Tuesday, March 31, 2009

SAR #9090


Incompetence is the more likely explanation.


As Suspected: The CIA reports that most electronic voting is not secure. How do they know?

Sleep Well: Peak Oil's courageous spokesman, Matt Simmons, claims that production from the world's aging oilfields is dropping by as much as 20% a year. (Cantarell, for example dropped over 30% last year and the IEA expects it to drop another 22% this year.) Simmons also says another leap in oil prices is but 3 to 6 months away. So we've got time yet to enjoy the new SUV.

Do As I Say: Amid all the editorials and speeches decrying protectionist steps by foreign governments, the trillions of dollars of support Washington has given to US financial organizations is never recognized as protectionist.

Not Kansas: Pay no attention to the treasury secretary behind the curtain.

Just Syaing "No.": Only in the Iditarod does gathering a group of the headstrong individuals to pull together work. Certainly seems unlikely at the G-20 meeting. If the headlines are right and "Only a united front at the London G20 can save the world from ruin," the world's in for ruin. Hope for the best, plan for somewhat less.

Bumper Crop: Two-thirds of California's banks will face "reglatory action" by the FDIC by year's end, or so it's said.

Continuity: The Obama administration is continuing the tradition of previous administrations in cooking the data before releasing it to the proletariat.

Monday, March 30, 2009

SAR #9089

Knowledge Oil is Power

Here's Your Hat... Rick Wagoner, CEO of GM, has announced an urgent need to spend more time with his family, or at least that's what Obama told him to say. GM is seeking another $16 billion to waste making cars no one is buying.

Howard! Someone needs to wake up the citizenry to Geithner's plan to give private investors billions of dollars at the taxpayers' risk.

Previews: The Iraqi government is attempting to disarm Sunni militias after two days of an uprising in Baghdad. The Sunni "Sons of Iraq" were paid and bribed with guns by Petraeus as part of his brilliant plan - which is coming unraveled. The Sunni's don't particularly want to be defenseless when confronting the Shia government. Isn't this where we came in?

Surprise? A vast computer spying operation has infiltrated computers in 103 nations around the globe and has stolen documents from both government and private offices. It seems to emanate from China, not the CIA. This time.

Take a Hike: Auto sales in the first half of March were down 40%, YoY.

Housing Market Explained: As long as there is excess inventory, house prices will fall.

Mission Creep: The FDIC is an independent US government agency that exists to provide deopsit insurance coverage for member bank depositors. End of story. Nothing in the enabling legislation suggest it should be guaranteeing debt from or loans to private entities wanting to buy bad loans from bad banks with taxpayer money.

Looting 2.0: The Geithner plan is the codification of a system that is high-risk capitalism for the poor and unlimited socialism for the rich, perpetually.

Emperor, Clothes: Obama is pitching a new, sustainable economy based on "responsible homeowners" who "save and invest". To that end the Treasury keeps pouring treasure into the banks and bullies. I've not seen the part of the plan that converts an economy dependent on insatiable consumption to one based on "saving and investing." Nor have I seen the secret annex where the wages of the multitudes are raised.

What if they gave a bond auction and nobody came? Oh, they did.

Say What? The Fed is printing money (monetizing treasuries) in an effort to lower interest rates, which in theory should encourage people to borrow and spend. Yet Treasury yields increased last week. Didn't Ben say 'please'?

Economic Snapshot: The fundamentals behind the new and improved stock market, clearly explained and fully illustrated.

Saturday, March 28, 2009

SAR #9087/Weekender

Talking about the future of free market capitalism

assumes facts not in evidence.


Crash Report: This was no accident. Wall Street, Ben and Tim, and their Congressional co-defendants keep saying this was a horrible, unforeseeable accident. Nonsense, it was the result of conscious, planned looting and will be followed by more conscious, planned looting. Who you going to believe, Bernanke and Obama, or your own lying eyes?

Semi-Retirement: S&P reports that the pension funds of the S&P1500 now meet only 74% of future obligations. One out of four of you will have to keep working.

Vietnamization Redux: Over the next year several Brigade Combat Teams will be given a couple dozen officers to dispense advice to the Iraqis and thus become Advisory and Assistance Brigades. Mind you, they'll still be 99% combat troops, but names count.

Agenda, Hidden: PIMCO says the Fed needs to double its balance sheet to $6 trillion. It also said it would be willing to make billions on the next $3 trillion in bond issuance it that would help.

Big Gulp: Finance - the pushing of numbers about on the screen - does not produce anything, although it sometimes (seldom?) makes it possible for someone else to actually make something. Before the current downfall it had grown to be 35% of the economy and provide 40% of the profitability of the S&P 500. In what version of a real world is this remotely possible?

Report Card: American Society of Civil Engineers took a look at the country's infrastructure and was not impressed. Gave it a D. Schools, water, roads, levees, all D's. Recommended a lot of remedial work, just to catch up. Beats rebuilding AIG.

No Exit: Turns out that hell is other people, white guys with blue eyes.

High Finance: The administration has figured out (with unacknowledged help from the regulated) a way to secretly subsidize the banking industry and claim that it is private enterprise. It is a transfer of nearly a trillion dollars to the commercial banks (for which read BofA, Citi with Goldman secretly at the trough). Call it the Geithner put.

Economics and the Madness of Crowds: Much the same thing, actually.

Sausage: Obama is sending 4,000 more US troops to Afghanistan to train their security forces to take on the untrained Taliban - who are winning this one. And he's going to establish benchmarks and if the Afghan's (and Pakistanis) don't meet them, they will get sent to bed without milk and cookies. Or we'll send more troops. Or more toy airplanes. And kill at least twenty-eleven of alQaeda's top leaders. Again.

New Records: Jobless claims, new highs, GDP, new lows. Profits are down. House prices, at new lows. Anger and unrest, new highs.

Hip-bone, Back-bone: Follow the dots: Higher temperatures in late summer in Great Britain are killing the most cranefly larvae. In the spring the crop of new adults is reduced by 95%. Golden plovers feed their chicks on craneflies. No food, no plovers. Golden polvers will be extinct within 100 years. Good thing humans don't eat craneflies.

Cheapskates: Japan’s consumers cut their consumption by 5.8% in February.

Friday, March 27, 2009

SAR #9086

Hoe your garden.


Momentum: Bailouts schmailouts, the economy is going to get worse, no matter how much taxpayers overpay for toxic assets, because the customer - and they are 70% of the economy - is going to see their jobs vanish, have less money and less credit available. Unemployed homeless folks don't really buy all that much stuff, no matte how handsome banks balance sheets are. The system itself, not any specific part of it, is the problem. Until the correct diagnosis is made, recovery is doubtful, implosion likely.

Alternate Universe: Not everyone buys the AIG doomsday scenario.

Contractions: Roubini is not bullish. He thinks US stocks will continue to fall (and that the current rally is but a passing phenomenon), US banks (including some major ones) will fail, and the economy will continue to deteriorate through the end of 2009.

California Dreaming Nightmare: By next spring California's unemployment rate will be nearly 15%, and will remain in double digits until the spring of 2012. Or so university economists with tenured positions claim.

Insight: The AIG scandal is, or should be, that the government used AIG to funnel money straight to its big banks here and abroad and, of course, to Goldman Sachs and the other usual suspects. Be nice to see an investigation into this particular bit of looting and secret bailouts.

Smoky Mirrors: Dr. Yellen of the SF Fed tries explaining the difference between the economy as seen by economists and the economy as experienced by real people.

Ex Exports: Japan's exports are down 49% YoY; exports to the US are down 58%.

Word Choice: Placing the big banks and AIG under FDIC receivership is misnamed "nationalization" so that it won't happen. Because if it did, the FDIC would put in new management. New management would have no reason to cover up the fraud committed by previous management.

We Don't Need No Stinking Stimulus: Consumer Spending dropped at a 4.4% annualized rate in the last quarter, more than previously estimated, which alone would drop GDP by abaout 3.5%..

Asked and Answered: Will Israel be Brought to Book? No.

Sign of Spring? The American Trucking Association reports that truck tonnage was up 1.7% in February, making it a two-month gain of nearly 5% from December's low. But the tonnage hauled was still nearly 10% below February 2008. So, not overwhelming, but a robin's a robin.

Headline Only: "Jim Rogers: The Dollar is Doomed."

The Beat Goes On: Citi and BofA are using TARP funds to buy up crappy paper legacy loans cheaply with the intent of selling them to the PPIP project as new-spun gold. Using taxpayer money to hoodwink the taxpayers out of more money. Isn't that what you thought would happen?

Porn O'Graph: New single family houses sold. Or house sold.

Thursday, March 26, 2009

SAR #9085

We have elevated scientific ignorance to an art form.

Ken Deffeyes

Nutshell: The biggest problem with the all of the official attempts at "solving" the economic collapse is the idea that perpetual growth is not only desirable, but that it is possible.

The Point: The Geithner-Summers plan is to transfer of nearly a trillion US taxpayer dollars to commercial banks, by buying toxic assets from the banks at far above their market value. It is in fact the original Paulson/Goldman Sachs plan. Taxpayers are the losers, banks the beneficiaries.

Sales are up, Up, UP! Before you get too excited, yes new home sales in February were "up" 15,000 units - annually. That's less than one more new house a day in each state. Back in '05 the annual rate was 1,400,000 - that makes February's numbers a 75% decline from the peak, so keep your shirt on.

Expanded Powers: Here's the appropriate response to the idea that even more power over the economy should be given to the executive branch: "Are you fucking kidding me! Have we not learned?" Amen.

The Very Best Part: Under Geithner's plan, even toxic assets held by hedge funds will be eligible for taxpayer funded rescue at wildly inflated prices. This ought to calm the electorate.

Faint Praise: February's Durable Goods report was (a) better than expected but (b) the second largest decline (-23%) in history.

401k's and Other Forms of Suicide: Buy-and-hold investing is seriously wounded, on life support. The "long term investor" now realizes that he or she is simply a mark to be conned by Wall Street. Told to "wait", "there wasn't really anything to worry about", they've seen their statements they understand that there is, in fact, nothing left to worry about.

My Questions, Precisely: Why does the treasury secretary have to bribe investors to take risks? And, will there be troops in the streets this summer? American streets?

Crocodile Tears: Reports suggest compensation for US hedge-fund employees may drop 25% this year - about $198,500. This will leave them making about 7.5 times that of the average union auto worker, while producing nothing and griping about the lousy bonuses.

Bunch of Numbers: Russia is currently the number 2 oil producer. But output this year is projected to fall 1.1% (by the Russian government), or up to 7% (Dow Jones experts) or as much as 15% (Moscow's Alfa Bank). So the world needs at least 1.5 million new barrels a day just to break even. The world's not going to get them.

Column A, Column B: Chicago Fed President Charles Evans, "The U.S. economy will certainly begin to grow by the end of this year." Harvard economist Martin Feldstein thinks the US will need another fiscal stimulus at least as large as the first one, as the recession lasts well into 2010.

Job Interview: Representative Ellen Tauscher says that the threat posed by Iran's missiles has been greatly exaggerated. So have her chances of being confirmed as Undersecretary of State for Arms Control.

Trees, Forest: Will Tiny Tim's Plan work? Maybe. Here's the real dilemma: Giving more tax money to the banks is unacceptable to an enraged public, while government ownership of recapitalized banks is unacceptable to bankers.

Rotten Socialists! With unemployment soaring to 2.7%, the Dutch government is pouring an $8 billion stimulus package into the economy to releive the suffering

Don't Tell the Realtors: While all the talking heads are proclaiming the end to the housing crash, California reports house prices dropped 41% last month from a year earlier. The US median price fell 16% for the same period.

Civics Lesson: Wall Streeters are upset that Congress is responding to the voter's anger. “We have no rule of law in this country. "We don’t know what Congress will do next. They’re ignoring all the old rules, and they’re making new rules whenever they want.” Worse, they're doing so without asking Wall Street to help with the wording.

Lack of Interest: The 30-year mortgage rate is down to 4.6%. The response is an increase in re-financing, which does nothing to lower the overhang of empty houses out there. House prices are still way above what the average worker can afford. Maybe some attention should be paid to the underpaid.

Porn O'Graph: Mighty, fallen; or fallen mightily.

Wednesday, March 25, 2009

SAR #9084

This crisis isn't about the economy, or even money -

it's about power.


Rhetorical Question: Not asked on last night's Obama Hour: "According to two Nobel-Prize winning economists, your Treasury Secretary's plan is flawed and will not work. Why are you and your economic advisers pandering to the Wall Street cronies that got us into this mess?"

Knight of the Living Dead: There's nothing wrong with the financial system, there are no bad assets, the problem is simply a complete lack of confidence in the system. So the administration says. They don't mention the growing lack of confidence in the administration.

Agent Orange, The Sequel: Vegetation along the US - Mexican border plants will be biochemically killed off in order to reveal illegal immigrants smugglers who will be killed off.

Spade, Spade: Much to the dismay of Big Coal, the auto makers and 97.2% of Republicans, the EPA has asked th e White House to bless classifying carbon dioxide as the pollutant it is a danger to public health subject to strict emission controls.

Quoted: "Everything that we're doing right now is engineered to avoid reality..."

Here to help...? The 'net is full of reports that the Treasury will seek ever wider powers to take over larger and larger sections of the economy. This is, of course, another Bad Idea. But don't worry, at the rate they've taken over AIG, Citigroup and BofA , the power won't be used.

Size Matters: North Korea says it does not understand on what basis the US and Japan can presume to tell it not to launch a communications satellite. "Because we're bigger" is the answer.

We're Saved: . The great green miracle works like this: we turn the planet's surface into charcoal.

Technical Knockout: Let me be the first to tell my son the engineer that scientists on the Lohafex project (putting iron filings into the ocean to stimulate algae growth which in turn would gobble up CO2 from the air) report that little, if any, extra CO2 was taken up. Maybe technology isn't going to save us this time.

The Lazarus Project: US Navy researchers claim to have experimentally confirmed detecting "compelling evidence that (cold) fusion reactions are occurring" at room temperature.

Trade-offs: The WTO foresees a 9% decline in global trade this year, with the downturn striking developed countries far more than developing countries. China's exports dropped 26% in February, YoY. Global industrial output in 2009 is predicted to fall 15%.

Keeping It Real: Moody's reports US commercial real estate prices have fallen nearly 20% in the last year.

Just Wondering... With all the money (not to mention countries) floating around in the care of narco-traffickers, how much of it goes through Citi or Barclays on a daily basis? Did AIG write insurance on their shipments?

Pick the Date, Win Whatever... The government's chief scientist, John Beddington, says a "perfect storm" of food shortages, scarce water and high-cost energy will join with accelerating climate change and lead to public unrest, border conflicts, and mass migrations before 2030. How much before 2030?

Porn O'Graph: After 3 years of drought in California, water is now a cash crop.

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.

Monday, March 23, 2009

SAR #9082

Executive Summary: We are screwed.

- Keith Hazelton

Simple Truth: Here's the bottom line on the AIG bailout and the TALF. They are stealing taxpayer money. They want you to be upset about the couple hundred million in bonuses. They do not want you to notice the couple of trillion they have stolen so far, nor to notice they are getting ready to steal a whole lot more.

An Observation: "The Administration really thinks the public is full of idiots." (Yves didn't add that the Administration is right.)

Who Gets to be Geppeto? The CBO says Obama's budget will be $1.85 trillion short this year - $100 billion more than the White House guessed. Between 2010 and 2019, according to the CBO, deficits will total $9.27 trillion - about 35% higher than the administration claims.

Silver Linings: Pemex is "optimistic" that the decline in Mexican oil production can be reversed by dirilling more holes and throwing monehy down them. Petrobras's reports that Brazil's oil and gas production was up 5.6% in February, YoY.

Jeffersonian: Rumblings of real class warfare are in the air. We, the People - to coin a phrase - have seen real wages stagnate for 30 years, seen the rich get richer, seen a foreclosed sign hung on the American Dream. We're not interested in saving the capitalist system, we're interested in fairness - and jail time for more than a few. Perhaps even real democracy -not one dollar one vote - with respect for workers, reasonable pay, progressive taxation, proper pensions and actual health care. Maybe not yet, but soon.

Bearing Down: Russian exports declined 50% in the first 2 months of the year, while GDP shrank 8%.

Wrong, Wrong,Wrong, & Wrong: The House's 90% tax on AIG bonuses is wrong because (1) It makes contracts worthless. (2) It is retroactive. (3) It is punishment for something that was not a crime. (4) It is political grandstanding, not leadership. (5) All of the above.

Fad: US federal regulators have warned of a “rampant Ponzimonium”. It wasn't clear if they were talking about Wall Street or Washington.

Slippery Slope: Sources claim the president wants new tools to ensure that the government can take over deal with any business in the country important non-bank institutions at any time and for any reason in danger of bankruptcy that pose risks to the financial system.

Tiny Tim's Asset Plan: The Geithner Christmas Club plan for curing the banks of their toxic assets reportedly involves some rich guys putting up 3% and the taxpayers putting up 97% and the rich guys taking all the profits and none of the losses. What could possibly go wrong after all private investors are "kind of doing us a favor".

One, Two, Three: Want to get really, really angry? Watch this three-part video on Hedge Funds and the Collapse of the American Economy. Take notes.

Desert Shade: The Mojave Desert may seem like the ideal place to locate solar energy projects, but Senator Feinstein says that she is concerned about what these projects would do to the aesthetics of the region, the threat they would pose to the tortoise population, and the lack of sufficient contributions to her re-election PAC.

Quoted: "There’s no reason that the top tax bracket should have such a relatively low floor. A guy who makes $300,000 should pay more taxes than a guy who makes $30,000 but by the same token a guy who makes $3 million should pay even more."

Location, Location, and Price: Barbara Desoer got a promotion that caused her to move across the country. Her employer said it would buy her $1.675 million house if she couldn't sell it. She couldn't, so Bank of America bought it from her and has it for sale at $1.295 million. The Charlotte market has a six year inventory of million dollar houses. And Deoser? She's the new head of Countrywide Financial.

Porn O'Graph: Home, Empty Home.

Saturday, March 21, 2009

SAR #9080/Weekender

We keep betting on the losing horse in a race that's over.


Quoted: The United States is the largest borrower in the world. The US national debt has already exceeded the level of 11 trillion dollars as of the beginning of 2009 and continues to grow like an avalanche. Experts say that the US has only two ways to solve the problem: to declare default or trigger off a war. And that's the Truth - or at least Pravda.

Fine Print: Job losses in the current downturn are steeper than in most recent recessions, which suggests employment will not return to pre-recession levels until 2015.

It's Not the Credit, Stupid! Here's why giving banks billions doesn't increase borrowing: The median income for a full time worker is $37,000. Adjusted for inflation, that is less than the worker's dad earned in 1973. Tell this to Obama, Summers, Geithner and Bernanke.

Well, Duh! Severe Dollar Depreciation Likely in the Coming Months, or so forty-eleven headlines say.

Drill Over There, Drill Later: Petroleum explorers are putting off and canceling deep-water drilling plans that were projected to produce about 2.5 million barrels a day by 2011. Low prices and tight credit get the credit/blame. Come 2011 we're going to miss those barrels.

Knock Knock: Researchers have proven that Mom was right for always telling Dad he'd already told that one; seems there are but 8 basic jokes.

Fish In Barrel: If you say it can't be done, then you fail to do it, can you brag that you've proven your point? Not in any bar I know. But if you're a right-wing GOPer who ran for office on a platform claiming government couldn't work, does the Bush administration prove your point? Or does it just prove that bunch couldn't run a koolaid stand?

European Vacation: In February, production in the Euro market fell 17% YoY, up from a 15% decline in January.

The Year of Living Dangerously: Twenty-five percent of American families are one paycheck from disaster. Fully half of all Americans say that they could pay their bills for only a month if they lost their jobs. More than that would be desperate after two months' unemployment. And that's before the baby gets sick.

Fill in the Blanks: Riots broke out on ________ streets as protesters demonstrated against _________'s handling of the economic crisis. Millions of _________ took to the streets earlier in a nationwide protest over the escalating cost of _________ .

Insured by the FDIC: The FDIC lost $10.7 billion cleaning up and selling off IndyMac - not the original estimated loss of $4 billion. Mrs. Hubbard, in charge of solvency at the FDIC, said the supplies in the pantry are fine, as long as you don't actually want to use them.

Smart Alecs: Research shows that cognitive skills peak in the early 20's and decline thereafter. My son pointed this out to me the other day but it slipped my mind.

Clear and Present Danger: The $1.2 trillion or so the Fed is going to spread like mulch around the strawberries isn't going to get a single worker a single raise, isn't going to get a single homeowner out from under an underwater mortgage. Isn't going to affect corporate debt or bank debt... Isn't gonna do much but print paper. Maybe you can teach the pup to go on it.

Long and Winding Road: There's an old Chinese saying: "The journey to a worthless dollar begins with a single step." The Fed took that step yesterday.

Porn O'Graph: S&P 500 earnings are getting to resemble gratuities.

Friday, March 20, 2009

SAR #9079

The American Dream, trade-ins accepted.


Bell-bottoms: Proving once again there is nothing new, the US is planning on increasing Afghanistan’s security forces to 400,000 and undertaking a major counter-insurgency effort "to protect civilians." I remember the US Army's version of "full-scale counter-insurgency": strategic hamlets, destroying a village to save it and napalm. Oh, and strategic withdrawal?

Inquiring minds: Why do AIG's counterparties get paid in full? The sanctity of (some) contracts? Which contracts? Oh, those that benefit Goldman Sachs & friends. Good to see Mr. Spitzer back.

Distraction: AIG bonuses. AIG bonuses. AIG bonuses. The AIG bonuses are chickenfeed. The Fed is stealing $1.2 trillion just by printing! Wall Street has taken trillions more, and you're worried about chickenfeed.

Resorts, Inc. The Federal Open Market Committee, noting that it has failed so far, will try to turn the economy around by buying $1.2 trillion of Fannie/Freddie mortgage-backed securities. You remember MBS - they're the packages of poo that got fancied up then fell apart and started this whole mess. One day soon you'll remember inflation, too.

Dumber than a Board: Only $10 million of the $45 billion taxpayers gave Citigroup will go for new offices for CEO Pandit the Bandit and his merry men.

Constitution Does Not Protect You: In a startling break from the Bush era, the Obama administration - motto "Change You Can Believe In" - says the Fourth Amendment prohibition against unreasonable searches and seizures does not apply to citizens who use cell phones.

Steel Yourself: China's steel exports are projected to fall 80% this year. Shipments have already fallen by 50% during the first two months of the year.

Just Because: The Transportation Security Administration said Wednesday it has resumed pulling travelers aside at random and screening them just for the hell of it, not because of any specific threat.

Dead on Arrival: The administration's proposed "cap & trade" system will not work if a major polluter like China does not go along. And China is not going to go along.

Stiff 'Em: Instead of trying to get debt free by paying off your credit cards, financial maveness Suzi Orman now tells her loyal fans to make just the minimum payment and stash the rest of your cash in cash. Ms. Orman apparently feels there may be good reason to have a supply of cash on hand. Like for when credit cards no longer work, or so you can buy special items from the commissary in the debtors' prison?

Rolling Stock: For February, YoY, inbound freight at the Port of Long Beach is down 43%; outbound freight is off 37%. Stuff is neither coming nor going.

The Throw Away Economy: The entire growth-for-growth's sake, consume for profits sake economy is turning out to be as irreparable as most of its products, Throw it away and get another one - one designed with some understanding of the limits of the earth.

No Payments Until Forever: Every week more than 25 FHA mortgages go into default without the debtors making even one payment. Foul play is suspected.

Now or Never: Saudi Oil Minister Ali Naimi warns that new investment in petroleum exploration and production is needed now to prevent a catastrophic energy shortfall by 2013. Energy researchers at CERA see today's reduction in E&P investment resulting in a 10% decline from current production levels within 5 years. Such a shortage would effectively stymie any hope of an economic recovery. The IEA agrees, but sees the problem arriving sooner.

Thursday, March 19, 2009

SAR #9078

Do not confuse the economy with the stock market.


Acts, Not Actors: Immediately after pledging `to work cooperatively to solve the current economic crisis, at least 17 of the G-20 rushed home to propagate protectionist barriers.

Rose Is A Rose... Energy Secretary Steven Chu is advocating "adjusting trade duties" to protect US manufacturing, in response to China's warning against the imposition of tariffs on carbon-intensive products.

Gotcha! After the Fed said it would buy $300 billion in Treasuries, the dollar fell 2.69%. This is (1) a depreciation of the dollar. (2) Called inflating the currency. (3) Quantitative Easing in action. (4) Making paper worthless by printing on it. (5) All of the above.

Story Time: The government says it is giving billions and billions to the banks in the hopes that they'll begin lending again. But the Federal Reserve reports that bank lending is growing (up 13% from a year ago) and at record low interest rates. So tell me again why we're giving the money away.

Cash Back: Representative Betty Sutton, D-Detroit, wants the government to pay you $3,000 to $8,000 to recycle your car.

Clown Car: Along with foreign central banks, foreign big banks, US big banks, and assorted US financial outfits, now hedge funds are crowding in to get cash from the government via the AIG conduit. How'd they all ever fit in there?

Buy the Rumor: The stock market loves the increase in mortgage applications, ignoring that 75% of all applications are for re-financings, not actual sales.

FΓΌhrer Knows Best: Republican State Senator Mike Bennett wants folks to pass a drug test before they can get their handout unemployment check. He says he has " nothing against the people who were using the drugs," he just wants those receiving unemployment to be ready to work at a moment's notice.

Here's the Plan: The GOP plans to fund Norm Coleman's challenges to Al Franken's 225-vote victory in the Minnesota senatorial election all the way to the Supreme Court. So Coleman will, in the end, win by 1 vote.

Revisionism: The World Bank, which had earlier lowered its projection from 9.2% to 7.5% has now cut its guess for China's 2009 GDP growth to 6.5%.

Backwards: For all the excitement, you'd think supply creates demand, at least in the housing industry. "Build it and they will come" was awfully weak as a movie plot, don't think it'll bring a happy ending to the current downturn.

Majority Rule: The eagerly awaited release of Depression 2009 has been called off for lack of interest. It's unclear if the product has been canceled, or will be rolled out at a later date.

Clueless: Wall Street firms are investigating ways to get around federal compensation caps even though they took gobs of government handouts. Don't they realize that right now there's no where to hide and the natives are restless?

Alfred E. Gazprom's exports to non-FSR countries fell 40% from January to mid-March, and its natural gas production is continuing to fall - haven dropped over 20% in the first 15 days of the month compared to last year. I don't get my gas from Russia, but if I did I might worry, just a bit.

Wednesday, March 18, 2009

SAR #9077

The first thing you need for a market is a mark.


Contract? What Contract? In a blow to the sanctity of contracts, a bankruptcy judge has ruled that contracts between governments and public employee unions do not have to be honored if it inconveniences the government. It'll probably feel different when a judge rules that a contract between investors and the government do not have to be honored either, like bonds.

Small Change: Nearly 75% of small businesses had their credit limits lowered and/or interest rates raised by December 08, while 70% of US banks have tightened credit rules for small business.

The Well Grasped Straw: The headlines read "Housing Starts Rebound!" Did they? Single family housing completions were 8.8% below January, single family housing starts were 1.1% above January, and single family permits were 11% above January. More are planned, fewer started, fewer completed. Completions of "privately-owned units"were up 2.2% from January, down 37% from 2008, Starts of "privately-owned units" were up 22% from January but down 47% from 2008. Someone is building a lot more condos in February than January. Optimists.

Sex Change? Has Ann Coulter morphed into Fox's Glen Beck? Not really, for Coulter said outrageous things for the publicity. Beck appears to believe the bizarre things he makes up.

Payday Advance: Goldman Sachs has started a Payday Loan branch in its main lobby, offering hundreds of thousands of dollars to over 1,000 employees who lost serious money on their Goldman Sachs funds. Presumably the interest rate will be lower than the 400% annual charged to the working folks from Walmart.

Tic Tock: The Treasury International Capital (TIC) report showed that foreign holdings of Treasury bills decreased by nearly $150 billion in February. They're on a diet, waiting for the big offering later on.

Unintended consequences: DEA sprays Roundup on coca plants. Most die. Farmers propagate the few that survive. Repeat for years, until spraying is a waste of money because the entire region grows Roundup-Ready coca. Now the local growers will selectively breed a new, stronger strain of coca plant to defeat whatever poison the US starts spraying.

Dr. Doom Says: The enormous sums the US must borrow to cover the federal deficit makes the bond market "a disaster in the making". The Fed will have to buy Treasuries, monetizing the debt - following the Bank of England's lead into "quantitative easing," for which read "inflation." The yield on the 30-year Treasurys has already increased 50% from its December low.

It's A Start: Mohammed ElErian, CEO of PIMCO, which manages $750 billion in assets, predicts the demise of the asset-management business. He also "would not be surprised" to see half of all hedge funds go bust.

Over There : British house prices could fall by another 55%, and there is a non-negligible chance that the whole country will go broke. Personal debt in the UK, £1.5trillion, is larger than the country's GDP. British corporate borrowing adds up to another £2 trillion. By next year the government will owe over £4 trillion. All round, nobody in Jolly Olde gets to buy a damned thing for 5 years.

Inventory Clearance: Toyota is planing to cut the cost of a Prius nearly 20%. GM is getting ready to offer even more discounts to coax customers over their fear of buying from a vanishing company so they can unload some of their inventory before they vanish.

Porn O' Graph: Meanwhile, back in the reality-based world...

Tuesday, March 17, 2009

SAR #9076

The death penalty for "financial crimes against the People" might get their attention.


More Equal Than Others According to the White House, contracts for bonuses at AIG are sacrosanct; mortgage contracts, not so much. Why not pay the bonuses in AIG common stock, no-dividend, non-redeemable, non-transferable for 10 years and forfeit if the recipient leaves the company. If these wizards can make AIG rise from the dead, repay the money the taxpayers borrowed from China and increase the value of AIG common stock, then they would deserve the bonus.

The Talking Cure: So Obama's going to sit on jay Leno's couch, explaining to Jay Leno's senior citizens that the economy is fine, just fine. How scared are the folks in high places?

Sausage: No one but the agri-business that makes the stuff likes ethanol. They make too much and are paying their Congressional puppets to increase its presence in gasoline from 10% to 15 or 20%, even though at that level it will ruin most engines. Never mind the studies that show there is no net energy gain from using ethanol as a gasoline subsitute, nor any net reduction in CO2 emissions. It pays for votes, so it'll get votes.

Technical Terms: Wonkish Paul Krugman describes the European economy: "Europe has gotten itself into one heck of a mess, worse even than ours … this is going to be ugly. "

Fifteenth Best in Everything: Especially self-deception. The US is rated 15th among developed countries in terms of health,education, security and general well-being. Don't blame it on the credit bubble. The decline started under Saint Ronnie and has been gathering speed as it rolled through the Bushes and Clinton. Non sequitor: "Something deeper about the structure of American society is probably responsible."

Pressing Matter: On Sunday, Bernanke admitted that the Fed is "effectively" printing money, " because our economy is very weak and inflation is very low." It may not cure the economy, but it will certainly take care of that pesky low inflation rate.

Bull Market: US industrial output fell 1.4% in February, down 11.2% YoY. Factory utilization is at 70% of capacity. The Empire State Manufacturing Survey reported NY manufacturing deteriorated rapidly in February.

Free Lunch: Attendees at the Copenhagen climate talks are encouraged to get there "without using any fossil fuels," which seems to mean bikes, sailing, and sea kayaks. Okay, if they can build the bikes without the petroleum that goes into mining and manufacturing the metals or the petrochemicals that go into the fiber sails and fiberglass hulls, and they don't count the 10 calories of petroleum it takes for each calorie of food they will burn, pedaling away...

A Modern Epic: Best quote to come out of the AIG manipulation: "The Fed has no business regulating anything more complex than a checking account."

Keep Your Eye on the Prize: AIG is the sideshow. In the blacked out center ring, the money keeps coming from the Federal Reserve, not via Congress. Via TALF the Fed is giving another trillion of unvoted taxpayer money to "investors" who will put up10%,and take 100% of the profits with 0% of the risk. And the investors can split the investments up into... CDOs! Brilliant. All in the name of creating more funds for consumers who have no appetite to go further into debt.

Mirror Image: More than half of all MBA students cheated regularly in college - more than any other discipline. That everyone was doing it was the rationale. They still are.

On The Record: In 2005 Bernanke said there was no housing bubble. In 2007 Bernanke said the bubble was confined to the sub-prime market. In 2009 Bernanke says it's all over but the suffering. Anyone else see this as a solid indicator that the recession will drag on and on?

Monday, March 16, 2009

SAR #9075

Why did we ever think Musical Chairs was a game?


Run Away, Run Away: March 15, 2009: "... every investor can have absolute confidence in the soundness of investments in the United States" President Barack Obama; and Bernanke said the recession would be over this year. Cut it out, pin it to the wall over your desk. Pray.

Groundhog Day: Is it a dead cat bounce or the real thing? The S&P 500 is up around 10%, so we've hit bottom, right? Some think we're on our way back to DOW 14,000! On the other hand, maybe it's really a dead cat, bouncing. Roubini thinks it's another sucker's rally.

Tomato, Tahmato: Climate scientists have issued gloomier and gloomier predictions; economists say that economic growth will save the day. Of course they also think that pouring money down a hole makes petroleum appear.

Three Bears: Larry Summers says the problem is the Greed has been either too hot or too cold and what we really need is Greed that's just right.

Headline Only: Anesthesiologist Faked Data in 21 Studies to Help Sell Billions of Dollars Worth of Potentially Dangerous Drugs

Details: The G20 members agree the world needs to do more to turn the economy around. They just don't agree on what to do. The Europeans want more financial regulations, the US wants more stimulus and the Chinese want to get paid back.

Modern Dance: Creationists visiting the Smithsonian are upset that it's all science, science, science. I felt the same way at the Twyla Tharp concert, where's the ballet?

Competition: The IMF is going to print tens, if not hundreds, of billions of a new global "super-currency" in an effort to drown the whole world in useless paper address the economic crisis. Careful, the Central Banks don't like competition.

Traffic Report: In February, inbound traffic at the Port of Los Angeles was down 35% YoY. At the container terminal in St. Petersburg, Russia, inbound traffic was down 27%.

Best of a Bad Lot: AIG, having managed to keep its theft from the taxpayers down to only $170 billion, is giving something over $100 million in bonuses so it can keep "the best and brightest talent."

Silver Lining: Over the last 30 years increasing airborne pollution has caused illness and death to millions while causing enough dimming to slow global warming.

Click Your Heels: Bankers say that if they don't have to label their bad assets as bad assets then everything will be hunky dory and people will trust them and there'll be a chicken in every pot.

Lights, Camera, Arrest 'Em: Police in East Haven, CT, arrested a Catholic priest for videotaping them using "unknown shiny silver object" they feared might be a camera.

Opinions Vary: The headline advocates: "Blame the Economists, Not Economics." I'd go with blame the bankers, not the banks.

You Ain't Seen Nothing Yet: The CEO of FICO (you know, your credit score - that FICO) says " We easily have another 12 to 18 months of pretty ugly times in terms of mortgage resetting. ... Credit cards are next."

One from Column A and One from Column B: The US Nuclear Regulatory Commission says the global economic/credit crisis will slow the expansion of nuclear power. Energy Secretary Steven Chu says that "Nuclear is going to be part of our energy future."

Age Wave: Economies with high median ages - Japan, Italy, and Germany - have a built-in bias against expanding consumption, are resistant to credit-based bubbles, and put increasing demands on social programs just as available taxation to support them begins to fall. Ponzi schemes end poorly.

Where's The Beef: After unveiling one plan after another to inject liquidity into the system, credit markets are still frozen. So, why doesn't the economy smarten up?

Scene, Not Herd: US Army troops patrol Samson, Alabama after a man went on a killing spree ending with his own death. The soldiers are... doing what, exactly? And by what authority?