Saturday, October 31, 2009

SAR #9305/Weekender

Confidence is earned, not printed.

Definition Dependent: The economically measured thing called a recovery may be underway. The emotional thing called a recession will be around for a long while. “At this rate, we wouldn’t reach anything that feels like full employment until well into the second Palin administration.”

Addition and Subtraction: Profits have plummeted – 47%, 51%, 58%, even 68% - at the big oil companies. In that US demand has dropped only about 750,000 barrels a day, doesn't the earnings data suggest the US market is not the biggest player anymore?

Corporate Citizenship: Just because their paid-for ratings of bonds and businesses have backfired on gullible investors who thought they were dealing with storied oracles doesn't mean S&P, Moody's or Fitch have to apologize. After all, they are corporations just exercising their free speech rights when they sell (or re-sell) their opinions.

GDP Thoughts: Regardless of how the various components of the GDP rise were obtained, many/most of the indicators of a recessionary end are positive, with the major exception of unemployment. This may not be the real thing, but at least it's beginning to taste like recovery-lite.

Revised Revisions: Moody's is concerned that housing prices will not bottom for another year and that home owners (and banks) will experience significantly higher foreclosure rates. This will prompt them to lower the rating on mortgage bonds that have already been through several downgrades. Sort of the Windows 7 of RMBS ratings.

Global Warming Science Wrong! Scientists have “significantly underestimated” the effect of methane on global warming. They had not been accounting for methane's interaction with tiny airborne particles. So good news, science corrects itself, just as advertised. And bad news, global warming gets a bit more serious, just as feared.

Slim Pickings? Chinese banks are putting $1.5 billion into a 36,000-acre West Texas wind farm. Has a vague ring to it. They must have one heck of an extension cord.

Equal Protection: A court has ruled that police must have a reason before they kill you. Not a good reason, just something they can articulate later, like cursing the officer for tasering you the first time. But tasers are harmless, so when police kill citizens with them, it's obviously accidental. Or you provoked them by not laying quietly on the pavement.

Asked & Answered: "Are Those $250 Social Security Checks Just Pandering to Seniors?" Yeah, so?

Fewer Good Men: Obama changed his mind (and promise?) and signed a bill blocking release of additional torture photos, under the theory that the Freedom of Information Act does not cover things the government doesn't want known. Another Lieberman moment.

Accuracy: The headline read 'The Fed overpaid Wall Street by $13 billion." Note that it did not say “accidentally overpaid”. The NY Fed said it had no choice but to make AIG reimburse the full amount of what it owed to Goldman Sachs the big banks.

End of a Tradition: If you can't hide your cash, bearer bonds, gold, stolen paintings and other ill-gotten and untaxed wealth secretly away in a Swiss Bank, why have a Swiss Bank account?

Plot Summary: Federal Reserve's game plan for ending the current mess: reflate, by all available means. It's worked so well in the past.

Porn O'Graph: Business isn't going to grow new jobs if it doesn't grow.

Friday, October 30, 2009

SAR #9304

Wars still have moral implications.

Crushing Cushing: Ever wonder why oil is priced by how much it costs in the little town of Cushing, Oklahoma? The Saudis have decided that won't do and are going to drop “West Texas Intermediate” as a benchmark and institute a new one based on the cost of crude on the US Gulf Coast.

Ugly, Ugly: New home sales fell 3.6% m/m in September, and down 7.8% y/y – at this rate only 402,000 new houses will be sold in the US in a year.

Reclama: Taken aback at the 3.5% GDP jump? Did you forget that Cash for Clunkers spiked auto output by 157% - and added 1.66% to GDP all by itself? And the Buyers' Bribe for houses lead to a 23% jump in residential sales, which is good for at least a quarter point of the GDP jump. So adjusting for one time things and government gifts, GDP growth was probably about 1.65% which is what a $1.3 trillion deficit will buy.

Flowers, not: Following an agreement with Russia to settle trade debts “in local currency”, Turkey has now agreed to use “national currencies” in trade with Iran and China. Pay attention to Turkey, they haven't forgotten their history, even if you have.

Fanny Fox? A South Carolina deputy assistant state attorney has been caught with a stripper in a graveyard. No relation to Wilber.

Simpleton Math: Delinquencies of 30 days or more are now reported on nearly 50% of all Option-ARMs. If they can't make the minimum “option” payments now, what is likely to happen when these mortgages recast and they have to start paying a full amortizing payment?

Fantasy Sport: Pimco's Bill Gross says the Fed, in an attempt to keep the economy “on the green side of the grass” will keep interest rates at zero forever. He did not use the term “ till hell freezes over.”

Solution #1: The main ingredient in building a nuclear weapon is determination. The process is tedious and exacting, but well known. The world now has 8 nuclear-armed states, two of which, the US and Russia, have embraced the concept of preemptive nuclear strikes. And the best defense is a good offense.

Perspective: The economy grew at an annual 3.5% rate in Q3. Unemployment fell by 1,000 to 530,000. Faint cheers are heard in Mudville.

One View: Credit bubbles burst with the same enthusiasm that expanded them, only faster. If the deflationary contraction is to equal the credit bubble, it will be the largest contraction since the South Seas Bubble and the Great Tulip Mania. House prices, for example, will likely fall 90% before the bottom is reached. Expect serious social fragmentation, general strikes and a breakdown in public services – healthcare, garbage, water, education as the economy and the markets fall for half a decade. Denial about the gravity of our situation is one of its greatest dangers.

In Case: The Case-Shiller index peaks in the summer, every summer, then falls off; be prepared for a 10 – 15% decline by next spring.

Armeggedon is Near: Jeffrey Brown of Export Land Model fame, and Dr. Foucher of logi Energy, believe that Saudi Arabia reached its peak production ability in 2005 and will never exceed that level, and that by 2013 there will be global oil shortages in the US and other OECD countries, even at the current low demand levels. Elsewhere OPEC says it will raise output if there’s a “real” shortage in supply. One group is selling advice, the other oil.

Two-fer: Two charts from the St Louis Fed: One shows commercial and industrial loans tanking and the other one is a tad boring.

Off-Stage: In South Florida the number of houses and condos in the foreclosure pipeline is five times larger than the current inventory on the market. Let's rush out and buy a place with the government incentive, you first..

Thursday, October 29, 2009

SAR #9302

Man cannot live by theories alone, except for economists.

Stock Market Summary: This Market Needs Another Stimulus Package. The Dow is down, the NASDAQ is down, the S&P500 is down. It's time to give away another trillion or two.

Horse's Mouth: Goldman Sachs says that if they cannot deal in the shadows while forcing Joe Public to work in the center ring with spotlights, they wont be able to steal as much money. That's not quite a literal translation, but that's what they meant.

Short, Pointed: The headline: The Worst September For Home Sales Since 1981. Comes with a free chart.

Who Said, and What did they Mean: “The equity markets provide perhaps the best example of a highly evolved complex ecosystem, where care must be taken to preserve the benefits that have evolved from competition and innovation… “ Goldman Sachs, justifying keeping its activities secret.

Confusion: Reports are circulating that one of the Karzai brothers works for the CIA. Just the one?

Catabolic Collapse: Bridges at both end of the country – the San Francisco-Oakland bridge and the Lake Champlain bridge (NY/VT) both have been closed for urgent repairs. Too bad there wasn't any stimulus money left over from feeding Wall Street to put some people to work fixing up this countries rotting infrastructure.

Bonus Question: “Will the US Senate stand for the people or health insurance firms?”

Essay Question: Do US drone attacks on unarmed civilians in non-combatant countries violate international law? Assume for the purposes of your essay that (1) such attacks might happen (2) there are non-combatant countries, and (3) there are international laws that apply to the US.

Quoted:How bad does it have to get in the US before the people finally speak out? Wait and see, because it will be getting worse, a lot worse than you might imagine.”

His Master's Voice: Goldman Sachs now estimates GDP growth in 3Q 2009 to be 2.7%. Don't expect the market to rally anytime soon.

Term of Art: Strategic Non-Foreclosure. There is a growing disparity between mortgage delinquencies and foreclosure starts by the banks. Banks appear to be be foreclosing only about half the number expected by delinquencies. In September the number of house 90+ days delinquent was more than twice the number of foreclosures started. Why? Because the banks want to stick the homeowner with the taxes and maintenance.

Pot, Kettle: The reformed Mr. Gingrich criticizes the unredeemed Beck as "destructive'.

Surge Support Surges: A poll taken in the Pentagon parking lot shows growing support for an increase in troops, more combat command slots, swifter promotions, and more medals. Lots more medals.

Freddie Kruger Moment: Just in time for Halloween, Joe Lieberman (Idiot-Conn.) said that he’d back a GOP filibuster to put a stake through health care reform's heart. Lieberman doesn't want the Congress “to do too much at once.” Or even at twice.

Porn O'Graph: You are here, and wish you weren't.

Wednesday, October 28, 2009

SAR #9301

We are not nearly as clever as we imagine.

House Numbers: The Case-Shiller Composite was up 1.0% in August, m/m, down 11.3% y/y, and remains down 32.5% from the peak. Don't get too excited, it was probably due to the $8,000 home-buyer. There's still more pain to come, starting with coming option-ARM speed-bump (see chart). Plus the flood of foreclosures on the way will drive down prices. Did I mention increasing unemployment? “Expect subdued home price appreciation” for the next few years. Subdued?

Working with a Net: BP managed to eke out a $5.34 billion dollar profit in the third quarter, a drop of 34% from the previous year.

Read it and Weep: In a burst of political pandering the Home Buyer Bribe (aka the Housing Price Support Supplement) reportedly will be extended in time and scope – helping out folks who make up to $250,000 buy “move up” houses. But it's not all cream, the $8,000 bribe will be lowered to will be reduced to $7,290 and the whole thing bundled with an unemployment benefit extension to make it veto-proof. Fiscal restraint.

Colonialism: China trippled its investments y/y to $20 billion in 3Q/09 as it gobbled up invested in mining and oil assets at depressed prices during the global economic downturn.

Clothing's New Emperor: Even the NY Times has noticed that Obama is as committed to hiding torture as Bush/Cheney. He's clinging pretty tightly to the executive power/national security rubric of his predecessor, too. Change? Trust you can change?

Gimmie, Gimmie: Washington Mutual's banking operation was run into the ground and taken over by the FDIC, so the parent holding company wants back $6.5 billion from the FDIC it contributed to the failed bank's capital, $4 billion from JP Morgan, $3 billion in tax refunds, and a partridge in a pear tree.

Conundrum: Will the government pay limits cause AIG to lose the people who drove it into bankruptcy as they go where their skills are appreciated and they can make more money? Is Al Capone hiring?

Strategic Withdrawal: A senior foreign service officer in Afghanistan resigned in protest over US strategy there, saying, “I fail to see the value or the worth in the continued U.S. casualties or expenditures of resources in support of the Afghan government in what is, truly, a 35-year-old civil war.” Interesting. I didn't realize we actually had a strategy in place.

More Mumbo Jumbo, Please: Clarity and succinctness in financial reporting can be unsettling, as in the Business Insider headline: “The Dollar Is Toast And It Won't Help The Stock Market.” or their “Bonds Will Get Slammed Once The Fed Stops Propping The Market.”

Me Neither: "I never bought Michael Jackson as King of Pop.”

Evermore: GMAC borrowed $12.5 billion, then topped up with $5.6 billion, and now is back at the Treasury looking for 'just' $2.8 billion, to help hornswaggle more people into buying cars they can't afford and eventually won't pay for them. It's the American way.

Viagra Won't Help: US politicians trying to restrict imports of 'dirty energy' from Canadian oil sands have found that WTO rules have prevented countries from erecting barriers to the search for profit and delivered the keys to the chastity belt to the world's business leaders.

Definition of 'Away': Where all the plastic crap goes when we're done with it. Progress isn't our only product.

Parse This: “Electric-car makers ranging from Ford Motor Co. to California start-ups are using $11 billion in taxpayer funds to supply a market that does not yet exist.” Electric utilities warn that if they are not given billions to build new plants – without environmental constraints – there won't be enough electricity to power all these non-existent cars.

Flattery, Sincere Form: Bush decided that the United States had the right to invade protect itself from those who might some day think of not doing as they were told. Thus Iraq & Afghanistan. Now Putin's decided that Russia should beef up its forces for “cross-border interactions” and be ready to launch preventive nuclear strikes against perceived threats.

Porn O'Graph: Old NOAA's Almanack.

Tuesday, October 27, 2009

SAR #9300

Don't be so worried, we're just the control group.

Crop Report: The Chicago Fed's National Activity Index suggests that growth in national economic activity improved in September, reaching levels that “coincided closely with the end of the four previous recessions.” The official recession might be over, but how are things at your house? Do you still have a house?

All China, All the Time: Goldman Sachs predicts China's increasing demand for diesel will drive oil to $85 or more by January. China's oil demand rose 12.5% in September, the 6th monthly increase in a row, ant its LNG imports hit a record high, too. Coal imports rose 7% in August, which is impressive if only because China is the world's largest producer (and user) of coal. Don't those folks know there's a recession going on?

Deja Vu All Over Again: This time it's the uncanny retracing of bad loan experiences by banks today, compared to banks in the 1930's. Just a coincidence that the pace of bad debt write-offs today exceeds the early years of the Great Depression. Nothing to it, move along.

Either/Or? Robert Reich has an interesting article on what Obama should do and when he should do it. It would be more palatable if he didn't set up the discussion with the observation that “while affordable health care is important, making a living is more urgent.” Wouldn't want to tax Mr. Obama by suggesting he tackle two things at once.

Narrow Window: The free market folks are saying that a healthy recovery does not need to create jobs for a lot of the unemployed, because “a healthy economy cannot be measured simply on the basis of jobs figures, because not all jobs produce wealth.” Maybe not, but most jobs provide income for the worker and her family.

Just Cut It Out: Apparently that's the treatment that works for severe migraines.

Mr. Sunshine: Since asset prices are being inflated by a weak dollar right now, a dollar reversal could smash this rally, says Nouriel Roubini. This will be a substantial risk once the Fed is pushed to increase interest rates. When in the last quarter century or more, brief periods of militarism aside, has the dollar not lost value? And if the Fed raises interest rates significantly, inflation will eat the value of the dollar for breakfast, lunch, and dinner.

Planning Ahead: In Switzerland, keeping with its conservative outlook, steps are being taken to replace the power currently obtained via hydro-power from melting glaciers – once the glaciers finish melting away.

Remarkable: Paul Krugman, in a short note on the renminbi/yuan name issue, pointed out that one of his comments was to be taken as a joke. Why he limited it to just the one is beyond me.

The Old One, Two: The GAO reports that within ten years the USA's debt, as a % of GDP, will exceed that at the end of WWII, and will grow steadily higher forever. But before that, about 2016, Congress will lose the surplus income from Social Security taxes (2016) and Medicare will be broke (2017). They conclude “that the federal government is on an unsustainable fiscal path.” The sentence would be more accurate if the word 'fiscal' was left out.

Asked and Answered: The headline asks: “Will Obama's Economic Policies Destroy the Dollar?” No, that's already been taken care of.

Harvest Time: After tanking the world's economies, mortgage securitization got a bad name. According to Barclays, it was a bad rap. So Barclays is going to see if there's an appetite among the incurably greedy for another flyer on AAA rated tranches of Slice&Dice backed by rising unemployment and broken promises.

Porn O'Graph: Spending doesn't increase if you spend your allowance paying off debts.

Monday, October 26, 2009

SAR #9299

When the Boss says, “We're all in this together.” We're not.

Political Solution: The problem: About half of Americans cannot afford health insurance, and about 40 million do not have any. The Solution: Require all Americans to buy health insurance. What this has to do with either medicine or the health of Americans remains a mystery.

The Right Threat: Losing a million jobs a month is not nearly as dangerous to Wall Street as the average house price falling $10,000 in a month. Take away Fannie, Freddie, Ginnie and the FHA, and you bankrupt the entire financial system. Which explains almost all of Washington's fiscal policies.

Resource Exploration: South Korea is joining China and India in prospecting for oil in places like Canada.

What Happened to the Cabbage: If the trumpets, drums and strings pay absolutely no attention to you, you are not actually leading the orchestra no matter how much you wave your arms about. So too, Obama as Commander in Chief to McChrystal, Odierno, Petraeus and Mullen – not one of whom would have a job if Harry Truman was on the podium.

Good/Bad News: In the near term, oil prices are unlikely to rise over $150 a barrel – because way before then oil prices will kill the recovery.

Home Sales Noise: Sales of existing houses either rose 9.4% in September, or fell 5.2%. Depends on how much adjusting you want with your statistics. Under either interpretation, house prices fell and are going to keep falling.

Spandex: By traditional measures of earnings and profits and the shape of the real economy, the stock market is at least 40% over-valued. But don't tell the speculators – they see her as Rubensque.

Tea Leaves: A group of Asia-Pacific leaders are promoting a regional free-trade alliance – modeled after the European Union - to reduce their dependence on US and European customers. Right now it is seen as a ten year project, which might include some sort of regional currency, modeled after the euro. Just talk, but it throws its shadow ahead already.

The Harvest: “People spend longer between jobs than in the past, and if/when they do find new work, it is often at a lower level of pay than before. “ And that's being optimistic.

Diagnosis: Observing a 50% run-up in the Dow since March, with only deterioration in the real economy since, Robert Shiller opines “"Somehow we got into this really speculative mentality and I don't think we're out of it yet." Y'think?

Unusual Suspect: Traditionally, when the Western economies tanked, the price of oil went with it. Except for a couple of times when the price of oil tripped up the economies. Things change. The price of oil tripped up Western economies, but China kept on increasing its use of oil. And now that's lead to the price of oil reviving before Western economies did. This does not end well.

Tounge Twister: Roubini says there is a serious crash on the way (the last one was a warm-up exercise?) but gold is not the answer. Not “unless you have Armageddon or another depression.” He didn't offer any reason for not expecting Armageddon, nor explain the difference between the two.

Quiz: Weak-kneed pacifistic budget hawks are in general agreement that the United States is on the road to ruin. Is the US (a) a dying empire. (b) a banana republic. (c) a failed state, or (d) Ruin? Why everything's just fine.

Early Warning? Last week Citi abruptly terminated its gasoline station affiliated credit cards and began raising credit card rates to 30% on many unsuspecting customers without warning (and apparently with little or no reason). What is Citi preparing for ?

Reverse Psychology: The Senate plan to curb carbon emissions would hand out – free – permits that would let utilities, refineries and manufacturers continue emitting carbon dioxide. Well, why not, they give Wall Street a blank license to steal...

Porn O'Graph: Were've I seen you before?

Saturday, October 24, 2009

SAR 9297/Weekender

Lying is proof positive of free will.

Picking Sides: Although those with credit card balances routinely get charged 29% and some credit cards are charging 79% annual rates, Bernanke insists Congress must move slowly and with caution when it comes to regulating an industry that contribute so much to so many PACs.

Without Derisory Comment: Sales of existing houses rose 9.4% m/m and 9.2% y/y in September. May be an artifact of tax rebates and foreclosure sales. May not. Enjoy it while you can.

Systemic Failure: Everybody's running around, searching for someone or something to blame for the Great Recession, looking for what systems broke down, what regulations failed. But it wasn't just part of the system that failed. It was the whole so-called 'market system'. The greed creed. Under the latest version of free-market capitalism everyone was free to serve their own interests with no regard to what might be good or bad for society. And it didn't take too long for the financiers to figure out they got their best returns from investing in politicians. So they bought the government.

Global Warming Defeated: A couple of years ago, 77% of Americans believed in man-made global warming. Now only 57% believe in global warming and fewer than that think it is man-made. The score so far: Scientists are overwhelmingly convinced that global climate change is happening and it is man-made. The public disagrees. There are only a handful of scientists who understand thsis stuff, so they get outvoted: There's to be no global warming. Majority rules.

Where's Waldo? If he's a member of the US Army, he's on his way back to Afghanistan. Or Iraq. Why?

Is Capitalism in Its Death Throes? Some worry that free market capitalism may be ending. Some say no other system has created so much prosperity and it must be saved. It's not capitalism that is ending, it's oil. And it wasn't capitalism that created all that prosperity, it was cheap oil for the last 150 years. What would Wall Street look like if oil had never existed?

Permanent Underclass: Paul Volker says that unemployment in the US will remain high for years. Easy for him to say, he's retired – from the chairmanship of the Fed.

Tea Leaves: Jeff Rubin, former chief economist with CIBC, predicts oil will reach $100 a barrel and gasoline top $4.00 a gallon by next Memorial Day, and that will lead to another meltdown, just as high oil prices caused the current financial meltdown. Australian Nationals Senate Leader Barnaby Joyce predicts a catastrophic economic collapse in the next few years, triggered by the US defaulting on its sovereign debt.

“Signs of Recovery”: In the strange world of CNBC and the stock markets, the fact that new jobless claims rose last week to 531,000 is an inconvenient aberration that can be explained away as American industry becoming leaner and more competitive. What American industry?

Quivering Upper Lip: The British economy shrank 0.4% in 3Q09, a result significantly behind the euro zone and lagging most major economies. The predictions “seem to have been a little over optimistic.”

Put Down the Bottle and Back Away from the Bar: Swedish researchers have determined that even low levels of alcohol consumption have a negative impact on drinkers' overall health. They recommend total abstinence. It's so depressing I think I'll go get a scotch.

Porn O'Graph: Go Healthcare, young man.

Friday, October 23, 2009

SAR #9296

When people leave their foreclosed homes,
they take their guns with them.
J. H. Kunstler

Wrong & Wronger: Politicians want to replace the expiring $8,000 new house buyer's bribe with a $15,000 gift for each and every homebuyer. The original idea was to get people to buy a house, but 4 out of 5 $8,000 recipients were already going to buy a house, the $8,000 was an unnecessary gift. Thus the “extra” house sold actually cost taxpayers $43,000. Under the new program it is estimated that for each person who the $15,000 bribe actually moves them to buy a place, 18 people who were going to buy a house anyway will get $15,000. That's $292,000 for each “extra” house sold. Progress in political economics – spending more money for ever smaller results.

Math Quiz: If 7,000 people exhaust their unemployment benefits every day (and they do), how many cars, buses and trains will it take to get them all to the big demonstration? And will it be on the Mall, or on Wall Street?

Dismounting from the Tiger: China's stimulus funds – equal to about 15% of GDP – has managed to stoke the Chinese economy along at an 8.9% rate. Chinese banks continue to pump funds into the marketplace, with no apparent plan as to how to wean the economy from easy money. Maybe they should ask Mr. Bernanke – he's positive he knows how to do it.

Fair's Fair: T. Boone Pickens told Congress that US oil companies are “entitled” to Iraq's crude oil because of the immense cost of our invasion and their incompetence at making weapons of mass destruction. He's a Texan.

Blindfolded: Citi borrows money from the Fed (It's a Bank!) for less than 1%. Citi customers pay 29.9% on their credit balances. But First Premier is the place to be – they offer a pre-approved MasterCard with a 79% interest rate. Wonder if you can charge tar and feathers?

Reality Check: In Indiana, five hundred people applied for a single $13 an hour administrative job at a truck driving school. Pass this on to anyone you know who works on Wall Street.

Quoted: “Successful societies maximize the creative and minimize the distributive. Societies where everyone can only achieve gains at the expense of others are by definition impoverished. They are also usually intensely violent.” If the shoe fits...

Record Increase! Ethiopia had 4.9 million starving citizens at the start of the year. Through careful planning during this the fifth year of drought, those in need of emergency food aid has increased by 25% to over 6 million. Exactly 159,410 tons of emergency foodstuffs are needed. I suppose suggesting these people stop having kids for a while – say until they know how they're going to feed them - is out of the question.

Don't Let the Door Hit You: Citi is letting customers using Citgo, Exxon, Phillips and Shell co-branded MasterCards know they can no longer pay at the pump, by letting them try. After they shut down the cards they mailed out letters, but many found out before the mail got there. Citi blames credit card reforms that may cut into their usury.

Let's Make A Deal: Steve Rattner – the US Car Czar – has got the good news and the bad news. The good news is that we the taxpayers have only lost 40% of the $50 billion 'invested' in GM. But it's early, we probably can manage to lose a lot more of it.

Oxymoron: “Jobless recovery.” All depends on whether you're jobless, or in recovery.

Thursday, October 22, 2009

SAR #9295

Nearly one in five workers, aren't.

What Goes Up: The dollar is at a 14 month low against the euro, oil is at a 14 month high in dollars. How high does oil have to go before the economy plunges again?

Update: The media are reporting that a new survey shows that a "clear majority" of Americans now support a government-run public insurance plan as a competitor to private insurance companies. What's new is the reporting. What's inaccurate is the suggestion that Americans previously did not support the public option. They did, but the media were too busy buying the Republican noise to do any actual reporting. Luckily the survey issued a press release.

Let Them Eat Cake: Goldman Sachs man in London, Lord Griffith of Fforesfatch, says the poor should accept that the rich getting richer is good for everyone because some crumbs may falloff the table. Well, that's not quite what he said, but it's close.

Kiss It and Make It Better: The administration is going to order the Treasury and Fannie & Freddie to purchase housing bonds issued by state and local agencies that provide mortgages to first-time and lower-income home buyers and enable the development or rehabilitation of rental properties. Officials declined to put a price tag on the program, which is their way of shrugging.

Short Listed: The National Retail Federation expects consumers to spend about 3.2% less per family this bargain hunting holiday season.

Coincidence: A new study says one in six Americans lives in poverty. Yesterday it was reported that one in six American workers was unemployed or underemployed. There were only a handful of stories today about Wall Street bonuses.

Leavesdropping: Not only do the walls have little ears, it turns out the trees do, too. Young sparrows learn what and how to sing by eavesdropping on adult conversations.

Nailed It: Niall Ferguson, economic historian and all-round gadfly, says the dollar is doomed and the Chinese are dumping it. This may devalue their dollar holdings, but it would increase the value of all their hard assets and those they've been buying up around the world. He also sees China's international trade surplus quickly going away as internal consumption rises.

With Comment: Hank Paulson held a secret meeting with Goldman Sachs board of directors in Moscow. Points for listing the greatest number of ways (a) this is wrong and (b) expected.

CREeping Down: Commercial real estate prices have now declined 41% since the October '07 peak. But some see “a deceleration in the rate of decline.” Those folks are called optimists. Or real estate agents.

Upon a Star... Mexico says it has found the petroleum fountain of youth and from now on it can keep pumping 2.5 million barrels a day for years and years and years. Don't bring up things like physics and petroleum geology and all that science stuff.

Theory of Everything: The US financial crisis was caused by Wall Street's greed, Ponzi schemes and frauds, assisted by their political accomplices, and enabled by a willing media. The confessional is now open.

Down the Drain: Pilots flying over the Alaskan back-country have noted for some time that shallow lakes and ponds and marshes are shrinking in size, some simply disappearing but didn't know why. In a state that is about 50% wetlands, this is disconcerting. Global warming, of course, is to blame – now that Palin is no longer governor. The permafrost acted to retain the water above it; as the permafrost becomes less perma...

Porn O'Graph: Laid off doesn't mean what you hope.

Wednesday, October 21, 2009

SAR #9294

Myths do not die, they transform.

Sub-Division: The housing industry, financially stressed because it is unable to sell its products for outrageous prices, wants the government to continue handing out $8,000 bribes to entice people into debt slavery, even as house prices are about to drop another 11% in the next 9 months. Areas that have seen the most foreclosures so far will see the steepest drop in prices. The IRS is investigating move than 100,000 cases of fraud under the old program.

Spade, Spade: Wall Street says that if the US passes reform legislation, they'll be forced to move overseas. I say “Goodbye.” I think the rule should be that banks take deposits, make loans, keeps everything on the books and can have access to the FDIC, FED and Treasury programs. Anything else is not a bank, it's a gambling parlor and should be tightly regulated, with no access to taxpayer money, ever. Dream on.

Wired: The CIA's investment arm – why does the CIA have an investment arm? Recycling drug profits? - is backing Visible Technologies, a software firm that specializes in monitoring “social media.” Social media is the internet, blogs, tweets and such. Why didn't they just ask NSA for this stuff?

Dieoff, Part II: Pine bark beetles, with extended life cycles thanks to longer warm seasons, have been decimating pine forests in the Rockies and Pacific Northwest for so long now that we accept it as normal. Farther south, parasitical insects have been attacking aspen trees, resulting in massive aspen die-offs from Arizona north to Idaho. Remember, it's parasite damage; it's got nothing to do with global warming.

Take the Money and Run: Qatar is selling it's $2 billion investment in Barclays, following Abu Dhabi which sold off part of its stake for a $2.5 billion profit this summer. Petroleum geology wasn't the only thing they studied in college.

Citations: The following headlines are offered for your consideration: “U.S. Deficit Rises to $1.4 Trillion; Biggest Since ’45.” And on the same page: “Bailout Helps Revive Banks, And Bonuses.” And a quote: “We’ve spent the last few decades shoveling money at the rich like there was no tomorrow. We abandoned the poor, put an economic stranglehold on the middle class and all but bankrupted the federal government.” And ending with “The Rich Have Stolen the Economy.

Lying Eyes: Despite football in the snow in New England last weekend, global warming is still with us. The combined global land/ocean surface temperature in September was the 2nd warmest September on record since 1880.

Consider the Sources: There are so many threats to federal officials these days that the Secret Service may have to stop investigating financial crimes. Wall Street's blackmailing of the administration should fall into one of the two categories.

Choir Practice: Andrew J. Bacevich, Professor of International Relations at Boston University and author of Limits of Power, which you should have already read, has a considered dismissal of America's Afghan adventure in a recent Commonweal, which you should go read now.

Tuesday, October 20, 2009

SAR #9293

Criminal penalties for white collar crimes are still on the books.

Collector's Item: States tax collections fell 16.6% in 2Q2009. For the year ending in June, receipts were down 8%. Personal income taxes are down 27.5% but sales tax receipts are off only 9.5% - which seems curious.

Golly Gee: Investigators were shocked to discover, even though they tried mightily not to, that Hamid Karzai had stuffed the ballot boxes. Now there'll be another chapter in this farce. And the White House says it would be a bad idea to send more troops there until Afghanistan has “good governance.” Stand down, men, there'll be a slight delay.

Just Sayin': Now would be a good time to prepare for the next crash and its unexpected consequences.

Go Away: North Korea responded to severe food shortages this summer by sending hundreds of thousands of city folk to the countryside where they were supposed to help with the non-existent harvest. It's fall, with a cold Korean winter on the way, and still no food, so the government has told the urbanites to stay in the countryside where they have a chance of scrounging some food, instead of returning to join the starving residents of the cities.

Reputation: The only thing a rating firm has to sell is its reputation, and in the last few years some of them have done so.

Shipped Out: Eurozone exports fell nearly 6% in August, m/m. A 'significant' negative impact from the unwinding of global imbalances is expected. Britain faces a 'dangerous rise' in debt, even as the population rejects government efforts to cut spending. German financiers feel the current pace of economic recovery is “unsustainable” and that the country will undergo another credit crisis as more bad debts surface.

People First: Many think climate change is the big issue. Others vote for peak oil. Some worry about water. All are partially right, but finally wrong. If we do not reverse our exploding population numbers, all is lost.

Conditions: Some prescient souls are wondering if the huge banking profits being reported might be due to the big government subsidies they received. Ya think?

Silly Question #45: “Could rising oil prices stunt the stock rally?” Yes, and so could a dose of reality. Remember that the last time oil started ramping up was 2007, which lead to $147 oil, which lead to the worst bear market since the Depression.

Almost Magic: The nation's largest non-government insurer of mortgages lost over $500 million in 3Q2009 and has lost over $1 billion so far this year. Delinquencies on their insured loans rose to 14% in the quarter just ended, double the rate a year ago.

Too Little, Too Late: Nothing the politicians have done or are planning to do will limit CO2 emissions enough to prevent a global temperature rise beyond 2ºC . The world must begin a rapid shiftto low-carbon economy by 2014 or face dangerous climate change. If a strong agreement is not reached at the UN conference in December, “catastrophy” will be heard with ever greater frequency.

Clouds, Linings: In California the tough times being faced by land developers have become a boon to those who would preserve the natural enviornment. Needing cash to survive, many developers are glad to accept suprisingly low cash offers for land they have in idle inventory.

Another Black Hole: Inspired by the US deficit, scientists have created a black hole on earth that sucks in light and prevents it from escaping, like Goldman Sachs does government money.

Monday, October 19, 2009

SAR #9292

Hope is not a viable investment strategy.

Remember When? The Dow is tip-toeing at 10,000, and better not look down, because there are no fundamentals down there to catch it, just Bernanke's funny money. Remember back in the old days, when the bubble drove P/E's from the traditional 15x range way up to 47x? And then remember what happened? You don't? That's okay, the P/E ratio is now 140x and the show's about to begin in the center ring! Good thing the Dow doesn't represent the real economy.

Reason #46: One more reason that Americans will never support effective measures to combat global climate change – they'd have to give up their power-guzzling big-screen high-definition TVs. Ain't gonna happen.

Usual Suspect: A suicide bombing killed several senior Iranian Revolutionary Guard officers. “ Surely foreign elements, particularly those linked to the global arrogance, were involved in this attack,” said Iranian television. “Linked to the global arrogance” - wonder who that could be?

Put a Cork in It: Some researchers have demonstrated evolution, natural selection and all, in a bottle.

Fairly Unballanced: Somebody finally noticed that Fox News is not news, but opinion journalism, a wing of the Republican Party, a propaganda machine masquerading as a legitimate news organization. What took the adults so long to catch on?

Promises, Promises: Geithner says the US must live within its means – once the economy recovers, if it ever does, or what little global confidence there is in the dollar will erode. In other words, it's a confidence game. But you already knew that.

Rubbing it In: After successful raids on oilfields in Africa, China now has its sights on drilling rights in the Gulf of Mexico, which – despite its name – America views as a private reserve. Enter a chorus of politicians...

Non-negotiable: Most of the world's decision-makers think they can negotiate with the laws of physics and chemistry, and continue signing a long series of useless treaties that will become a global suicide note. Even the brutal truth that we are ''on the edge of a precipice beyond which there is no redemption'' may not be enough to move the world to action. Even doing something, but not enough, will lead to disaster. The planet cannot be bought off.

More of the Same: Delinquency is on the rise. No, not the juvenile kind, the indebted consumer kind. In September a record 7.65% of mortgages were 30 or more days late. In sub-prime mortgages it's over 40%. Delinquencies also rose on home equity loans and auto loans.

More of the Same: Sunday's NY Times sees a bright and happy future for the US, based on endless greed without any moral constraint or responsibility.

The High Priced Spread: Expect oil to trend higher. Global demand is expected to rise from this year's 84.6 mbd to over 86 mbd in 2010 – and that's the level of demand that drove prices to $150 in mid-2008. Add in the decline of the dollar and recovery-dampening oil prices look to be a sure thing.

Keeping Score: The Dow has broken 10,000 for the 26th time, with the first time being more than a decade ago. In lieu of gifts, please direct donations to a local homeless shelter.

Ennui: It is becoming evident that we are sinking slowly into an economic depression. The middle class now lives from paycheck to paycheck. Half of mortgage owners have no equity, no sense of ownership in their houses. Nearly 20% are unemployed or underemployed. Millions more will be evicted before Washington gets through sending money to Wall Street. But still the people slumber in front of the TV. Anger? What's the point?

How'd GS Do It? It was easy. We gave them $76 billion, loaned them $2 trillion more at less than 1% and then guaranteed their losses. Or something like that. And where's that anger?

Solomonic solution: Some argue for deflation. Others point to quantitative easing and scream inflation. Who's right? Both. For the immediate future, Americans' net worth will decrease and their food and energy bills will increase, while house prices fall as the economy suffers the effects of both inflation and deflation. We live in interesting times.

Saturday, October 17, 2009

SAR #9290/Weekender

What is the next phase of this train wreck?

Oil War: The Pentagon pays about $400 a gallon to put fuel into a Humvee, helicopter or aircraft in Afghanistan. Hope it's worth it.

Take Notes: Citigroup reported 3rd quarter net income of $101 million and a $0.27 loss per share. See, they had an $851 million after-tax gain, which turned into a $3.1 billion reduction in income... Or something.

Noted: The headline read “Highway expansion goes green.” This is wrong in so many ways.

Multiple Guess: Arrange the following countries in the order in which they will collapse: China, Dubai, Iran, Ireland, Latvia, Lithuania, North Korea, Spain, USA, Venezuela. Usual prizes & conditions.

Keeping Score: The current US budget deficit is $1.4 trillion – 10% of the country's GDP and 66% more than it took in. How long before something's got to give? How long before that something is the taxpayer, starting April 15th?

Massive killer whale pod sighted: No, it wasn't in lower Manhattan, it was off the coast of Scotland. Fifty of 'em.

Fine Print: It's a good idea to start with the footnotes when reading a bank's financial statement, because that's where the bodies are buried. Sometimes the notes are less than wholly forthcoming too. Especially about the effects of mark-to-make-believe.

Truth Will Out: “The stock market is not just a marketplace in which buyers and sellers meet to exchange interests in businesses. It is a den of speculation and the goal is profit – the shorter term the better.”

Super Goo: A scientific 'howdunit' as our intrepid heroes figure out the secret to barnacles' super glue. Hint – it's a bit like blood clots.

Not Newsworthy: “FDIC Forecasts More Bad Loans and Bank Failures”

Please Explain: In Iraq, a Halliburton employee was gang raped and kept in a shipping container for a week. When she got out she found that Halliburton's contract with the government prevented her from suing them. An amendment by Senator Franken, designed to prevent a repeat of this, drew 30 votes against it. Each by a Republican senator. God Bless Halliburton and the United States of America.

Headline Only: “Field experiment on a robust hierarchical metropolitan quantum cryptography network.” Raise your hand and quietly leave the room if you understood that.

Level Playing Field: I'd be less repulsed by Goldman Sachs paying billions in bonuses if they first paid back the $13 billion in TARP funds they got under the table via AIG. Wouldn't it be nice if every loan we took out from the banksters came with a guarantee that if we didn't get around to paying it back, the government would?

Farm Fun: Crops in the fields are running behind schedule while the weather seems to be running ahead of schedule. Rain, snow, stuck in the mud. Ah, farming.

In Summary: Dollars, those greenish pieces of paper we call money, are just a state of mind, a belief. They are not backed with anything but “the full faith and credit” of the US – which has more faith than credit these days. They are not even as pretty as wampum was. They have no intrinsic value, being backed by broken promises. And remember, throughout history all currencies have been debased, and paper currencies – sooner or later- lose all value.

Porn O'Graph: 15 weeks and counting.... 15 weeks is 4 months without a paycheck.