Tuesday, March 24, 2009

SAR #9083

Borrow. Spend. Repeat.

Michael Panzer

Ambiguity: In the headline: "Geithner unveils bad asset plan.", which word does "bad" modify?

Locate the Exits: The World Bank warns that it is in the self-interest of the developed countries to prevent a wave of serious social and political unrest from sweeping through the world's poorest countries - the ones whose natural and human resources they are exploiting.

Vocabulary: From this day forward, banks no longer have bad assets, toxic assets, assets of any kind. They have "Legacy Loans."

Tiny Tim's Scheme: Economists tell us to hope that Tiny Tim's scheme actually works, so banks will start lending again. Who decided that the banks weren't lending? Data shows they are lending. The problem is rather that folks weren't and still aren't making their mortgage payments on their overpriced houses, can't put another plasma TV on the card, and haven't had an actual raise since 1973. Consumer spending is 70% of the economy (the rest is Defense spending and whatever Madoff was doing with his share). Until the people get a greater share of the pie, the price of paper assets in the bank vaults is meaningless. Even if the working fold were to get a fair portion of the wealth, the consumer would still be in debt for years and years. If this plan isn't designed to camouflage more theft from the taxpayers, then it's a total waste of time and effort, and it will do nothing to alleviate the real problems in this economy.

Bad Novel: The man who was head of Milosevic's secret police and the organizer of the death squads responsible for the genocidal murder of the Bosnians was actually one of the good guys, employed by the CIA.

Location, Location: Las Vegas and Phoenix are not the places to be; New York and Seattle are - according to the S&P/Case-Shiller Home Price Index.

Unsend: Google has come up with a brief delay after hitting the send button for you to say expletive deleted and hit the "Undo Send" button. If only they could develop something similar for public utterances. Luckily, I've an editor.

Headline Only: Sweden Says No to Saving Saab.

Bottom? Harvard Economist Ken Rogoff continues to see Bad Things: Some countries cannot bail out their banks because their liabilities are 2 or 3 times GDP. Housing is 2 years from bottoming. Equity markets will continue to fall with housing. The recession will end in serious inflation. Most large financial institutions are insolvent and must go through some form of bankruptcy. The Obama/Geithner team is simply "wishing away" our problems.

Saturation Obaming: Aren't you getting a little tired of seeing the President on TV every night? He's a good looking, well spoken fella, very adept at complete thoughts expressed in good English, but he wasn't voted Head Cheerleader... Oh, right, he was.

Bean-O: Gazprom apparently hasn't got much gas these days. Production last week was 25% less than a year ago . Gazprom says it's storage is full and Europe doesn't want to pay the going rate, so the lack of demand causes them to cut back production. Others think Russian storage was nearly empty and is being refilled. The IEA does not know if there is a supply crunch right now, or if there will be one in the fall.

Porn O'Graph: The advantage of experience.


Anonymous said...

Toxic asset is an oxymoron. Seems to me that anything toxic is a liability.


Anonymous said...


"Porn O'Graph:

Does the chart show new houses not built or houses built that are sitting empty? I'm assuming not built, which shows just how bad the beefed up CAR act and subsequent securitization feeding fest distorted the market. We won't be building new houses for at least a decade.


CKMichaelson said...

RBM - #1 Correct, and we're the morons.
#2. The chart simply shows the change in the ratio of new to existing house sales. Builders cannot compete for sales against the huge and growing number of steeply discounted REO and distressed existing houses. The real import of this is that selling an existing house does not create an economic boon that building and equiping a new house does. The "gap" represents the "gap" in economic activity... And yes, we won't be building new houses for a very long time.

CKMichaelson said...

I'd like to thank all those who caught my errors this morning. Didn't have the "Don't Send" button working.

Anonymous said...

Saturation Obaming:

Obama has devalued the Presidency. Cheapened the product. I can see the day when the president is Guest 3 on Latest Night just after Coco Kabooms.

Barry soon to be O Bummer!

CKMichaelson said...

Don't tell me you've already forgotten how badly the last guy devalued the prestige of the Office of President. You have my sympathy.

Anonymous said...

Progress at last! From hence forth the assettes will have legacy loans. Now we're getting somewhere.