Wednesday, December 31, 2008

SAR #8366

The End is Near!

War There! War Now! There is a segment of the American press and public that thinks a "war" between Israel and the Palestinians is a Good Thing. First off, it is not a war - it's even more lopsided than the US vs Saddam 1.0 was. It's also not justifiable, but to find that out you have to read non-US media. Any non-US media.

Informed Source: Paulson's handed out another mumbo-jumbo explanation for giving GMAC another $6 billion. Asked if this would become a monthly occurrence, a Treasury official said there is no cap or deadline for aid to automakers.

Great Leap Forward? Trying to avoid another short-lived burst of consumerism, Mr. Obama wants to create 3 million new jobs. There now are only 1.5 million people unemployed in the construction field. How will he employ constructively employ all the unemployed cashiers, burger flippers, and unskilled Wall Street paper shufflers? Send them to the countryside with hoes?

Janus: Looking back, we find that all most of the experts were wrong. Looking forward, we suspect nothing will change.

Lessons Learned: Various pundits, from credentialed economists to respected financial commentators, keep assuring us that "they" won't repeat the mistakes that lead to the Great Depression and made it linger so long. I agree. "They" will make entirely new ones, and recycle some of the old ones - and give them new names. The results look to be the same.

Baby Steps: The SEC has halted a dangerous Ponzi scheme that had bilked over $23 million from investors. The scheme had been running for almost an entire year.

Blame: The blame for the collapse of the financial-capitalist economy belongs almost entirely at the doorstep of the CEOs and senior partners on Wall Street and their non-regulating co-conspirators they sent to Washington. Madoff was not the only crook in the room, nor the largest.

Again: The bad news is that Roubini's been making pronouncements again. The good news is he thinks the worst will be over by 2010. If.

Plan A.2: Governments have no Plan B. Those in power got their power the old fashioned way and are not about to give it up. Plan B is Plan A revised. The only system they know that gives them the power they want is the one that has already failed, so minor a fix that leaves them in control is what they're after. Much like Wall Street.

Santa's List: The FDIC's list of troubled banks has surfaced. Not the official list, but one constructed using the same criteria, sort of...

Check Kiting: Seems that Paulson didn't actually have the $5 billion he gave GMAC. But some of the money he'd previously given away hadn't been spent yet, so he used that. See, if you've got $350 in the bank and you've written checks totaling $350 but only $345 worth of them have cleared, you've still got $5. Right?

Progress report: Zimbabwe is going under. Pakistan is wobbling seriously. Riots go unreported in China. The Russian media report 'civil protests'. Greece has been burning for over 10 days. The riots have begun. Ah, Happy New Year.

Actual Facts: The old nostrum that the US was the destination of choice for investments is getting pretty threadbare. Private wealth - foreign private wealth, of course, there seems to be little domestic private wealth left in the US - is no longer sopping up Treasury debt. Seems that only China, Japan and Saudi Arabia are still rowing the boat. When they throw in the towel the drop in the dollar's value will be breathtaking. Reserve your seats now.

Footnote: New SEC rules will let companies count as an asset things that may or may not exist but that they think might show up. Starting with oil companies and what are called "unproven" reserves. My bank account is full of unproven reserves.

Tuesday, December 30, 2008

SAR #8365

Very few people are interested in voluntarily confronting reality. cryptogon

Pathos: Going wildly in debt far beyond any hope of repayment is what got us in this hole. Bernanke and collaborators claim the way out is through more debt. Which is more pathetic: An economist who knows he is a fraud, or one who doesn't?

The Semitic Wars, Volume 47, Chapter 13 : The Tribe of Abraham has again attacked the camps of their cousins the Palestinians. There are any number of apologists for Israel's brutality and the Palestinians' continued foolhardiness, but the best summary is simply this: It will end poorly, long before it ends.

Indigestion! Kuwait has backed out of a $17 billion joint venture with Dow Chemical, funding being a bit tight in Oil States right now. Too bad for Dow, which had planned to use that funding to pay off its $13 billion in debts from gobbling up Rohm & Hass.

Bad Moon Rising: Some are predicting the USA will erupt and split in six or seven smaller nations. Nope, there is not enough gumption left in the US citizenry to mount a decent protest, much less massive separatists movements. More likely the US will simply thrash around a bit and then fade into irrelevance. Governments will be overthrown, in more places than you might suspect (think Europe). But the US populace will sit in front of the TV, waiting for someone to reward them with their god-given right to happiness and success.

Never Satisfied : First the media was angry at Citibank for just sitting on the TARP funds they hadn't paid out in executive bonuses. Now that they've given $800 million to a South Korean company, everybody is mad at them even more. Can't win.

Two Aspirin: Somehow Obama, working with Bernanke and the new folks at the Treasury, is expected to rescue the US from recession, or at least lead the nation through the next year or two with but mild discomfort. No one should actually suffer, it's not the American way. And massive inflation, like depression, has been banned from the land forever. Call me when its over.

American Dream, II. There's a new reality. America once was about upward mobility. Not any more. Today a third of Americans earn less than their parents did. For that matter, their parents earn today what they did in the 1960's. PS, the rugged individualist is a fraud, too.

Biology 1 Bible 0: Thankfully, nature's urge to merge beats the heartfelt promise of chastity nearly every time. Seems silly to keep making bets you can't win. Sillier to urge others to set themselves up to feel guilty about being perfectly natural reproductive units.

Bake Sale: The US Treasury has to pump out some $2 trillion in debt in 2009. At the current low (verging on no) rates, who is going to buy them? The Saudis and the rest of the oil folks are no longer rich and the Chinese seem to be pushing back from the banquet table. So, other than Aunt Mildred - who lost all her money to Madoff - who is going to buy the magicians' flash paper?

Revealed Truth: It is no secret that the hard-copy daily newspaper is fading away. It will never quite disappear, but is already a walking ghost. Many decry this fate, see it as a turn towards darkness. Part of the mantra of the 'save the newspaper' faction is that Internet bloggers are no replacement for real journalists. Maybe not, but neither are today's newspapers.

Opportunity: Let's start an airport based rental service for clothing, footwear, coats, bathing suits and the other stuff once stuffed into suitcases and lugged to airports. Imagine an on-line rental agency with a selection of freshly laundered items in SML& XL sizes, which you could rent by the day/week at the destination airport of your choice. For a small fee they would supply basic toiletries and personal grooming appliances. All for less than the cost of checking a bag on United Screen Door and Airline, Inc.

Up Ahead: How many of the Alt-A and Option ARM mortgages that reset in the next couple of years are going to fall off the table? Many, many, if they were from WaMu during the "a thin file's a good file" period. Ah, the Twilight Zone.

Monday, December 29, 2008

SAR #8364

Suffering is neither preordained nor redemptive.

Keeping Track: What we all need for Christmas next year is an electric train set. From coast to coast and into the suburbs.

The Gas Tax : Congress wants the auto makers to produce highly fuel-efficient cars that will help deal with both the challenge of climate change and the certainty of dwindling gasoline supplies in the future. Problem is, the public thinks the future is next month, maybe the month after, and they want to drive there in a big SUV - after all, gasoline's cheap.

A Town in Oklahoma: How long will this turmoil last? How long before we get back to “normal?”

Low Rates! Yes, mortgage rates are marvelously low. Let's refinance! Except prices have fallen so far that most applications for a re-fi are turned down because 80% of the current assessed value won't pay off the old mortgage and the applicant hasn't the resources to pay off the old balance and put 20% down on the new loan.

Where's the Egress Express? The Taliban have now taken over a province astride the main highway to Kabul, just 30 miles from the capital. They administer the area, including providing a police and judicial system. Obviously the US and its allies are not winning this struggle and at best are slowly surrendering the countryside to the Taliban. Tell me again what the national interest is that keeps US troops there...

Ready, Steady: Falling oil prices have led to a falling ruble. To prevent this leading to a falling government, the Kremlin is prepared to put down "social demonstrations" should they occur. Their version of Northern Command, I suppose.

Get Your Bets Down: There is a 50/50 chance Russia will cut off gas supplies to the Ukraine on January 1st, for non-payment. Natural gas to Europe flows through the Ukraine. The last time Moscow cut deliveries to the Ukraine, Kiev simply siphoned from shipments earmarked for Europe. What are the odds it'll happen again?

Succinct: Headline "Consumer Spending Falls, as Unemployment Jumps." Also: Earth spins, sun rises.

Psst! Everybody wants to get through this bad patch in the economy - just survive, with some assets left. Yet none of the big boys are doing well, brokers are going broke. What to do? Who to believe? Sad truth - none of us has been here before and no one really knows what's going to happen next.

Roadsign: Geologists admit that oil's end is visible down the road a few decades. Maybe it is time to reconsider the wisdom of basing our economy on perpetual growth and our civilization on a finite resource.

Comfort, Sort of: The Fed has spent trillions bailing out the worst run companies in the country. Now Fed funds are paying less than 0.25% - essentially nothing. This suggests that there is no expectation of inflation, and no risk that the government won't be able to pay you back. Think that's so? Yes, the US does not have protesters in the street. Nor has the economy collapsed, yet.

Saturday, December 27, 2008

SAR #8362 / Weekender

If it could be proved, it wouldn't be politics.

Received Wisdom: Reports claim Chinese GDP growth less than 5% is a recession, for it needs that much expansion to absorb new workers. It is thought unthinkable that China could have a negative GDP growth. Yet China's electric power output dropped 8% in November...

Prediction for 2009: Here's a summary of the experts' forecasts for the New Year: It's going to get worse, much worse.

Demand Decreases: By December 31st the world demand for petroleum will have dropped to 85.83 million barrels a day. That's due to rampant demand destruction of 700,000 barrels a day. This 0.8% decrease in demand provides support for economists' explanation of the $110 per barrel drop in prices. Some of the oil statistics floating around simply cannot be right.

Data: Retail sales, excluding cars and gasoline, fell 2.5% in November, 4% in December.

Who Can You Trust: How many other Ponzi schemes are there besides Madoff's? How many more financial psychopaths are ginning up fake account statements? How many little old ladies are there out there who think they have money in an account, but it's all just some big scam? How many more bad banks? How many bad brokerage houses? How many more bad companies with bad stock? How many more bad government entities with bad finances and worse bonds? How many bad pension funds? [Quoted from Byron King]

How Bad Is It? State lotteries are reporting a drop in sales as fewer and fewer suckers poor people waste their money play. If this represented growing wisdom it would be a good sign. It is most likely an indicator of desperation, when the gullible no longer buy the dream. Scratch 'em off.

Down Payment: Japan's factory output has biggest fall on record, declines 8.1 from October. Is Mr. Bernanke still sure the US should follow Japan's lead?

Need To Know: Bank of NY/Mellon, JPMorgan Chase, and 19 othersl were asked what they had done with the billions in taxpayer money they had received. None provided a specific answer, most claimed they chose not to disclose how they had disposed of the funds. Most simply said, "Go away, kid, you're bothering me."

Most Import Meal: Young people who skip breakfast tend to engage in sex earlier than those who eat Wheaties.

Machiavellian: Misdirection may provide a way for US politicians to finally accept what the population has wanted for the last ten or fifteen years - national healthcare. The US government cannot let a group of big states go bankrupt - as seems to be in store for California, New York and a few others. But bailing Arnold out is not a popular idea. If the Feds were to assume the enormous financial burden that healthcare is for every state - equally throughout the nation - it could go a long way to helping out the individual states while advancing a national healthcare agenda.

Demanding Supplies: Falling petroleum prices have derailed many current and planned oil-field projects. This guarantees the price of oil will rapidly rise once the world decides it wants to make things again. The top five net oil exporters shipped 24mbd in 2005, but will only export 18mbd in 2012, perhaps less. The decline in investment guarantees a rise in price. Teaching point: Small changes in demand have large effects on the price of a commodity in limited supply.

Connections: Kyrgyzstan's ongoing electrical blackouts are inconvenient. But without electricity the pumps that drive public water systems do not work. Air, water, food. In that order.

Porn O'Graph: Retail Sailing...

Friday, December 26, 2008

SAR #8361

"...some are more equal than others." George Orwell

Bernie, M'boy: The US financial system, the housing, equity and Treasury markets, are all Ponzi schemes, with the need for a constantly increasing source of fresh money to keep going. That funding is based on new debt, new dollars based on nothing produced, just the trust and confidence of the participants. Please explain the difference between Madoff and Paulson & Bernanke.

Sentence Completion: Mexico gets 40% of its budget from oil exports. Mexico will stop exporting oil in about 4 years. After that Mexico will ___________ .

Quoted: What happens when California lays off a quarter million employees, sends them to bed without their suppers? When it closes the homeless shelters and the clinics? When Arnold cannot afford to call out crews during next year's fire season?

The Enigma: No one understands what's going on in the oil markets, don't feel lonely in your confusion. Countries lie about reserves, production and exports. No one really knows how much is used nor how much is in storage. Demand figures are windage-adjusted guesses at best. Maybe oil was not worth $147 a barrel, but it is certainly worth a whole lot more than $37 a barrel.

Falling for You... Conditions in the United States are expected to get much worse, with forecasts that the economy will shrink by as much as 6 percent in the fourth quarter and keep declining for the next six months.

Location, Location, Location: Exxon is paying $6 million to 'resolve' charges stemming from the spilling of 15,000 gallons of diesel into Boston Harbor. If they had paid $400 a gallon for the Prudhoe bay disaster...

Quoted: "I don't think anything from historic episodes suggests that, left to itself, the economy is going to magically recover and come back to full employment," Roger Farmer, National Bureau of Economic Research.

Down and Down We Go, In a Spin: China is sitting on $1.3 trillion in US Treasury & GSE bonds paying a measly 2.9%. They accumulated this fund underwriting the US purchase of Chinese goods. But the US customer isn't buying any more. To keep its economy afloat, China can inflate its currency or dump dollars. Inflation lead to Tiananmen Square in the 1980's and the leadership has not forgotten. If China begins to dump dollars just as Bernanke gins up the presses to buy another $1.5 trillion for Paulson's TARP and Obama's stimulus, deflation will not be a problem.

North, Sloped: Production from Alaska's North Slope declined 3.8% this year and is expected to drop 4.9% next, to 665,000 barrels a day.

Ground Floor: A Madoff victim has brought suit against the SEC for its ongoing 'negligent conduct." Who will be first to seek damages from the Office of Thrift Supervision for its active connivance in falsifying banks' books?

China Clipper: China's crude oil imports are expected to grow only 1.2% for 2008, down dramatically from last year's 14.7% growth on top of a 14.5% spurt in 2006. The industrial world runs on oil; if the Chinese use only increased 1.2%, expect their GDP to be down, down, down.

Small Differences: Some anticipate social unrest, protests, riots. But it takes widespread suffering to trigger much beyond polite protests in the USA. When unemployment reaches double digits, when hundreds of thousands have their heat shut off, when the electric grid fails and the water supplies stutter - then we'll see social unrest. For now I'm content to predict increasing unemployment, decreasing public services and rising concern about food, heat and water. Once we have hungry, poor, homeless, cold, unemployed people, will be lots of time to predict social unrest. Weeks even.

Last Minute Gifts: The Treasury Department gave stocking stuffers to 92 more banks, and anointed Amex and Citi banks so they could take a swig of the old eggnog, too, while GMAC got promoted to 'bank holding status.' What's the rush? Shoring up for end-of-year reports? Painting the pig?

Wednesday, December 24, 2008

SAR #8659

Last Minute Christmas Gift !

A Word: Bring joy to yourselves, me, and others by putting the cursor right here and clicking. It'll take you to Second Harvest, where you can make a donation - at 10¢ for each day of the year you read SAR, call it $30. Thank you; you can take the rest of the day off.

Americans, a people with massive debts and no practical skills.

Progress Report: Pemex announced that crude oil production fell 6.5% in November from the prior year, Cantarell's output fell faster than expected, and exports fell 20% - all a little steeper than the Export Land Model predicts.

Ripley's: Japan's Mikuni credit rating firm says the US dollar will fall by half without some form of debt relief and recommended that Japan write-off its entire holdings of US Treasuries to help the US dig out from under its crushing debt. Japan is the 2nd largest foreign holder of US Treasuries.

2 Little 2 Late: Fitch sees "imminent default" for GM and Chrysler. A stocking stuffer.

Things Left Unsaid: The head of the Bank of Spain warns that the world faces a total financial meltdown. He didn't get the talking points memo.

Identity Theft: As the economy recesses, the American consumer will be less and less of a consumer. In a culture based on shopping and consumption, what happens to all the addicts when they can no longer play the only roles they know? Panic? Depression? Social unrest?

Freed Markets: The Office of Thrift Supervision allowed IndyMac bank to back-date receipt of $18 million from its parent company so it would appear healthier than it was. It failed two months later. Similar back-dating has been discovered at other banks 'regulated' by OTS. Lies, damned lies, and Government assisted lies.

Deflation Defined: Ten percent of US employers are lowering wages in 2009, another 10% are cutting their matching contributions to 401ks. Eat your gruel and be happy.

Should'a Could'a: Shell's UK chairman says that the North Sea has long since produced over half its reserves. He also pointed out that it would have been better to have conserved the resource for later when more problematical sources begin to dry up. Drill There, Drill Now.

Rumors of the Fall: Harvard admits to losing $8 billion from its $36 billion endowment fund. "Sources" are whispering that the losses were close to half - $18 billion - at the end of October. The end of year report card will be interesting.

Multiple Choice: November's existing house sales were down 8% from October and 10.5% from a year ago. 45% of them were facing foreclosure or sold for less than the mortgage. This is described as (a) a decline (b) a plunge (c) a collapse (d) expected.

New Jargon: Climate scientists are using 'ACC' more and more often. It stands for Abrupt Climate Change - as opposed to the gentle, gradual, old fashioned "by 2100...." predictions. The US is now expected to suffer abrupt climate changes within the next couple of decades. For example, seas will rise rapidly if melting of polar ice continues to outrun recent projections, and the ongoing drought in the US west may be the start of permanent regional drying.

Seasoned Greeting: Russia's Gazprom is reusing last year's Christmas card to Europe - the one that said their present may be delayed or diverted by those nasty Ukrainians who paid part of the overdue gas bill but 'restructured' the balance for payment in February.

Good Riddance: Finally Milton Friedman's Chicago School of Economic Thuggery is being chucked in the trash. What took so long?

Suçlu: The financial crisis was caused by the liberal press - according to Limbaugh, O'Reilly & Rove. Reminded me that the Turkish word for the accused, 'suçlu', and the word for the guilty, 'suçlu', are conveniently identical.

Porn O'Graph: Gingerbread houses.

Tuesday, December 23, 2008

SAR #8358

How often do "best case" scenarios pan out?

The Question: If the former chairman of the NASDAQ is a long-time crook, who could you possibly trust? Do you have any reason the think that Madoff was the exception? Didn't you just read the one about the bonuses?

Mene Mene Tekel Upharsin: "It is possible during the financial crisis to support domestic producers by raising customs duties." So said Russian Premier Vladimir Putin. But it could have been the leadership of India, Vietnam, Indonesia, China. In economic terms it's known as 'beggar thy neighbor' and gets a great deal of credit for making the Great Depression great. Of course none of the TARP money nor the Fed's trillions in guarantees is protectionist, we're free marketeers - funny ears and all.

Pathfinder: Analysts predict Britain's GDP will fall by 3% in 2009 and another 1% in 2010. Go deep and I'll throw it to you. Meanwhile, Japan's exports fell 27% YoY, with a decline of 25% in trade with China.

Obama's jobs program.... President Next promises 3 million new jobs within 2 years . The US is now losing over half a million a month. New math.

Things Better Left Unsaid: Economist Paul Krugman: "I'm fairly optimistic about 2010 ..."

Load Shedding: Nepal is likely to collapse both politically and economically if a way is not found to prevent electrical supplies from shrinking to a 6-hours-a-day level. Remember the term for shutting off the electricity, 'load shedding'. You'll see it again. Soon.

Coda: Lately the common theme in nearly every report on global warming has been: "These changes are occurring much faster than previously predicted."

Breaking the Dollar: As scared folks park their remaining cash in a Money Market, keeping the fund's net at a dollar and still making enough income to pay the light bill becomes harder and harder. Either they'll have to close, or start charging you to hold your cash, just like the Treasury

Cart, Horse, Cart: Today supply leads demand in the oil field, so prices and development investment are falling. Tomorrow demand will outstrip supply, prices will rise and it will be too late for investment. Takes these two to contango.

All Purpose Answer: Darth Cheney, after conferring with himself, has ruled that he doesn't have to leave any record of what he's done as VP for the last eight years. Or what he's done in any other capacity, for that matter. Just as well, we probably really don't want to know.

Operating Loss Projected: Who knew that General Motor's first name was Toyota?

Revival: Israel/Palestine. Chechnya. 9/11. Iraq. Somalia. Afghanistan. Nigeria. Congo. George Bush and the End of Days. Religion has reclaimed its rightful place as the leading cause of violence, torture, war and death. If my god is right, and he is, then yours must be wrong, and it is.

Increasing Decrease: Swiss glaciers are vanishing at an ever increasing rate, much like the US GDP.

Progress? The Army blows things up and hurts people, that's their job. But they wouldn't want to hurt people when they only meant to blow something up, so they've developed a 'wallpaper' that will cut down on the flying debris from explosions.

A Word: A lot of you folks read SAR regularly. I'm glad you do. Your appreciation is my reward. But if you'd like to "do something" in return for the non-stop entertainment, drag out your checkbook and write a healthy one to the local food bank. If you need help finding it, go to Second Harvest. If SAR's worth 10¢ a day to you, make it for $30 to cover the year. Thank you. Now back to our program...

Monday, December 22, 2008

SAR #8357

Don't mistake motion for progress.

Stocking Stuffers : Bailed out banks have awarded $1.6 billion of taxpayer money to the incompetents who lead them so poorly . Maybe Santa could bring these executives little shame - they have none of their own.

All Greeks to Me: What began as a protest against some casual violence by Greek police has become a much wider protest, verging on a revolt against the system. This may be the most significant European uprising in over 20 years, especially if protesting against can be transmuted into movement for a new societal orientation. The leaders of the West should be watching closely, as should their still loyal subjects.

Until Prop 8 Do Us Part: The nuts in California now want to undo the 18 thousand gay marriages that were performed in perfectly legal ceremonies.

Hot Stove Sitting: The US, faced with a frozen credit system like Japan's in the early 1990's, has dropped interest rates to near zero, like Japan did in the 90's. Japan subsequently learned that cutting rates without disclosing and disposing of toxic assets had no effect. The US is repeating the experiment to confirm that the Japanese were right.

One Liner: Hedge funds, except Mr. Madoff's, will have access to $200 billion in government money under a Fed program designed to support consumer credit.

Back to the Future? This summer the International Arctic Research Center discovered methane escaping from underwater Arctic permafrost at the highest concentrations ever measured. If more than a tiny fraction of the sub-sea methane is released, stopping catastrophic global warming would become impossible. The massive Permian-Triassic extinction is thought to have been triggered by a massive release of sub-sea methane, similar to an event now apparently beginning on the floor of the Arctic Ocean. This may be the most harrowing data on global warming ever reported.

Kitchen Sinks: Psst! Need a few bucks 'til payday? See your local Fed, it's got $200 billion set aside for auto loans, credit card loans, student loans, payday loans, title loans. Well, for derivatives backed by such loans; wouldn't want Ben to step on Vinny's toes.

Fearing Fear: Homeland Security seeks to arm commercial flights with anti-missile lasers. Does anybody do a cost/risk analysis on these things? How's the odds match up with the danger of doing your Christmas shopping at WalMart?

Semantics: The Pentagon has decided to comply with the Iraqi Status of Forces Treaty, which requires all US combat troops be out of Iraqi cities by June 30, 2009 and entirely out of Iraq by January 1, 2012. This will be accomplished by reclassifying 70,000 soldiers as "support troops."

Good News / Bad News: The good news that most of us will live to see the effects of global warming. The bad news is that most of us will live to see the effects of global warming.

Sentence Completion: Waterboarding is a war crime. The US has hanged enemy personnel for this crime. Dick Cheney has admitted approving waterboarding at least one specific prisoner. Dick Cheney should be ________________ .

Secret Plan: Paulson says there never was a playbook, which we all suspected. But how were they able to screw up so much, so consistently?

Top This: While Madoff stole $17 - $50 billion (reports vary how much was stolen, how much simply lost), his 'investors' (better we should see them as unindicted co-conspirators) will be getting back some $17 billion they paid in taxes on capital gains Madoff told them they had made over the years. They hadn't really, so Uncle Sam has to give back the tax payments.

Fine Print: Iraq's parliament has voted to reject a law that allowing troops from Britain, Australia, and some other countries to remain beyond the end of this year.

Reasonable Observation: Civilization is a collective agreement to follow certain rules which groups adhere to as long as there is clean water, food, and some degree of security. Absent these basic requirements, the enterprise dissolves. Witness Zimbabwe. Or Greece... or Pakistan... or Belgium

Porn O'Graph: Money, supplied.

Saturday, December 20, 2008

SAR #8355/Wekender

The history of money is replete with riots.

Silver Lining: Oil is significantly underpriced and the big boys know it. They are socking crude away, with the futures market guaranteeing them a $10 a barrel profit. It's called 'contango'. Wanna dance?

Adjustments: Reporters are pointing out difficulties in comparing today's unemployment numbers with historical records due to this and that. Far more startling is that only 35% of the unemployed in the US qualify for unemployment payments.

Cut It Out: Undersea cables carrying telephone and internet service between Europe and the Middle East have been hit by "failures". Last January two such cables severed by a dragging anchor. Another example of non-redundant systems' vulnerability to the unanticipated.

A Curious Turn: Some are predicting that next year loan repayments will surpass new mortgages extended. Paying off debt is deflationary.

Who benefits? The biggest string on the automakers' loan is that they "quickly" reduce their debt by 2/3rds. Quickly, as in before they go bankrupt when this crust is gone. The GOP's union busting is in there, too, but the important thing is the big money institutions and individuals will have been bought out before the bankruptcy occurs and the common shareholders wiped out.

Reprise? The Soviet Union collapsed following the collapse of oil prices in the late 1980's. Russia is quickly changing from petro-rich to debtor nation, a fundamental step in that dance. Even $50 a barrel would pinch its social economy. Same with Iran, and at $30 for a couple of years Saudi Arabia could become an interesting place. Governments, like economies, run on oil.

Weather or Not: I know, I know, it snowed in Las Vegas. Yet over the last decade NOAA has recorded 230,000 new highs and but 110,000 new lows. Higher highs, fewer new lows. Sounds like a trend. And snowfall? Why, when I was a kid...

War on Unions: The Bush auto loan requires the UAW take wage cuts that will put GM/Chrysler "wages" on a par with transplant auto factories. But "wages" here means total labor cost including pensions and healthcare for retirees. In that current workers are paid roughly the same as their counterparts in Tennessee and Alabama, in order to reach this number current UAW workers will have to cuts to convenience store clerk levels. This is may be a sticking point in the process.

Business As Usual: We're supposed to be shocked that a broker lied to his clients and enriched himself at their expense. Why? How is this different - other than scale - from business as usual on Wall Street? Madoff was more efficient, not bothering with a lot of the mumbo jumbo middle steps, but the end result's the same - a fool and his money, parted.

Boosterism: Japan is planning to buy $227 billion in stock "to help stabilize" the market. How did this approach slip past Hank?

Cultural Difference: Belgium's supreme court found that the current government had interfered with the judicial system, and the prime minister had the good manners to propose his government's resignation. Unlike the US, where that sort of thing is routine in Bush's Just-Us Department.

Demand: The price of oil has come down farther and faster than ever, faster than demand dropped. The US drop in demand is down 4% from the peak, and is well in the lower range of the 5 year average daily demand. If OPEC is able to stick to the announced cutbacks in production, the price about 6 weeks out will be interesting to watch.

Non News: The dying Bush administration has decided to regulate the regulation of carbon dioxide emissions so that the EPA cannot control the gases causing global warming. EPA head Stephen Johnson emphasized that the ruling was made to protect the economy, not the environment.

Porn O'Graph: The Piggy Bank's broken.

Friday, December 19, 2008

SAR #8354

Does anyone outside their immediate family still regard

our leaders as leaders?

Facts Not In Evidence: The article asks: Are biofuels still economically feasible? Which begs the real question: Were biofuels ever economically feasible? Or morally?

Quagmire: California is first among equals, as the state needing the largest handout the soonest. But like AIG and Iraq, once will not be enough and there is no exit plan in sight.

Ozymandias: Scientists have discovered both a new type of pterosaur (flying reptile) and a 65 foot long sauropod. A cautionary reminder of the permanence of change.

Sir Lance A Lot: Hank Paulson, who has done such a wonderful job in saving the investment banks and the entire financial/credit system, has rushed off to Detroit to save the ugly sisters. He doesn't actually have to rescue them, just keep them on life support until Obama takes office.

Winter Advisory: Twenty percent of US households were behind on utility bills at the end of last winter, and five percent had service terminated for non-payment.

Huffing & Puffing Keep in mind that Bernanke & Co. are striving mightily to restore the status quo, to let the Larry Kudlow's go on believing that financial capitalism actually works. All that 'success' will bring us is another, even bigger bubble and another, even bigger crash. No point in actually trying to solve the problem.

Vocabulary: "Anonymizing" What Yahoo! will do with all the info it has on you, every 90 days, compared to the 9 months retention Google now holds your identifiable data.

One Stop Shop: Tuesday the Fed said it would use any and all possible tools to help the financial markets and the economy. It will stick its not-so-invisible hand into any market that is not performing to the Fed's satisfaction. It already is the market for corporate paper, mortgages, and mortgage backed securities, and is about to become the market for household and small business loans. Soon after will start the new Americanized Master-Visa Express credit card program.

Glory Days: Morgan Stanley made $3.3 billion betting against itself by buying back its own cheaply valued debt, and made $1.1 billion hedging its own debt. Only a capitalist could be proud of making money selling its own shroud. Even so, it lost $2.4 billion in the quarter.

Unsaddled: As the US economy drops, more and more horses are being abandoned by their wannabe owners who no longer can afford them.

Far, Far Away: As part of its effort to con Washington into a few billion in "loans", GM has stopped construction of the factory that would have made the engine for the Volt plug-in electric car and the fuel efficient engine for the Chevy Cruze.

Quoted w/o Comment: "I've abandoned free-market principles to save the free-market system." George W. Bush, Washington, D.C., Dec. 16, 2008

Ouroboros: Watching the rich eat their young is instructive. Seems that a lot greedy of rich folks kept making money with Bernie Madoff right up to the point they didn't have any money. Worse yet, they had pledged their apartments, condos, houses against loans to get more money to give to Madoff, or used their accounts with him as surety for other loans to buy apartments, condos and houses ...and then the walls came tumbling down.

Not Today, Not Tomorrow: Bush's mandated 36 billion gallons of biofuels by 2022 is not going to happen. That's the best news on the corn-based ethanol front in months.

Thursday, December 18, 2008

SAR #8353

They just don't know what else to do.

Cry: Now that everything else has failed, Bernanke has opted for "quantitative easing," better known as printing money. This cannot work. The US relies on foreigners to buy our debt; with zero return and steadily increasing inflation robbing their principal, who's going to buy? If you print all the money you want, imports will slow or stop - which is fine for salad spinners, but is not going to work in the oil trade. The bond market may decide the fate of a currency, but those with the oil decide the fate of countries.

Symptoms: Feeling a tad queasy since FMOC endorsed Bernanke's quantitative easing? Are you concerned that this will soon get out of hand and turn into rampant inflation? Read Yves, she'll not make you feel better, just less alone.

1000 Words: News stories have been bragging that over 1,000 species have been discovered in the Greater Mekong during the past decade. Pictures, slideshow and video here.

They're Off! Joining Suzuki, Subaru has withdrawn from the world rally championships, Volvo, #2 truck-maker in the world, has temporarily halted production, Toyota is begging Nippon Steel for a 30% discount, Honda quit Formula 1 racing, GM is shutting down 3 assembly lines in Mexico. Chrysler closes everything for a month. Is that a checkered flag? Is it over yet?

Fun, Fun, Fun? China says that the US should not assume it can borrow its way out of the current financial crisis. Did Daddy just take the T-Bird away?

Rainbows: The two largest drivers of the American Consumer society, cars and houses, got way oversold in the run-up to the crash. The economy will not begin to revive until those cars are on the way to the junk yard and their owners have begun to forget how the housing & banking industry cleaned them out. Bernanke is going to lead the horse to water, but the horse remembers the bad taste from last time.

Q & A: Paul Krugman asks, "Do we need a middle class?" and answers "No." Just as you suspected.

Table Stakes: The Fed's spent the last 9 months trying to solve a crisis caused by too much bad debt by issuing more debt to the same actors. It hasn't worked. Now they are at the OTB window, doubling down to make up their gambling losses with one last long shot.

Maulled: At least two mall owners - General Growth Properties Inc. and Centro Properties Group -- have empty piggy banks. That's 850 malls across America looking for a savior this Christmas.

Contest: Now accepting suggestions for a replacement for 'Dominoes' in headlines and reports about the continuing collapse of the auto industry. 'Cascade' might work, at least for reports of the effect on suppliers of all the month-long shutdowns being announced.

Et Cetera: Madoof, AIG, Blagojevich... Nice to see tradition still means something in the US, as its economic and political escapades return to the warmly remembered norms of the Roaring 90's.

Point of No Return: Scientists report the Arctic is warming much faster than predicted by the IPCC, and think the temperature will soon reach a point beyond which recovery is no longer possible. Temperatures and events forecast to occur 10 or 15 years in the future are happening now.

Unthinkable: Why do we keep bailing out the banks? What do we use banks for? Not savings, not us. Not to get a loan, hardly ever. To process the credit cards, sure, and to hold the checking account. Provide public notary service once in a while, that's about it. Let 'em drown.

Overslight: To get a $120,000 mortgage takes the 5-page Uniform Residential Loan Application. To get $20,000,000,000 from Paulson's TARP takes a two page form, one page listing how much and the other telling where to send it.

Porn O'Graph: Assets in a sling, shot.