Saturday, November 29, 2008

SAR #8334/Weekender

The purpose of money is to reduce violence

in the marketplace.

Simple Arithmetic Nowhere in the reporting on the deadly assaults in Mumbai is there any mention of the fact that 46% of Indian children under 3 are malnourished. There's a lot more data, but that's explanation enough.

Ocean-view Apartment: If you stand on a chair and lean out the window, you can just see a sliver of the ocean from here. My landlord calls it an "ocean view apartment." Obama says the same thing about the change; he's just going to use the centrist, experienced (recycled) Clinton and Bush folks as a chair, so he can see the ocean of change once in a while. He promises .

Earmuffs? With 70% of its gas fields in decline, Russia may not be able to service domestic gas needs by 2010. The EU currently gets 40% of its gas from Russia.

One Step Further: If retailers have the disastrous season that is popularly forecast, what happens to all the empty malls? And the debt that built them? Where will the unemployed gather to dream?

Limbic System: Now that the immediate threat is seen to be the economy, plans to cut greenhouse gas emissions are being shelved. Humans are still looking across the savannah for lions.

Talking Points: Robert Shiller wants to make sure you understand: (1) House prices are falling faster and farther than in the Great Depression. (2) The Treasury last held interest rates at zero in the GD. (3) Consumer confidence is as low now as in the GD. (4) Asset bubbles take as long to deflate as to inflate. The current round took well over 7 years, closer to 20. (5) Bad things will happen

Stealth Flighters: GM has asked the FAA to block the public's ability to track the flights of their planes. Lots of luck; remember those secret rendition flights?

Ingreedyents: Just because commodity prices are falling doesn't mean food prices are. Or will. They are expected to be up about 6% for 2008 and go up another 4% or so in 2009, with the largest increases in meat and poultry and the largest decreases in package weights.

Attention to Details: The Housing bubble was a Ponzi scheme. So is the American Empire. All Ponzi schemes eventually collapse.

Bankruptcy for Idiots: The CDS spreads on British debt jumped even higher on Tuesday, touching 100 at one stage. In the US: Michigan -192; California -165; Nevada - 164; New Jersey - 150. CDS on US bonds are at 56 basis points. Neat, you can buy insurance on US debt that will pay you dollars if the US fails. Financially that's like buying insurance on the end of the world.

Ripley's: The scurry to safety reached a crescendo this week as the yield on ten year Treasuries fell below 3% for the first time ever.

Four Strikes and We're Out: Jobless claims remain at recessionary levels, consumer spending fell 1%, factory orders plummeted, and home sales fell to the lowest level since 1991. Citibank stock rose by over 50%; the bailout's working!

Three Times and Out? The recidivism rate on modified mortgages is approaching 50%, which suggests that there is a large group out there which is never going to learn to swim and should never have been let near the pool to begin with.

True or False: If Detroit’s Big Three go bankrupt, the perfect storm really will have arrived with a collapse of both the real economy and the financial sector. True. Foot bone connected to the leg bone...

Thursday, November 27, 2008

SAR #8332

SAR 8332

Traditionally it has been profitable companies that get nationalized.

Can You Spell "Weimar"? The Fed is wildly stuffing cash into every crevice it sees in the dike, confident they can complete repairs before inflation runs away with the remnants of the American economy. That light in the distance isn't the end of the tunnel - it's at Ben's print shop.

Early Christmas: The Fed has wrapped up $7.4 trillion and put it under tree for Wall Street. A few stocking stuffers for a few near-banks, but half of everything made in the US last year has been either given or promised to the bankers and brokers. Almost all of this was done without public discussion or Congressional authority. It is simply the GOP rewarding the base as they run out the door. You can tell your grandkids you witnessed the greatest theft in history .

Spot Quiz: Is Britain going bankrupt? (a) Yes, (b) Yes, (c) All of the above.

A Bank's A Bank: Paulson's TARP has given Bernanke's Fed $20 billion to allow it to lend $200 billion to holders of asset-backed securities. Never mind the math, they are bankers. And never mind the loan, the Fed is a bank. A private one, lest you forget.

Tarot Cards: Goldman Sachs issued bonds guaranteed by the FDIC at 200 basis points over Treasuries. Why? Why is an FDIC-backed bond less trusted than a Treasury? Selective default by Uncle Sam?

Cockroaches: Some memes running around the web need to be squashed. Here's one: The average Union worker at GM makes $70 an hour. Nope. About $28. The US operations of Toyota, VW and Honda average $24-$25. Go beat another horse.

Who, What, Where, When, How Much and Why? There is no transparency and there is no oversight. Paulson and Bernanke refuse to say how much they are giving away, to whom, nor what (if anything) they are getting in return. Requiring disclosure would set off a panic if the bankruptcy of the banking system were no longer hidden. Ditto, the Treasury.

Deflation: Next year British households will pay back more money to banks and building societies than they take out in new mortgages.

Captain Renault: The GAO is shocked to find the Treasury has handled TARP poorly, with a systemic failure to track how the money was spent and few controls to prevent conflicts of interest between Paulson and Goldman Sachs .

Droll proverb: The Fed's latest $800 billion attempt to calm the waters has been called "spitting in the wind." Really, they said spitting.

Slight of Hand: The only part of the $7.4 trillion in giveaways and guarantees approved by lawmakers is the $700 billion TARP, not one penny of which has been spent on what was authorized. Last week the Fed lent out $91.5 billion - 2,000% more than the average week in the three years before this all started, when banks borrowed only $48 million a week. This isn't the New Deal, its the Raw Deal.

Reminder: No sales leads to no profits leads to no dividends. This, according to Bloomberg, is "news".

Pablum: A long article asks, "Will the Financial Crisis Put an End to Reckless, Planet-Destroying Consumption?" Their answer is 'Hopefully". The real answer is "No". Go read something else.

Wednesday, November 26, 2008

SAR #8331

While 'what goes up must come down' is well confirmed,

the reverse remains unproven.

My, How You've Grown: The oceans are growing in acidity ten times faster than climate change models predicted and is directly correlated with atmospheric CO2 increases. Acidic oceans will dissolve the calcium carbonate shells of corals, shrimp, crabs, and other sea creatures, especially krill which form the base of many major oceanic food chains. Neither the Fed nor Paulson has plans to bail out crustaceans.

Traitor! Shell's CEO Jeroen van der Veer, who ought to know, warns that mankind must quickly convert to alternate energy sources "or else the lights would go out." He cited the usual constraints and offered no solutions.

Symptoms: How bad is Citibank? Look at it this way: As part of the government's all-hands effort to save the behemoth, the FDIC would only take on $10 billion of future Citibank losses. Does Ms. Bair know something Ben and Hank should?

Not Quite the News: One-third of China's Yellow river is so polluted with sewage and factory waste that it is unsuitable even for agricultural use. I'm shocked that it isn't 50%.

Progress? Bush is proud of the progress made in Iraq. But... But sewage still runs in the streets of Sadr City. Electricity is available only 5 or 6 hours a day in Baghdad. Clean running water is a memory. Ah, nothing like the combination of American ingenuity and Republican supervision.

Coming & Going: Last year Brazilian coffee farmers could not afford to buy fuel, petroleum base pesticides and fertilizers. This year they can't get credit to buy these things, even though prices have fallen.

Not Good News: An 'ultra-large' 23 billion ton coal deposit has been discovered in China's Turfan Basin. Great, just what the atmosphere needed.

Ambidextrous? There's a story out of Washington claiming that last July staffers from both McCain and Obama's campaign compiled a joint list of candidates for positions in the new administration. Just as you've always suspected.

Headline Only: People in the UK who fail to tell the authorities of a change of address or amend other key personal details within three months will face fines of up to £1,000 per offense.

Health Insurer's Security Act: That's the working title of Obama's health plan. It requires that everyone in the US give blue Cross Blue/Shield, HCA, and their co-conspirators $500 a month forever. In return they will do redundant paperwork that doesn't cover much of anything. Doesn't matter whether you want to or not. Single Payer? Actual health care? Not a Prayer, not in this Universe.

Marriage Counseling: We're spending $7.5 trillion in an attempt to save our economic system. That's like buying an abusive spouse a really expensive present in hopes they won't beat you again. They will.

Numbers Game: So many folks in England fear genetically modified crops that field trials will be conducted in secret to prevent disruptions. The experimenters maintain that there is no way to feed an exploding world-wide population without using GM technology. Like the Green Revolution 50 years ago, all this effort and money is being spent to make an unsustainable population larger.

Tuesday, November 25, 2008

SAR #8330

"Ignorance more frequently begets confidence than does knowledge."

Chas. Darwin The Descent of Man

Now Playing: The Treasury is giving the Fed $100 billion which the Fed will then loan to investors so they can buy CDOs backed by credit card receivables, auto loans and student loans. Meanwhile, the Fed is using another $100 billion to purchase Fannie Mae and Freddi Mac's bonds and mortgage backed securities issued by them and Ginnie Mae. Separately, a week after saying he wouldn't, Pinocchio Paulson says he may have to ask for the remaining $350 billion in TARP funds so he can complete his Christmas giving.

A Nation of Sheep, A Nation of the Sheared: The US government has promised to spend $7.5 trillion to rescue the financial system. That's 10 times the cost of the Afghan and Iraqi wars combined. Enough to pay off 50% of all the mortgages in the US. But there'll be no money for health programs, for GM, for people.

New Record: The median price of an existing house fell by over 11% in October from the year before, the largest drop since records began in 1968. Nearly half the houses sold in October were foreclosures.

Crazy Aunt: A US bailout of the Big Three is bound to scandalize its neighbors on World Trade Organization Street, setting off gossip about protectionism and unfair competition. What they won't talk about is the fact that most of them have crazy aunts in the cellar, too.

Quoted: "The problem is that the Bush Administration has so lowered standards that someone who is competent is applauded as a good choice."

Washout: Over one-third of China's land is being seriously eroded, putting both crops and water supplies at risk. Within 35 years the 100 million people in southwest China will lose the land they live on, while yields in the northeast, China’s breadbasket, will fall 40%.

Cupboard's Bare: Only on Wall Street could Andy sell Bob some US Treasury notes, take the money, not deliver the Treasuries and not go to jail. Under the polite rubric of "failing to deliver repos" over $5 trillion in "fails" are just rescheduled for later delivery. Without penalty.

Idle Hands: Unemployment claims have reached a 16 year high. The only bright spots in the data were in the medical and criminal justice fields. Putting people in jail, supervising them and keeping records on them are second only to taking care of sick people, supervising them and keeping records on them. Tell your kids; it's not plastics anymore..

They're Still Here... "Amazing how much damage the lame ducks can do in the time remaining." So much evil, so little time.

Homework Assignment: In preparation for the take-home test on "Friedman & The End of Fiat Money" please read: Double jeopardy for financial policymakers , Wolfgang Munchau (FT) and The Fed is Out of Ammunition , Christopher Wood (WSJ).

Math Quiz: More people + Less Food = (a) 923 million hungry people, (b) increasing starvation, (c) a profit opportunity for Agribusiness, (d) all of the above.

Warning: Most of the Fed's giveaways are run out of the New York Fed, whose president, Timothy Geithner, is Obama’s Treasury Secretary. The only change will be what's left in your kid's piggybank.

Sticks and Stones: According to Don Blankenship, CEO of the nation's 4th largest coal producer, those who want to stop global warming are: (a) crazy, (b) communists, (c) atheists, (d) totally wrong, (e) all of the above. Nothing like a reasoned position. Nothing at all.

Permanent GOP Talking Point: The only serious step needed to (a) reduce the deficit, (b) create jobs, (c) provide decent health insurance, (d) balance the budget, (e) defeat terrorism, and (d)prevent erectile dysfunction is to abolish capital gains taxes.

Monday, November 24, 2008

SAR #8329

$250 billion & no management changes.

Any of this legal?

Correction: No matter what the folks at CNBC and WSJ claim, Friday's late inning rally was not a tribute to Geithner's nomination as Treasury Secretary; it was applause for Sheila Bair's open-ended promise of a trillion bucks or more to cover the debts of US banks.

Sooners: In a massive re-enactment of the Land Rush of April 1889, China, Japan, Kuwait, Saudi Arabia, South Korea and others have been rushing to buy or lease millions and millions of acres of arable land throughout Africa - a place that routinely cannot feed itself, much less the billions in Asia.

The Swamp: Analysts claim the government has to cough up another $1.3 trillion (on top of the $2.8 trillion already poured into morass) "to improve liquidity." Who needs it? GE, Wells Fargo, Citigroup, AIG, Goldman Sachs... Stop right there, that's the magic word.

How Deep ? Investors have been pummeling Citigroup, but JPMorgan appears to need capital even worse; more than GE and even more than AIG's $180 billion or whatever they're up to now.

Undependable: Crude oil exports from Mexico, the third largest source of oil for the US, have fallen 17% in 2008, while production dropped 10%. Google "Export Land Model".

The Truth About Bailouts: Bailouts will fail as long as they ignore the consumer. Until the consumer can spend again, there will be no economic recovery. It's obvious that the debts of the US customer cannot possibly be paid back with earnings of the present population; thus no amount of money or promises will keep The Collapse from continuing.

Short Answer: Why would the Paulson bail out Citigroup and not GM? GM is about jobs. Citigroup is about money.

Out of Town Tryout: An unruly mob gathered outside Reykjavik's main police station to protest the terms imposed as part of Iceland's financial rescue. It is reported they shouted and stomped. Later on more practiced folk will show them how it should be done.

Grammar Quiz: According to Mr. Paulson, the American banking system "has been stabilized." That statement (a) occurred some time ago, (b) may occur sometime in the future, (c) is way past tense, or (d) things are closer than they appear.

Technology Won't Save Us: The alternative energy caucus claims the US can convert to non-polluting technologies within 10 years. It took 60 years or more to build the current thermal-powered system - mostly during times of an expanding economy.

Same old Sleaze: The folks who got us into the current mess are working hard to make FHA-backed loans the next crisis. Over the next 5 years inapropriate FHA-backed mortgage holders will begin defaulting about the time the Option and Alt-A folks taper off. This will go on nearly forever.

Connections: Something to worry about one day next week: FEMA has failed to make contingency plans for a drastic nationwide reduction in electric power supply if an influenza pandemic caused serious disruption in the coal industry.

Clarity Award: Ilargi's introductory comments over at Automatic Earth on Saturday are exemplary. Go read them.

Definition: Bankruptcy fraud: A Federal crime occasionally prosecuted if the amount of money involved is small and the perpetrators are not politically connected. As an example, not AIG.

Porn O'Graph: Delinquency rates, real & commercial

Saturday, November 22, 2008

SAR #8327 / Weekender

"I believe the banking system has been stabilized. No one is asking themselves anymore, is there some major institution that might fail, and that we would not be able to do anything about it. "

Henry 'Pinocchio' Paulson, November 17, 2008

Believe It or Don't: The US seeks $300 billion from sheiks as "financial aid" to help prevent its economy from sliding into a painful recession.

Quiz: There is a "fact" wandering around that needs to be euthanized: The average GM worker is not paid "more than $70 an hour." Not even close. It's $28 bucks an hour plus health and such, and the union is taking over the health plan in 2009

Grains and Losses: Farmers in Texas are putting next year's winter wheat in, spending about $6 a bushel for fertilizer, fuel, and seed, to produce a crop that will get them about $5 a bushel. A bigger truck won't help.

Check's in the Mail: Argentina is going to seize some $30 billion in pension funds and continue to collect the $5 billion in annual contributions from workers. The government said it is doing this to protect Argentina's savers. We're from the government and we're here to help.

Pick A Number: Goldman Sachs sees unemployment at 6.8% for November, going to 9% by 4Q09, with GDP in 4Q08 declining at a 5% annual rate. These are the most realistic pessimistic to come out of Wall Street.

Dominoes in a Dark Room: Before we tip GM into bankruptcy, maybe we should turn on the lights and see how many dominoes it's going to take with it.

You Heard It There First: On CNBC Friday morning, guest Hugh Hendry of Eclectia Asset Management said that all financial institutions in the country will be owned by the US government within a year, with shareholders getting nothing because the taxpayers will be "paying this for a long, long time."

Grid, Locked: In 2003, after North America suffered an extraordinary power blackout, the nation's power companies guaranteed bigger, longer blackouts unless more supplies were brought on line and massive improvements to the grid were not funded. Credit crunch... blah, blah, blah. You know the rest. Batteries, put batteries on the list, Martha.

Carbon is Forever: It's not just diamonds. Carbon, in the form of carbon dioxide from fossil fuels is durable. Some of it may last only a century or so, but 25% will last "essentially forever." Second hand smoke.

Revisionism in Action: In a speech on November 20th, Mr. Paulson claimed that "By pro-actively addressing the problems we saw coming..." He topped himself with: "I believe we have taken the necessary steps to prevent a financial collapse."

Appropriate Panic: Don't worry about the stock market; you've already lost your shirt. Worry about the credit markets - the one that Bernanke and Paulson have been fixing. Many corporate bonds are now paying over 20% - even for AAA companies. Deflation is the problem, it is ugly, and it is soon to be a four-alarmer.

Porn O'Graph: Where the Jobs went, and when.

Friday, November 21, 2008

SAR #8326

Memo to Mormons: What goes around, comes around.

Future Farmers of Africa: South Korean conglomerate Daewoo is leasing a million acres of land on the island of Madagascar for 99 years to grow corn. It will lease another 300,000 acres to grow palm oil. It already is growing corn on a 50,000 acre farm in Indonesia. This will not end well.

Drumbeat: A building in Syria bombed by Israel in 2007 "bore multiple features resembling those of a nuclear reactor". I bear multiple features resembling Harrison Ford, too. The US claims the site was a reactor that was "close to being built." Just like my wife's dream house.

Shylock Survival Plan: Now GMAC wants to be a bank and tap into the TARP funds. Manny down at the barber shop is looking into it, too.

Commie Pinko Tree Huggers: The US National Intelligence Council, the coordinating point for analyses from US intelligence agencies, in its current report, "Global Trends 2025: A World Transformed," describes the world in 2020 as a series of disasters, "permafrost melting, lower agricultural yields, growing health problems, and the like are taking a terrible toll, much greater than we anticipated 20 years ago."

Interpretation: In the flurry of reports on housing this week, here's the keeper: Single family housing permits last month were down over 40% from a year ago and down over 70% from January 2005. No permit, no house. Starts were down 40%, Completions were down 33%. Next month will be worse.

Takes One To Know One: Just as it's major client is getting thrown out of Iraq, piracy comes along to provide Blackwater Worldwide another revenue stream.

Chilled to the Core: Researchers have discovered that glaciers in the Himalaya have not added ice in over 50 years, suggesting that the predicted rate of melting for these icefields due to global warming has been optimistic and that major rivers supplying water to over 1 billion people may dry up much sooner than expected.

Oil's Too Cheap To Drill For: Oil at $60 per barrel makes deep-water projects in Brazil, the Gulf of Mexico and West Africa uneconomic. Oil's at $48 now. Watch this space.

Curious: They never were going to say: "We're broke because we're rotten businessmen. But didn't they miss an opportunity to tell (some of) the truth: the social welfare costs are killing them. What a missed opportunity to argue for universal health care.

Coronation: At the bottom of the deflationary spiral we have begun, cash will be king. Every "Leading Indicator" is pointing down that particular path. Most of the government's bailout plan is aimed at getting banks to lend. Are there are a whole lot of idiots out there who actually want to go further into debt?

Headline Only: GM Shares Sink to Lowest Value Since Last Depression.

Hip Deep: US debt is now exceeds 350% of GDP. Logically, if there were any logic left on Wall Street, this debt can never be repaid. No one mentions this as Paulson and Benanke scurry about huffing and puffing and trying to re-inflate a debt creation engine - any debt creation engine - to pull the economy back to giddiness.

A Promise Isn't Really a Promise: It's a sad commentary on our times that "pension relief" means transferring the pension obligations of corporations to the taxpayers. Brother can you spare a dime?

The Beetles: Pine bark beetles have finally gone too far. They've quietly been destroying the forests in the American West and much of Canada for a decade, but now they've gone too far. The Park Service says it has had to close 38 campgrounds for fear trees would fall on visitors.

Porn O'Graph: Credit where credit's due.

Thursday, November 20, 2008

SAR #8325

Ruining the industrial base of the United States
turns out to have been a poor strategy

Public Service Announcement: Freddie Mac is at $0.56. Fannie is going for $0.39. Ambac is down to $0.85. NYSE rules says that any stock under $1.00 gets delisted, so if you want to track these stocks, check with the OTC guys. Ford and GM next week?

Perversion: Hedge funds didn't do any better in October than you did. Feel better?

Sequestered: The EU's plan to develop 12 pilot coal-fired power plants with carbon capture and storage technology has been scuttled for lack of funding. Avoiding catastrophic climate change is just too expensive.

Slipping Shipping: At the docks in Long Beach, inbound cars are piling up. Over on the outbound side, recycled cardboard and paper products are pilling up. Sad, the largest export though Long Beach is recycled paper and cardboard. The world doesn't need the one thing the US is good at making: waste.

Lecture: Dr Henry Jacoby, of MIT's Sloan School: "We have to get coal out of the system." There will be a take-home test.

Take Two Aspirin: When the media starts focusing in on a story, you can be pretty sure it's not news anymore. For example: "Is China in a downturn?" The real question is: How long will China's recession last and how bad will it be?

Whistling Past the Graveyard: Pemex's Cantarell oilfield is declining faster than predicted - this year's fall exceeds 300,000 bpd. Worse, the gas in the field is advancing rapidly. When it reaches the wells, the show is over.

Changing Partners: Just as the Great Depression ushered in political and economic change, the current episode will bring the end of globalism, regulation-free markets and "greed is good" capitalism. Might change a few political systems, too.

Call for Delivery: The DOE has some good ideas as to where the US could store its carbon dioxide, if a way to capture, transport and store its carbon dioxide is developed. Also, if we had some beer we could have pizza and beer if we had some pizza.

More than Meets the Eye: The Treasury owns 79.9% of AIG and thus controls it, right? Wrong. A Treasury creation - The AIG Credit Facility Trust - controls the shares. Who are they? Three people "appointed by the Fed." No further information is available - a Paulson/Benanke trademark. [Read the second comment to this story.]

Hippocratic Oath: Scientists have discovered that nitrogen trifluoride (NF3) is 17,000 times more potent than CO2 in causing global warming. NF3 is used in making the solar photovoltaic panels environmentalists put on their rooftops. Or used to be.

Magic Trick: Citibank's Corporate Special Opportunities fund - don't you just love the name? - lost 53% of its value last month and has been liquidated. From $4.2 billion in assets at its peak to just $58 million today, plus (or rather, minus) $880 million in debts. Investors, who had been locked in for a year, have seen 90% of their money disappear.

Porn O'Graph: When I got my first car, gasoline was...

Wednesday, November 19, 2008

SAR #8324

The saying is "In God we trust."

It doesn't mention bankers.

Questions Before Answers: What's the goal in bailing out the auto industry? To save the stockholders? To keep manufacturing big things that use a lot of fuel? To lose more money turning raw materials into junk? To keep people working at doomed jobs? To prop up a broken economic system for a while longer? Because we can't think of a good alternative?

Warming Regards: In 2007 the IPCC reported man-made global warming everywhere but in Antarctica. Wrong. Research now shows that Antarctica is warming, just at half the rate the Arctic is. Great stretches of Antarctic coastline is undergoing "substantial warming" and this will continue even if we begin reducing our CO2 emissions. How big's a cubit?.

No Shows: The National Bureau of Economic Research reports that industrial production in October was down 6% from the previous year, double September's 3% drop.

Waste Makes Waste: Unappreciated by those who don't live nearby, underground coal fires are a fact of life in many coal mining areas. The one under Centrallia, PA has burned for 40 years or more. China's underground coal fires produce as much CO2 as all of Germany does. Bad enough we're killing ourselves with power plants.

Preaching to the Choir: The energy crisis is not over. Oil is $60 a barrel not because huge new supplies were found but because the high price of peak oil destroyed demand. The cupboard is bare and if we don't lay in some alternative supplies and go on a diet, the economy will continue to beg on street corners.

Tea Leaves: The consensus estimate from 59 economists is that the current 'downturn' will be the steepest and longest in over 30 years, the economy will continue to shrink well into 2009, consumer spending will enter the worst drought ever and foreclosures will continue to increase. Not called the dismal science for nothing.

Pudding: Congressional wimps, especially the Democratic castrati, politely allowed Paulson assure them they did not know what the laws they wrote said and that he wasn't about to pay any attention to them anyway. And he wasn't going to tell them where he spent the money and he certainly wasn't going to rescue a single homeowner. Just banks. Big banks.

Reminder : The IEA's recent World Energy Outlook cited a 6.7% depletion rate for existing giant oil fields. That's a drop of about 5 mbd a year. How long before we need a new Saudi Arabia? A new Middle East? Enjoy the $25 fill-ups.

Garage Sale: US airlines are stuck with nearly 300 surplus planes. Make an offer.

Step Back: Bernanke and Paulson insist that their cheerleading has worked and that rain will soon fall on the parched earth and their rescue of Wall Street has "already been demonstrated." You have to stand back a ways to see it. And squint.

A Forest Full of Trees: What'll it be today? Global warming? Credit crunch? Economic collapse? Peak Oil? Oh, wait, peak oil's sooo yesterday, right? Wrong. Industrial civilization depends a lot more on energy than it does on credit, and without energy there's not going to be a lot of civilization around to cause global warming. The population problem will be self-correcting.

Pick a Number, Any Number: Non-financial US corporations need to repay or refinance $4 trillion in the next 2 years, in a market where the US government will be sopping up about $5 trillion. Out at second?

Porn O'Graph: Confident Un-confidence.

Tuesday, November 18, 2008

SAR #8323

The USA, a subsidiary of Paulson, Bernanke & Associates

Rush to Do Nothing: Democrats are still afraid of the GOP. Why not force a Yes/No vote on the auto industry? Never mind the merits of the case - that's not the point. Getting the GOP on record is the point. On record as being against the working man, against American Industry, the flag and apple pie? Wimps. It would be interesting to live in a two-party state.

Fair Deal: GM they can have the $50 billion (a) if they can identify at least 10 million customers who can actually afford to buy all those new cars without starting a new credit bubble, or (b) if they use it to rebuild the national mass transit systems they and their friends in the oil business purposely ruined 80 years ago. Make that $100 billion.

No-Brainer: Faced with foregoing their bonuses, Citibank's top executives decided to fire 50,000 employees instead.

Buy the Numbers: Consumer durable goods (appliances, carpets, stoves, furniture) output fell by 18% in October 2008 from the previous year. That's the 30th consecutive month. You want fries with that?

End Run: Claiming unspecified pipeline damage, Georgia has halted natural gas deliveries to South Ossetia. Suppose the US is behind this, too?

The Agency Problem: If I'm CFO and short my company's stock before issuing the quarterly report, I've been bad. If I hire you to do my books, see I'm failing and short me. you've been bad. If a bank gets private information from a customer and uses that information to trade at the expense of the customer's stockholders, it's (a) business as usual, (b) Goldman Sachs or (c) not yet proven.

Getting Back On: After every fall, my mother would tell me to climb back on the bike and try again. Barbara apparently told little Georgie the same thing about free market capitalism.

Futility, Defined: The governments of the world will gather in Copenhagen in December 2009 to negotiate a treaty spelling out what they may do to lower global greenhouse gas emission. Their decisions will be based on the 2007 ICPP report which was based on data published by mid-2005, which was based on research conducted in 2004.

While You Were Out: Just before the polls closed on election day, the Bushies in the Bureau of Land Management announced a December 19th (late on the Friday before Christmas) lease auction on 50,000 acres adjoining Arches, Dinosaur and Canyonlands National Parks. Easements to allow vacationers access to the parks will be maintained.

Parting Gifts: More than 2300 felons are seeking pardons from President Bush before he leaves office, not counting administration officials.

Multiples Choice: States, cities and Home Depot have applied for funding from the Treasury, along with about 6,000 banks. There's not going to be enough IOUs to go around and states and cities will eventually to go begging to Wall Street where they'll pay 18% for funds the banks are getting from the Fed at 2%. This is variously called Banking, Capitalism, Democracy or Theft. Chose one.

Work Visa: The Iraqi cabinet has agreed to let its US pupetmasters extend their all-expensive visit to the end of 2011. Apparently, no one thought to ask Moqtada al-Sadr.

I'd Rather Not: Remember thinking CBS was giving in to the White House when Dan Rather got fired for telling the truth about the emperor's old uniform? Seems Dan has not gone quietly and has used his investigative reporting skills to show how clever you were.
Porn O'Graph: Mirror, Mirror, Oil and Dollar.

Monday, November 17, 2008

SAR #8322

If there were an easy way out of stupidity, greed and debt,

somebody would have found it long ago.

Simon Says: At the G-20. Bush urged European leaders not to abandon free-market principles just because the US has. Gordon Brown was emphatic that the US should not bail out American car companies. Obama was in Chicago.

Happy Un-Motoring: Republicans reject the idea of rescuing Detroit, observing that it wouldn't change anything, just put off the reckoning for six months. Same is true of adding liquidity to Wall Street. Those six months will turn out to be a very long time.
Silly Question: Pundits are debating the right- or wrongness of stiffing your mortgage holder, citing the "moral obligation" to pay up. Wait, we're not talking morals here, we're talking money.

Ship Out: When the dollar was sinking, US exports grew and saved the day. Now, in the face of the stronger dollar and weakening demand througout the world, US exports are taking a dive. To quote Krugman quoting Setser, "Ut-oh."

Follow the Logic: San Jose wants to be the first on its block to receive funds from Paulson's TARP. Just $14 billion, to start with. Told that the TARP was not structured to cover municipal debt, Mayor Reed said, "Not yet."

It's Only 0.33%: AIG has set aside $503 million of the $150 billion it got from the taxpayers to pay bonuses for Christmas. Who was supposed to be keeping Santa's list?

Forgetful: Former Chrysler president Thomas Stallkamp said, " "There's the feeling that next to financial services, automotive execs are the dumbest people in the world." Not really, there's politicians, economists and voters to consider, too.

Mystery Guest: Part of science is finding out what we don't know. For example, we've just found out we don't know why atmospheric methane concentrations are rapidly rising after a decade of stability. Methane is far more effective at prompting global warming than carbon dioxide, so repairing this ignorance seems a good idea.

Standing Invitation: Turns out the US did have invitations to all those weddings they've been dropping missiles on. The US and Pakistan have a "tacit agreement" - which probably means the US paid off the right people - that lets the US kill a certain number of Pakistani civilians and Pakistan gets an IMF bailout.

Easy Payments: GM's flacks say that it would cost the US $200 billion if the company goes under, but only $100 billion to save it. This year. Your mileage may vary.

All Over But the Lawyering: It will take several years to unwind the trillion dollar tangle that is the London end of the Lehman debacle. So far two months of effort have resolved about $5 billion - or one-half of one percent - of the total.

Bended Knee: Ever call the fire department and have them tell you they'll get back to you? Welcome to the G-20. They're going to get together in March to talk about recommendations on how to save their skins.

Who Goes There? Somali pirates are forcing international shipping firms to consider going around the Cape of Good Hope rather than running the gauntlet to the Suez Canal. This will take longer and drive up costs.

Here's My Plan: Reports claim that Iran is converting its financial reserves into gold bullion. Saudi Arabia is buying large amounts of gold. What strong dollar?

For the Shell of It: By 2030 the Southern Ocean will become too acidic for tiny creatures such as pteropods - which form a base of the food chain - as well as shelled animals like crabs and shrimp. The absolute tipping point will be when CO2 concentrations reach 450 ppm, which will happen long before 2100.

Designated Runner: Amid all the corny hoopla, it turns out that ethanol is a fair substitute for gasoline but not for the heavier products of crude oil distillation like diesel and jet fuel. The US cars may run on gasoline; the world runs on diesel.

Prices are Falling : That's the good news. The bad news is that food pantries and soup kitchens are running short on food and long on customers.

Porn O'Graph: How much is that S&P 500 in the window?

Saturday, November 15, 2008

SAR #8320/Weekender

The market's "invisible hand" isn't invisible,

it was never there.

Please, sir, I want some more. The new kids, JPMorgan, BofA, Goldman Sachs, have joined some real banks in demanding the FDIC clearly guarantee their bonds. Also, they claim the FDIC fees are too high. Mr. Bumble hit Oliver with a ladle.

No Shame: Theft holding company - noun. (1) An insurance firm that bets you'll die young. (2) An insurance company that buys the smallest S&L it can find and then asks the Fed for access to the goody bags and the Treasury for a few billion TARP to hide what they're doing. (3) The Hartford, Genworth, Lincoln National and Dutch owned Transamerica.

Straw for the Camel: The Fed, FDIC and Treasury have put the taxpayer on the hook for $5 trillion. So far.

The Paulson Pardons: At the end of his term it is traditional for the President to issue a few, well selected pardons. That may be where Paulson got the idea to give away as much of the $700 billion as possible to his once and future friends and colleagues.
Chinese Fire Drill: In China's miracle cities, factories close, throwing serfs out of work, often without their final pay packets. 67,000 factories havae closed so far, leading to "labor disputes and protests." City streets full of hungry, desperate citizens are making bureaucrats at all levels of the country nervous. Thankfully, we've got Northern Command.

Clean Break: The EPA's ruling blocking a permit for a Utah-based coal-fired electrical generator puts about 100 similar proposed coal-fired power plants at risk. It's not too late for Bush to overrule. Lawyers, to your posts!

Holy Holocene: About 10,000 years ago the earth entered a long warm period called the Holocene, during which agriculture began, cities were built and mankind flourished. As the earth continues to respond to the warming caused by theCO2 civilization has pumped into the atmosphere it is thought that as early as 2016 a tipping point will be reached triggering a series of feedback loops that will make rapidly destabilize Earth's climate. Scientists suggest that only by eliminating the burning of coal is the only way to sharply reduce our emissions sufficiently to prevent this.

Rocky VI: With October's 2.8% decrease in retail sales as an intro, it looks like the Christmas season will need a big finish

Toast, Buttered Side: Paulson now says the problem is that the American consumer can't get a loan to buy a new car and the Treasury's objective is to restart the consumer credit bubble market. TARP won't cover helping Detroit or homeowners because its only job is "the stability of the financial system."

On Being Afraid: Evolution has wired us to react to immediate dangers; things we can see, taste, and feel. Knowing we are doomed if we do not do something about climate change is not the same as feeling doomed. Explains smoking, too.

Public Service Announcement: Layoffs and reductions are the prime topic for discussions in the local pub, after-work bar, and on the train. To help keep readers at the top of their game, The SF Chronicle is publishing an ongoing list of bankruptcy fillings and mass layoffs under the heading WARN . You've been warned.

See, The Problem Is: Debts get paid out of income. Incomes haven't risen since Nixon went to China or before. But consumers kept consuming and now they need to go on a diet. The Recession Diet.
Nose/Face: 80% of current refinery construction projects (30/160), are being abandoned. It takes five to seven years to complete one of these projects. This is a vote for a very long very severe recession. Five years. Or seven.
On bailing out the banks: When you get a mortgage from a bank, the first thing the bank does is sell that debt to Fannie or Freddie (95% probable) and farm out the servicing. Why involve the bank? It adds no value, simply does a little paperwork, sucks out fees and collects bonuses.
Porn O'Graph: Debt divided by income yields a pretty sad picture.