Saturday, May 30, 2009

SAR #9150/Weekender

"Liberty is not the power of doing what we like,

but the right to do what we ought."

Lord Acton

Click Your Heels: US GDP fell 5.7% in the latest quarter, a slight bit better than the previously reported 6.1%. Do you think Noah cared whether it rained 6 inches or only 5 3/4 on any given day?

Chicken/Egg? "Dollar falls to 5-month low" and "Oil rises to new six-month high."

If Nominated... David Petraeus, Bush's favorite general and current head of US Central Command, admits that under Bush, the US "violated the Geneva Conventions." This will not endear him to the Limbaugh/Cheney wing of the GOP.

Tightrope: Energy prices are prompting inflation concerns - as is the Treasury, flooding the market with bonds. The resulting rise in long term rates - especially mortgage rates - has enormous negative consequences for the housing market and thus for any hope for a recovery.

Details: The US complains that the Chinese are manipulating the value of the yuan. The clever orientals are doing this by buying US Treasuries. So the US wants they should stop?

On Being Prepared: Buy printers, ink & paper; inflation protection.

Fine Print: The headlines blather that the Arctic may hold twice the oil previously found there. Sounds like a big deal until you note that "previously" (USGS) was 90 billion barrels and this time the estimate is 40 to 160 bn bbls. So the Arctic may hold less than half that previously claimed. If they are ever actually found. But that doesn't sell the papers. Nothing does, anymore.

Keep off the Grass: Forget the headlines. Forget green shoots. New houses sold at a SAAR of 352,000 - 34% below April 2008. All the rest of the comparisons are lost in statistical noise.

Here Comes CMBS: S&P suggests that 25%, 60%, and 90% of the very best of the 2005, 06, and 07 vintage Commercial Mortgage Backed Securities (CMBS) will be downgraded to "less than wonderful." Geithner is getting a plan ready.

Danger of Inflation? Who you gonna believe, Paul Krugman or your lying eyes?

Boogeyman: The wingnuts are out to save your freedoms. Not by repealing the Patriot Act, which is a good idea whose time will never come, but by warning you that the EPA will be regulating your life from now on. And it's all the Sierra Club's fault. Strict controls on emissions, higher electric rates, bans on driving you car to Wal-Mart. Mandatory use of paper, not plastic. Fear all change!

True Or False: "A sufficiently-determined central bank can repeal the laws of mathematics!"

Star Wars: The Pentagon is unilaterally invading cyberspace and setting up a new military command for both offensive and defensive computer warfare. The innocent have nothing to fear.

Sideshow: Good News: The subprime crisis may be over. Bad News: The mortgage crisis is not. Foreclosures break another record! Charts, graphs, free popcorn!

Advise and Consent: "Let’s hope that the key conferences aren’t when she (Sotomayor) is menstruating or something, or just before she’s going to menstruate," Liddy said. "That would really be bad. Lord knows what we would get then." Newt says that Sotomayor is such a threat to America that her nomination should not come to a vote in the Senate. Rush, as head of the wing-nut faction of the GOP, confines himself to calling Judge Sotomayor "a racist."

Pelican: Much like the bird with the big beak, US consumers may be confident but that doesn't mean they can actually swallow any more debt.

Early Worm: Getting a head start on the hurricane season - official start is June 1st - National Hurricane Center reported that it is currently tracking its first storm -- an unnamed tropical depression -- for 2009. Way off Cape Cod and headed northeast.

Blow Hards: A variety of government programs and subsidies to the renewable energy programs are succeding - at least in Texas - to the point that there's too much power being generated and it's driving down the price of electricity. Darn.

Mortgage Insurance: Perhaps things could be better if the government worked for the people and not for the Usual Suspects. Like in Marinaleda, Spain.

Greed, Incorporated: The Treasury's PPIP is designed to subsidize private investors to get them to buy toxic assets from the banks. The banks say they are private investors and want the taxpayers to subsidize their buying their own 'legacy loans' from themselves.

Porn O'Graph: Bad moon rising.

Friday, May 29, 2009

SAR #9149

Before investing for the future, try to figure out which future.

Asked & Answered: "Was Rape an Enhanced Interrogation Technique?" Yes, and there are pictures....

Leadership: Former GOP Speaker of the House Newt Gingrich, in a display of the qualities he is remembered for, Twittered one and all regarding Judge Sotomayor: "White man racist nominee would be forced to withdraw. Latina woman racist should also withdraw." Unfortunately he was limited to 140 character assassinations characters.

Tsunami II: Warning, Plot Spoiler: A wave of foreclosures at least as big as the original inundation is headed this way. Option ARMs will come crashing down in 2010, 2011 and 2012.

Juvenile Prime Delinquents: Prime rate mortgages make up 53% of new foreclosures, while the delinquency rate has jumped to 9.12%.

Smile: The UK is expanding its already extensive CCTV camera/computer network with the goal of automatically logging every car's license plate as it passes any of thousands of checkpoints. "Innocent people have nothing to fear from the way we use it," say police administrators.

Elixir: Discerning readers will note that Louis - friend, co-conspirator and editor - is back at his oar. Only the one. A bit more diet Dr. Pepper and we'll let him have both, but for now he's not to touch split infinitives or puns.

Memory Lane: The past is prologue. Next time, the pictures will be digital and in color, but the banknotes just as worthless.

Green Zone II : Obama's devotion to Bush's wars can be measured by his new billion dollar embassy building plans for Islamabad and Kabul. "If you build it, they will come stay."

Baskervilles: In 2008, 140 muni bond issuers defaulted on a record $7.6 billion. So far this year, only 16 municipal issuers have failed to make payments on $426 million in bonds. Spooky, huh?

Growth Industry: Washington says that absent stiff mandatory limits on CO2 emissions, the amount of CO2 dumped into the air will increase by 40% by 2030. In that limiting carbon emissions means decreasing economic output, and that those who profit most from killing the planet give the most to politicians, we're toast.

Destiny: In response to warnings that "the world's destiny" depends on quick and drastic reductions in greenhouse gas emissions, the US is now planning to reduce CO2 emissions by 3% below 1990 levels by 2020.

Asked and Answered: "Why Do Republicans Oppose Sotomayor?" It's what they do.

Flash in the Pan: We have an abundance of natural resources - as long as we are supplied with abundant cheap energy, mainly petroleum, to dig 'em out, transport, refine and transform them. Absent the cheap energy, there are a lot of scarcities waiting to show up.

The Sting Redux: The confidence game known as bailout is but a fleecing of the American taxpayer to benefit the few. It does not star Paul Newman, and Geithner is in a supporting role.

We Are Screwed: Predictions generally become amusingly irrelevant soon after utterance. Here's a look at the US as it becomes a banana republic with nuclear weapons sometime between next week and reset day. The current Wall Street/Washington attempt to keep the game going at all costs will eventually consume all costs and then be consumed. Not that any of these predictions will happen, but what if?

Change You Can Believe: Despite efforts by the administration and GM bondholders and GM management, the UAW pension plan will not be gutted to save investors.

Porn O'Grpah: Net Worthlessness.

Thursday, May 28, 2009

SAR #9148

Iraq - where we have too much to lose if we leave,

and too much to lose if we stay.

Better Late Than... Ten mayors and 17 other high-ranking officials, including an aide to the governor of Michoacan, have been arrested on drug-trafficking charges. President Calderon was shocked. Shocked.

Credit Where It's Overdue: JP Morgan claims credit card losses at subsidiary WaMu may reach 24%. But is someone playing games with the numbers?

Economists Say Recovery Sighted... Just think how high the Dow would go if the US lost only 500,000 jobs a month. Or if houses lost only 12% y/y in value, instead of 18.7%. Or if home-owner's equity melted away at only $250 billion a month instead of $400 billion. What a wonderful world it would be...

Downer: US Army Chief of Staff General George Casey (to give credit where credit is due), says the Pentagon is prepared to occupy Iraq for another ten years. A SOFA is something to sit on.

Fraternal Twins: The US economy and the US stock market are two entirely different creatures living more or less under the same roof. Stocks are looking up, the economy is not.

Hide In Plain Sight: Banks are keeping 70% of REO houses - perhaps half a million - off the market. In addition, some 15+ million homeowners would like to sell their houses "if the market improves." These inventories should keep housing prices depressed for years.

Interesting: The ongoing rise in Treasury yields threatens both the stock market and whatever stirring of recovery are abroad in the land. The tightrope walk begins.

Skinny Dipping: If the melt-rate of Greenland's ice sheet keeps increasing at 7% a year - as it has for the last decade - sea levels along North America's Atlantic coast will raise by 12 to 20 inches more than the overall increase in sea levels worldwide.

Either/Or: A new report claims a new oil price shock is inevitable and could come as early as 2010 or as late as 2013. Others see it differently.

Rinse Cycle: The US may be 'surging' troops into Afghanistan, but they'll be playing catch-up. The Taliban has become the effective government in much of northern Afghanistan. Among other signs of their control is the disbandment of schools for girls - at least 10 have shut down in the Kunduz area alone. The Taliban are certainly despicable to civilized eyes, but they are winning.

Well, Duh? Some are just now realizing that people with underwater mortgages on unsaleable homes that are losing value aren't out shopping for a bigger, more expensive place. Soon they'll begin to suspect that "moving-up" has moved out.

Matchbox Collection: When I was a kid I collected matchbox replicas of famous cars. Now, as a taxpayer, I'm collecting the companies that made those classic cars.

Shocking Stockings: Those elasticized stockings they make you wear in the hospital, the ones that are supposed to prevent blood clots - don't. At least not when given to stroke patients to prevent clot formation.

If/Then : In a shocking turn of events, the IRS acknowledged that tax revenue has fallen right along with taxpayer income. Revenue is down 34% in April, y/y. You can work out the rest.

Spin Cycle: NAR reports that existing single family home sales were down 2.8% y/y and median sales price dropped 15% y/y. Their spin: "Existing-home sales rose in April with strong buyer activity in lower price ranges..."

Plug-Ins: Tesla only builds electric cars and builds the only true "highway" electric. They go for $140,000 a copy. The future is not what it used to be.

Whitewash: Energy Secretary Chu says that if we paint the roof and driveway white, we can keep on polluting the skies with CO2. Or something like that. This will work best if - along with the whitewash - we become vegetarians, have fewer kids, consume less, use mass transit and walk to work.

Porn O'Graph: The Bear went over the mountain.

Wednesday, May 27, 2009

SAR #9147

What's better, shattered dreams or shattered lives?


The First Cut Is the Deepest: State after state, needing to reduce their deficit-laden budgets, turn first to cutting spending on education, employee healthcare, pensions, and eliminating public health support, Illinois is even cutting state troopers. This is what comes from the GOP Starve the Beast campaign. Are states cutting here in order to get Congress to bail them out? Welcome to the twilight zone.

What Caused This Rally? Big boost in consumer confidence drives up the market even though housing continues to drop and oil options suggest a further fall in prices as the economy slows. Really, all I want is a believable explanation.

Misprint: The GOP is accusing Obama of thinking the Supreme Court should "protect people who may be vulnerable in the political process." They also suspect the nominee will erode the property rights of the unborn or something like that...

Who Ya Gonna Trust? The same bunch that did not have a clue that there was a housing bubble, or that the credit scheme supporting it would crumble and destroy the economy, now are absolutely, positively, 110% sure the recession will end this fall. October 17th is the predicted date.

Cliff Notes: House prices continue to fall at a 19% y/y rate and will eventually drop 40% or more from the peak (down 30% now). Prices are falling about in line with the bank stress-test 'worst case' scenario. Nation-wide the median nominal price is about $140,000.

There Goes the Sun: The economy is doing in the sunshine business. Suntech Power - the world's largest maker of solar-power modules - reports 1Q profits fell 96% on reduced demand. A planed expansion of module production has been delayed. “Solar demand dried up.”

Vive La Difference: Accepted more or less as a religion in the US, in France Scientology is accused of being a money-making scam. Just how this disqualifies it as a religion is not clear.

Halloween Part II Between November and February, delinquent, in foreclosure and/or REO prime mortgages increased by 473,000, Alt-A mortgages increased 159,000 and subprime increased 14,000 - in total the three categories jumped 60% in dollar terms, to $717 billion, on which losses are expected to be over $300 billion. Then we can start talking about the derivatives and tranches and such that will fail...

Leg Up: A little help, please: Yesterday a CSMonitor article cited "some indications that the Obama administration may have leaned on banks not to release the entire foreclosure inventory at once..." Anybody got an original source for this?

Deceptive Advertising: Send me your poor.. it says on the plaque. Just as long as they don't vote and don't expect to get their fair share of the pie in this ever-more class laden classless society.

Olduvi: Richard Duncan has long claimed that one of the first signs of the end of our current technological civilization will be a decrease in electrical production. I mention this because the International Energy Agency is forecasting a 3.5% drop in electricity demand this year. Russia's demand is set to drop 10%, OECD countries nearly 5% and China about 2%. This is the first decline ever in global electricity supply.

Help Wanted: Why are folks paying any attention to the pundits? Especially the consensus view - whatever that might be? The consensus view missed the housing bubble, the credit bubble, assured us it was 'contained' to the sub-prime sector, and has generally missed every important financial point in the last 20 years.

Down is the New Up: The constant change in nature is astounding. Just now I learned that the natural rate of unemployment in the US economy from henceforth will be 8%, not the silly 5.5% that replaced the earlier 4%. And the new normal for GDP growth will be 2%, not that silly old 3% we'd hoped for.

Bubble? Some Russians put $200 million into Facebook, raising its "valuation" to $10 billion. Where's the value & don't tell me it's in the advertising revenue.

Quoted: "Of all the things to worry about in today’s world, the prospect of Social Security shortfalls several decades from now doesn’t rank high on the list. But there’s a whole generation of Very Serious People who think that worrying about entitlements is how they demonstrate their seriousness — while worrying about climate change is hippy-dippy... declaring that saving the planet is, you know, expensive, so let’s not.

Collector's Corner: Dow 6500 in 6 Months or Less? Where Are The Markets Going? All Indicators Show Down Why We'll Probably See Another Serious Equities Sell-Off Downward Correction Could Be in Store for the Markets

Porn O'Graph: The national case.

Tuesday, May 26, 2009

SAR #9146

Failing at capitalism does not automatically make one a socialist.

Default Settings: The combination of low wages and high consumption built the massive debt that fueled the bubble. Salvation lies in an equal period of higher wages and lower consumption. Today's prize goes to the reader who can lead us to that promised land of unlikely outcomes.

The Fire Next Time: The overburden of dead and dying trees in the forests of the Northwest - the handiwork of pine bark beetles encouraged by global warming - suggests that massive and prolonged forest fires loom in the near future.

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

Improbable Event: Some estimate that it will take 17 years for the US to rid itself of its 35% ($12.5 billion) ownership of GMAC. Hands now, how many of you believe this is going to happen?

Un-warranted: Old National Bancorp of Evansville, IN, paid the Treasury $1.2 million to retrieve warrants worth $5.8 million from TARP. How is this fair to the taxpayers?

Where do the Joneses live? Folks in Miami carry an average balance on their credit cards of $9,800 - 22% of their income. Tampa, Los Angeles, Jacksonville and Orlando are all above 16% of their income. Notice a trend here?

Missing the Point: There's a growing debate over the future of personal transportation in the US between plug-in hybrids and fuel cell vehicles. The real debate should start with the conviction that hauling around 3,500 pounds of car to move 200 pounds of people probably isn't the optimum solution.

Suffer the Little Children: Bringing California's budget under control may require completely eliminating the state’s medical insurance for low-income children, the welfare program for families and assistance to college students.

Surrender: Eventually the true cost of money will surface, for if the world is a riskier place, the cost of borrowing should rise. If governments are competing with each other to borrow large amounts of money, its price should rise. Sooner or later interest rates will rise, and the violence of the upheaval will be proportionate to the suppression.

Marks & Markers: The top holders of US debt are: China ($767 bn), Japan ($686 bn) and then it falls rapidly to Russia ($138 bn), the UK ($128 bn).

Menu: Interest on ten-year Treasuries jumped 10% last week to yield 3.45%. By September the Treasury has to sell $900 billion in new bonds. Despite Mr. Bernanke's belief in his ability to hold borrowing rates down, there's a lot of suspicion that the free lunch isn't going to be free. "There isn't enough capital in the world to buy the new sovereign issuance required to finance the giant fiscal deficits that countries are so intent on running."

Failure: California is the 8th largest economy in the world. It should not be having a budgetary crisis. But this not a budgetary crisis, it is a political crisis - California's political system does not work. What’s really alarming is the chance that California’s political problems are a preview of the future for other states and the US as a whole.

Farm Teams: Torture? Not the US. Now the US only provides the intell to enable others to arrest and interrogate mid-level suspects. Oberfeldwebel Schultz is in charge of the operation.

Porn O'Graph: The unemployed don't play the market.

Monday, May 25, 2009

SAR #9145

"E pluribis Unum" has been replaced with "What's in it for me?"

"We are out of money." Barack Obama, May 23, 2009 . Not that it was a surprise to learn the US is broke; we were simply too polite to mention it and hoped it would go away. Not that the US will default, it won't. It will keep paying in dollars of lesser and lesser worth... until something else replaces the dollar.

A Whiter Shade of Pale: Levels of atmospheric methane are rising in the Arctic. Scientists hope it is from some mysterious, unknown source, and not bubbling up from melting permafrost.

Good News, Bad News: The good news is that $1.4 trillion in commercial real estate may not totally collapse. The bad news is that it may.

Reruns: Nearly 60% of voters are against Washington helping the states with their budget problems. Even more - 66% - are against helping California. But the states will be saved - I've seen this movie before.

Investment Science: To charts, hemlines, tips, hunches, greed and unjustifiable optimism as ways to make a fortune on Wall Street, add this one: Sell on the first day of the month. Nonsense, it's all gambling.

Porn O'Graph: All the tea oil in China.

Age & Beauty: The oldest and largest trees in Yosemite Nation Park are dying, done in by global warming. If this is happening in one of the most protected areas in the USA, what's going on down the street from your house?

Risky Behavior: Of kids who get the flu, those who had flu vaccinations are three times as likely to be hospitalized than those who did not.

Scolding: On top of the S&P downgrade, now the IMF is scolding the UK to repair its public finances by "putting public debt on a more firmly downward path faster than envisaged in the 2009 Budget, or face serious shocks" to its already battered economy.

The Heat of the Sun: Ultimately, global warming can be blamed on the sun. But for the last few years the sun has been pretty quiet, which helped keep the temperature increase down. This weakening of the sun's warmth has been overwhelmed by man's CO2 outputs. The sun will eventually regain it's strength and add to the warming of the planet.

Smoke? Mirrors? The Fed plans to keep interest rates near zero until the economy pulls out of the tailspin and begins to recover. At the same time, the Treasury will borrow $2 trillion, which will drive up the cost of money. Do these folks talk to each other?

Facts Not In Evidence: Discussions about how to feed 9+ billion humans come 2050 assume that 9+ billion humans are going to make it to 2050. Maybe the challenge will be smaller.

Simple Truth: How are we going to pay for universal health care? Taxes.

Coming Or Going? The dollars dropping in value, quick run to safety! What's safe? The US dollar. Sounds like a Kafka play.

Porn o"Graph: Going Loonie, again.

Saturday, May 23, 2009

SAR 9143/Weekender

If your civilization depends on consumerism,

you don't actually have a civilization.

Be Careful What You Wish For: California's survival requires eliminating or greatly reducing children's health insurance, welfare-to-work programs, children's welfare, mental health services, college loans, state park maintenance and operation and the dismissal of thousands of teachers. "Women and children first" used to have a different meaning.

Walks Like A Duck: Another bunch of fools have been recruited and trained by the FBI to be fall-guys, this time it's blowing up a synagogue and using a single missile to shoot down military aircraft. Today's phrase is 'agent provocateur'. Can you use it in a sentence?

Do-Over: The health insurance folks would like to explain that what they said (at a press conference with Obama) and what they meant (in their mean, tiny hearts) are not quite the same. Instead of actually supporting changes in the system, what they meant to say was they would try to ramp up savings somewhat in the future. Besides, there wasn't a Bible in the room.

Failing State: Mexico's petroleum exports fell 18% last month, to 1.17 mbd. But Mexico also imported 300,000 bpd in gasoline, lowering net exports to only 850,000 bpd. To the lack of oil revenue, add the drop in tourism, the drug wars, the decrease in remittances from the US, the endemic corruption and Mexico looks to be headed for civil unrest and eventual collapse.

Two'fer: China's burgeoning car culture is not only gobbling up petroleum and spewing carbon dioxide - it's also causing immense tracts of forests in SE Asia to be leveled and replanted as rubber plantations to grow tires for all the new cars.

Essentials: There is no actual evidence to support the headline claiming 1 in 7 detainees' had rejoined the jihad on release. In the first place of the original 700 or so probably only 1 in 7 were actually jihadists - the rest were turned in for the reward, picked up by accident and so on. After being tortured and confined in cages for years it is understandable that some might seek revenge. The innocent do act that way. And the "rejoining" some of those 1 in 7 did was to write editorials criticizing US torture. And even the writer of the original story has come to disavow it.

Magic Tricks: The GAO says that mismanagement and a lack of investment in new satellites will lead to failures of the GPS system as early as next year. The first of the replacements was due up in 2007, but has been delayed. Out of sight, out of mind.

Tag Sale: JD Powers estimates that only 10 million cars and light trucks will be sold in the US this year - lowest number in over 30 years; damned few of them will be made by Chrysler or GM.

Geography Lesson: Is Obama but Bush in blackface? We've a Petraeus-invented surge underway in Afghanistan, where US money and munitions continue to be diverted to the enemy - just as in Petraeus' Iraq. General McChrystal, fresh from secret camps and prisons in Iraq, is now in Afghanistan. A huge Bondsteel-type mega base is going up in Helmand province. And all this to gain control of the rug trade in Baluchistan - along with pipeline right of way and a port.

Good Question: 'Why don't we stop hurting the planet?'

Daisy Cutter: The RNC is running Goldwater's Daisy ad in an attempt to convince the American public that the prisoners at Guantanamo are capable of superhuman feats of strength and are too scary to be held in the puny prisons in the US. (Presumably including Omar Khadr, a Canadian-born 15 year old when he was taken in 2002, who has grown up in a cage). Actually, the Republicans are afraid that if these prisoners are moved to the US they would have to be treated as humans, with rights and all, and that, they believe, is not right.

Recidivism: A year after being 'helped' by the government's Home Saver Advance (HSA) program, 70% have redefaulted on their mortgages. You can lead a horse to water, but if it's not alive it won't drink.

Angels on Pins: The difference between the Paulson Plan and the Geithner Plan is that Paulson wanted to save the financial system with taxpayer money and Geithner wants to use taxpayer money to save the financial system. But Geithner will cost more than Paulson's, so his plan's better.

Porn O'Graph: Peeking at the Peak.

Friday, May 22, 2009

SAR #9142

The consumer is not resting. It's a dead customer.

Rumor Mill: GM is to be sent off to bankruptcy court next week with a plan that includes billions of additional taxpayer funding "sources said." But the same sources also said GM then would re-emerge as a global competitor.

Rehearsal: On a Thursday night - Thursday, mind you - the FDIC spent nearly $5 billion (and obligated itself for up to $10.7 billion as a gift to Carlyle, Blackstone and WL Ross ) putting Bank United FSB of Coral Gables out of and back into business. Long weekend coming up.

Hyperventilating: Headline hype 'Unemployment Claims Drop'. Well yes, from 643,000 new claims to 631,000. Exactly 1.866%. The 4-week moving average was 3,500 down at 628,500, a decrease of one-half of one percent. What's the margin of error? How many folks got the flu and couldn't make it to the labor office? Who stopped for coffee? Continued claims are now at 6.66 million - an all time record.

Silly Question: "Can America's Debt Get Too Big to Pay?" Does this dress make me look fat?

Here's An Idea: Tired of bailout nation? Frustrated? Tired of hoping for change? "I'll tell you what we should do. Stop paying our taxes. And our mortgages. They can't throw us all in jail! They can't evict us all!" Back in the 19th Century they were called Rent Strikes.

Sticks and Stones: Netanyahu, after calm and serious consideration of the recommendations from President Obama, VP Biden, and Secretary Clinton, deemed their ideas stupid, childish, and juvenile. And he complained that the promised billions in aid were insufficient, also.

Pounded; How real is the spreading fear that more and more governments are less than sterling risks? So far this year Greece, Ireland, Japan, Portugal and Spain have had their credit ratings cut. Now the UK is "under negative review". Add to that the jump in US bond yields and the euro's climb back to $1.40 and you could get a little jumpy, too.

The Biggest Question: Will the world really, really bail the US out?

Supply/Demand? Crude is back in the $60 range and gasoline in the US about $2.30. Either way, it's still a lot cheaper than bottled water. Crude is up about 50% and gasoline about 35% from their lows - during a time of immense oversupply even though stocks have dropped a bit lately. Strange.

Rogers That: Jim Rogers, generally known as 'the legendary investor', alleges the market will fall more, bottoming out "later this year, next year, who knows?" Governments, he says, have papered over the problems with new money, not by solving the problems. Rogers doesn't understand how the problem of too much consumption and too much debt can be solved by cheaper credit to encourage more consumption and more debt.

Slippery Slope : Obama is considering the need for “preventive detention” to be legally established in the US - to incarcerate those who think bad thoughts. I suppose eternal incarceration is marginally preferable to starting wars of aggression against those who might some day call us stupid or otherwise disrespect the US. Amusingly, this was in a speech on civil liberties.

Time Travel: Rising unemployment will drive childhood poverty in the US to 27%, and over 50% for African American children. Not a surprise when unemployment among blacks will reach 28% in some states. When I was in college my mother was a foot-soldier in Lyndon Johnson's War on Poverty. It worked out about as well as the War on Drugs and the War on Terror. The war on the poor and the black in the US is older than any of those, and still goes on.

No Knock: If you have the convenience of a wi-fi net in your home, you've given the FCC permission to enter and search the place without bothering with a warrant. Better yet, they claim they've had this power since 1934.

Thursday, May 21, 2009

SAR #9141

Instead of minimum wages,

why don't we give maximum wages a try?

Governance 101: California is a fine example of what happens when you don't supervise the children. Democracy only works with an educated, rational electorate operating within a functional legislative structure. This is the future Nyquist & the GOP envision - government with no money. California Dreaming indeed.

Hang-Up: Corporate earnings are down over 30%, the markets are up over 30%. Sounds like another crank call.

Proud to be an American? If you are not sure waterboarding is torture, what about using a razor to make small slashes on a prisoner's genitals? Once a month. For years. And then dropping all charges and releasing the subject. After he confessed, of course. See, torture works.

Charterhouse: Pundits and stock hustlers claim the rally means the recession is over and you should buy stocks now. Any stocks, doesn't matter what, they're all going up. Or maybe not, for the chart shows the 52-week moving average is above the current S&P and that predicts more bearishness. Of course, I've got a seed packet that predicts I've got tomatoes by now, too.

Capitulation: Congress is letting the insurance companies, the pharmaceuticals, the for-profit hospitals and the medical suppliers write the healthcare legislation. It will be a rejection of the idea of a single payer health care system and a re-enforcement of health-for-profit by an insurance monopoly run 50 layered complexity of enrichment of the entrenched. More business as usual.

Toll'd Ya: In 2Q09, revenues for Toll Brothers, the largest US luxury home builder, dropped 51%, y/y.

Write if You Get Work: Despite massive "quantitative easing" and their continuing AAA rating from Fitch and Moody's, the British have managed to fall deeply into a deflationary cycle - ahead of the rest of the world. We wish them well as they enter the abyss - and ask that they drop us a postcard so we'll know what we can expect.

Six of One...: Bankers say that if they cannot gouge the poor they will be forced to gouge the rich - especially you tightwads who pay off the balance every month. One way or another they intend to get their pound or two of flesh.

Cart, Horse, Cart: The price of crude rose to near $60 a barrel as investors speculators drove stock markets higher on the unproven theory the US recession is ending easing. The higher prices will kill the recovery. Then the price of crude oil will rise as....

Revisionist Future: New analysis shows that by 2100 global warming will be twice the IPCC estimate, reaching 5.2ºC instead of a comfy 2.4º. Even this may understate the problem because some feedbacks, such as the melting of the permafrost and the subsequent release of methane) were not included. Don't panic yet, wait until it gets really, really scary. By the way, 5.2ºC is about 10ºF. Okay, panic.

Amazing Stories #628. Deere expects world-wide construction and forestry equipment sales to decline 42% and smaller utility tractors and turf equipment to fall 20%. So their stock goes up. Twilight zone.

The Irregulators: . The Obama administration is planning an entirely brand new regulatory body to monitor consumer financial products, like mortgages and credit cards, to protect the consumer from abject stupidity, credulity, and gullibility.

Alternative Universe: The Pension Benefit Guaranty Corporation resembles nothing so much as the Social Security Trust Fund. There is no money in either. PBGC is about $33 billion in the hole now, with GM and Chrysler careening down the street with $77 billion in underfunded pensions and $42 billion in totally unfunded pensions. (Others say the shortfall is only $10 billion, but that's not dramatic enough anymore.) Taxpayer? Is there a taxpayer in the house?

Porn O'Graph: Real debt, real wealth, real depressing.

Wednesday, May 20, 2009

SAR #9140

"There is no error so monstrous that it fails to find

defenders among the ablest men."
- Lord Acton

Damned If/If Not: Given the choice between taxiing themselves and a budget needing $21.3 billion in cuts, Californians shot themselves in the foot. Again. Direct democracy in action.

Note: The observant may have noted a subtle deterioration in SAR of late. I am happy to advise that Louis, our long-time friend, editor & co-conspirator, has been removed from the ICU and deposited in Recovery. He may soon be back - silently - among us. I have missed him and so, unknowingly, have you.

Downslope: Japan's economy, with a 4.0% decline in 1Q09, passed Germany's 3.8% drop, reaching an annualized rate of 15.2%. Globalization, indeed.

Fun with Numbers: The Bank for International Settlements reports that outstanding derivatives fell 13% last year, to leave an outstanding total of $592 trillion. Outstanding.

Dragnet: According to the US Commerce Department, April housing starts fell 13% from March and 54% y/y on an annualized basis. Building permits were down 50% y/y. Single-family housing starts in April were at 368,000 units annual pace. N\Housing, with new starts now down 77% from their peak, isn't going to lead this parade. There are already too damned many houses sitting around, so maybe this is a good thing.

Thought Experiment: AmEx stock climbed after it announced cutting 4,000 employees, 6% of its staff. How much more would the stock soar if AmEx fired everybody?

The Delinquents: Commercial banks are experiencing the following delinquency rates: Residential real estate, 7.91%. Commercial real estate, 6.4%. Credit cards, 6.5%. Charge-offs are: 1.8% for residential real estate and 7.49 for credit cards. "Highest since records...."

My Question, Exactly: "If Consumers Won't Kick-Start the Economy, What Will?"

Clear Skies From Now On? How often do you talk to your children about thrift, saving for a rainy day. Tell them stories about squirrels and acorns? Didn't think so. And one out of four of you don't lead by example, either, having not even enough savings to survive missing more than a couple of paychecks. And 41% report buying only necessities - which seems to include iPods, cell phones, and Happy Meals.

The Short Of It: Deleveraging will not be painless, not for you and not for the banks.

Connections: Farmers, like everyone else, operate on credit. But this year the credit crunch is making it difficult for farmers to borrow. No credit, no seed,no fertilizer, no equipment. And eventually, no food.

Baby Steps: First, China and Argentina worked out a currency swap, now China and Brazil are inching closer to dropping the dollar and denominating their bilateral trade in their respective currencies. Russia and Turkey are discussing the same idea. Pretty bold of them, doing business without giving Uncle Sam his little commission on the deals.

Definition: The Cheney doctrine consists of torturing random foreigners to obtain false confessions to support a previously told lie or delusion.

Spend It All, Now: Economists have begun asking for a planed inflation rate of 6% for a few years, to eat up what little value you have left in your savings. Certainly makes Treasuries look like a good bet, huh?

Enough Said: US Said to Consider Stripping SEC of Power, Shifting Some Duties to Fed - Sure, we want to give more governing power to a private bank.

Kicking the Tires: Here's the plan: GM files bankruptcy and 'sells' the health assets (?) to a US government owned entity for about $6 billion. The GSE would pay the $6 billion to the secured lenders (pay off the rich and well connected). The other assets would be sold off to pay off some portion of outstanding claims. The GSE would then portion out the new company to the union and the bondholders while writing off the $15 billion in loans that GM has already wasted. Tiny Tim is also giving GMAC $7.5 billion.

English 101: Correct the following headline: "Some Madoff’s Victims Are Also Crooks And Liars."

Ah-ha! A somewhat long but quite convincing explanation of the path from the end of the Bretton Woods era in 1971 to today (and tomorrow) is drawn from Duncan's "The Dollar Crisis”. Get a cup of coffee go read it - after you're done here, of course.

Porn O'Graph: Here a spike, there a spike. And remember 30% have no mortgage!

Tuesday, May 19, 2009

SAR #9139

I have seen the future, and it won’t work. Paul Krugman

New Normal: The US faces a long slow descent to a calmer and more rational standard of living. It's not a depression ahead, it's a return to living within our means - which is scary enough. It's not a "bottom" we're looking for, to bounce off and begin another climb. It's a leveling off at some sustainable level. You never really thought sneakers should cost $165 a pair, did you?

Bar Quiz: Can you (a) Name the seven dwarfs ? (b) the eight reindeer ? (c) the thirteen guilty?

Predation: The absolutely never-fail, never-miss Predators have failed us again. Twenty-nine people were killed in North Waziristan by two drones and nine more on Monday. How can this be true? The Air Force told 60 minutes that drones were foolproof. Or something about fools, anyway.

Final Grades: Fitch lowered some Citigroup RMBS from AAA to CCC- in one step; some Bear Stearns RMBS got the same treatment. But the toxic waste is, remember, worth far more than 27 cents on the dollar...

Bright Side: Athens created the art and philosophy on which western civilization is based after it lost wars to Persia and Sparta; maybe there's still hope for America.

Revival: The random walk theory looks better and better as an explanation not just for the market, but nearly everything - the economy, politics, US foreign policy, American Idol...

Get Out Of Jail Free: Good thing the Nuremberg Trials took place before the US Supreme Court ruled that if Bush didn't hold you down while Ashcroft poured the water, you cannot sue either for things they had their underlings do.

Just Go Away: Those about to be evicted are offered $1,000 by Uncle Sam to mail in the keys and quietly go away - without trashing the place

Small Comfort: The good news is that the projected rise in sea levels from the collapse of the West Antarctic Ice Shelf has been trimmed from 5 meters to 3.5 meters. That's' from 16 feet 4 inches to 11 feet 6 inches, on average. Big sigh. However, the report noted that the sea levels along both US coasts would rise by 14 feet 6 inches.

Tea Leaves: China's electricity production fell in early May by 3.9% y/y. Electrical generation is a proxy for economic activity.

Cliff Notes: The US housing bubble has brought prices down to 2000-2003 levels, and will fall another 17% from peak for a total decline of 40%. There will be no recovery, as tight credit, unemployment, and housing over-supply for a long while - 3 to 5 years. Or so says Deutsche Bank.

My Question, Exactly: "Why Are We Bailing Out GM And Letting Them Ship Jobs Overseas?"

Fine Print: Visa is marketing a gift card that says, in the small print, it cannot be used for 24 hours after purchase. If an attempt to use it is made, the card is automatically canceled and the money reverts to Visa. Well, it's certainly a gift.

Dark Spots: Hidden in the unemployment data is the 10% decline in employment for engineers, and a 9% decrease in employed computer professionals. There has been a sharp uptick in census counters.

Onward Christian Soldiers: The covers.

Back In The Sadle Again: The Street is spreading the meme that not paying the top guys gazillions is ruining everything and they'll hold their breaths until Obama gives in and lets them gorge themselves again.

Tautology: Niall Ferguson maintains that because regulation wasn't really tried, it didn't work, and because it was subverted, it didn't work, and thus shouldn't be tried again, because it won't work. After all financial crises happen. Relax and enjoy them.

Porn O'Graph: Reversion to the mean, applied.

Monday, May 18, 2009

SAR #9138

When Obama promised change

I thought it would amount to more than 17 cents.

Horse's Mouth: Real US GDP decreased at an annual rate of 6.1 percent in the 1Q09, after falling at a 6.3% annual rate in 4Q08 In the fourth quarter, real GDP decreased 6.3 percent.

Task Master: Don't be fooled by the conversion of Rogoff and Roubini to the Goody Twoshoes school of economics, the US has started a 10-year decline and our living standards will never be the same. If you are not scared silly, you've not been paying attention.

Definition: With graduates flooding out of the colleges and universities with dim prospects for employment you might think that unemployment would increase. It won't. If you've never had a job, your are not counted as being unemployed. To U-3 and U-6 we to need a new category: U-Lose.

Takes One... Five Centuries after giving the world the Spanish Inquisition, the Spanish now are leading the campaign to expose the US inquisition to the world.

Précis: "Credit Card Defaults At Record Highs But Worst Is Yet To Come." Usual depressing details.

Genocide? No. Except Charles Krauthammer claims "Genocide is an impermissible evil. Except..." Apparently except when done the the US or Israel. Same, too, torture.

Onward Christian Soldiers: After the US invasion of Iraq, Bush's daily intelligence briefings from the Pentagon arrived with Top Secret covers bearing Biblical quotations, courtesy of Major General Shaffer, the Pentagon's Director of Proselytizaton Intelligence.

Spelling Bee: There are trillions of dollars worth of funny money hiding somewhere out there, nobody knows where Can you spell hyperinflation?

Fill in the Blank: A human being who was repeatedly tortured by the CIA until he provided the (false) information they were seeking, has died in a Libyan prison, having beaten himself to death while chained to a wall.

Sad Fact: The US cannot afford to pay higher interest rates. Much of this week's activity will flow from this fact. And this month, and this year.

Going Thru a Phase: S&P says the banking crisis is merely entering "a new phase" and that the crisis will last another 4 years. S&P said banks will have a tough time surviving absent a bigger capital cushion than regulators require.

Quit Playing Pretend: There never was a 'trust fund'; the government spends every penny it takes in, every year. Social Security is interchangeable with the Defense Department, except we don't have a special tax labeled "DoD". They are both costs and neither is going to go away. The government will either increase taxes, increase borrowing, or increase inflation. Social Security and the Defense Department are both going to be with us for as long as politicians want to be re-elected. End of story.

Charlie Wilson's Way: If what's good for GM is good for America, then the concern about the US going bankrupt seems well placed.

Form a Line: Every politician and every commentator who thinks that torture is acceptable under some set of circumstances should be required to undergo public waterboarding before making such pronouncements. Every time. And retroactive enforcement of this requirement would be a good idea, too.

Not News: "The IMF is hurting poor countries."

Things to Ban: There's so much to be incensed about... Obama's duplicity. Cheney's existence. Wall Street bailouts. But save room for AIPAC.

Porn O'Graph: Earning a bear market.