Tuesday, March 16, 2010

SAR #10075

There's 'truth' and there's 'the whole truth', and then there are talking points.

Even Handed:  Hamid Karzai is upset that the US had Pakistan arrest #2 Taliban leader Mullah Baradar.  Seems Karzai thought his theft of the recent election made him the actual president of Afghanistan and was holding peace talks with Baradar.

Standard Accounting:  To think Lehman's was the only big investment house to manipulate its balance sheet via repos would be naive.  The whole point of accounting has become to find ways to crook the books without going to jail.  Ask Barclays.

Snowball's Chance:  Given that a Senator must raise $30,000 a week, every week for six years, just to run for re-election, is there even a remote chance of meaningful financial reform?

Slower Beats Faster:  Mortgage delinquencies are not increasing as fast as the were, but they are still increasing.  In January 2010, 10.25% of US mortgages were delinquent and 3.3% were in foreclosure – for a total 'non-current' rate of 13.5%.   That's only a 2% increase from December, but it’s a 22% increase y/y.  Between 5 and 7 million houses eligible for foreclosure have yet to be repossessed and put up for sale. Then there are the second liens, which are now seen as worth only 40 to 60 cents on the dollar, helping losses along.

Let's Make Renege on a Deal:  What do you call a Congressman who demands you include X in a bill before he will vote for it, votes against it after you include it and then lies about the whole thing?  Mr. Campbell (R-CA), for one.

Garbage In, Garbage Out:  Beijing's garbage – like China's economy – has been growing rapidly – abut 8% a year through 2008.  In 2009 it did not increase, it shrank ½ %.  Either they suddenly became ecologically conscious consumers, or they've cut way back on consumption.  Makes you wonder about those growth statistics.  Couple that with the sudden downturn in the Chinese economy's leading indicator index and you could loose a little enthusiasm for the 'China, China, China' mantra.

Jean Paul Gottcha: “If you owe the bank $100, that's your problem.  If you owe the bank $100 million, that's the bank's problem.”  Krugman is getting a lot of credit for substituting China for 'bank' and $2 trillion for a few million.  But if the renminbi is revalued up 20%, the price of oil will follow, and any export advantage the US gains will go right into the gas tank to pay for higher priced oil.

Health careful:   The GOP is dead set against Obama's Romney's heath care program.

Working Without A Net:  As of mid-2009, Bank of America was on the hook for derivatives valued at 2,221% of its net worth.  For Citi it was 2,527& and for Chase an enormous 4,562%.  But stand back – Goldman Sachs is sitting on derivative obligations in excess of 33,823% of its net worth.  I know, that's just 'notational' value.  But I've got a notational that it's going to matter one day.  Soon?

Choices:  Short of hyper-inflation it is impossible for a government to inflate its debts away.  So we either earn/grow our way out by adopting a very strict budget.  Or we have to write it off – bankruptcy for countries is called sovereign default.  Depressing, isn't it.

Delusion:  Michael Lewis claims that the entire south end of Manhattan suffered a case of mass delusion lasing 5 or so years.  Actually, most of the people on Wall Street were just smart enough to fool themselves and dumb enough to buy the lies they were fed by the crooks and thieves they worked for.  The only shared delusion was that they all thought they could get away with it.  Oh, wait.  They did.

Porn O'Graph:  Stocks are a good buy.  Or was that 'goodbye'?


Vitus Capital said...

On Michael Lewis... "The only shared delusion was that they all thought they could get away with it. Oh, wait. They did."

Great point . ML will have to come up with a new title. Or, we can go read other stuff to fig. out who/what to get mad at for spawning the crisis..

Anonymous said...

Jean Paul Gottcha:

As you may know from prior comments I dislike Krugram immensely . However, I think he is onto the real problem here. He's not the first, but he seems to be the most influential at the moment. Clusterstock disagrees as strongly as I agree with him.