Cream, To the Top: Michael Alix has been appointed VP of the NY Fed's Bank Supervision Group. Formerly he was Chief Risk Officer at Bear Sterns. Fox, henhouse.

Old Joke: The difference between an economist and a weatherman: weathermen are sometimes right. Only a dozen or so out of 15,000 economists foresaw the housing crash. Most continue to spout an economic theory that has been proven wrong repeatedly over the last 20 years.

Porn O'Graph: Saudi Arabia's oil reserves are immune to the laws of physics.


Independent Accountant said...

On Saudi oil reserves.
Matt Simmons, a Houston investment banker noted about five or six years ago, that no matter how much it produced Saudi always reports 262 billion barrels of oil reserves. How much does Saudi have? Only Allah knows for sure.

CKMichaelson said...

IA - Yes, all the middle eastern oil producers have the same miraculous oil fields - that fill up as they are drawn down.

Check out the IEA's 2008 Annual Oil Report. I'm commenting on it on Monday.