Thursday, April 30, 2009

SAR #9120

Sometimes things are exactly what they seem.

On Reflection: It really should not come as a shock to discover that the US economy contracted at a 6.1% rate in the first quarter of the year. Nor should it be shocking that some folks are picking out one tiny uptick in consumer spending as a straw on which to base a market rally. Caution, objects in the mirror are closer than they appear.

The Epidemic: Seven police officers were assassinated in one hour in Tijuana, as the Mexican epidemic of drug violence continues with no cure in sight.

Dickens, or Here, Piggy,Piggy: From Geneva, WHO chief Margaret Chan says "It really is all of humanity that is under threat," while in New York "Stocks Soar To Highest Level Since Early February".

Perspective: Let's just pause a moment and ask ourselves if we really, really think a one party state is a Good Idea. We need at least two parties, just not necessarily the two we have. Maybe three or four - but as Krugman says, only after we get universal single payer healthcare.

Behind the Curtain: The Summers/Geithner PIPP is being sold as a way to bail out the banks but it is actually designed to bail out the hedge funds. Just as bailing out AIG was really aimed at AIG's counterparties, the PPIP is a way to help the hedge funds buy up toxic assets legacy loans for pennies with the risk going to the taxpayer.

Hard Data: Ever wonder what scientists mean when say global warming is coming and that it is dangerous? When they say we have to cut back on carbon dioxide emissions? Try this: No one can burn oil, gas or coal in their homes, cars or factories after 2024. Worst case, indeed.

Enough, Already: Unemployment rates rose in all of the nation's largest metropolitan areas for the third straight month in March.

Standard Standards: AmEx wants to extend an invitation to you to become continue to be a cardmember. All you have to do is send them certified copies of your state and federal tax returns for the last five years. Really.

Little Miss Sunshine, Incorporated: GDP is horrific today, but don't fret. "The worst of the contraction is past," and "we'll see positive growth very soon."

Stop the Presses: Paul Volcker says" The Federal Reserve is going beyond the traditional role of central banks here or abroad. At some point it's reasonable to ask should this particular institution, with its independence very well protected, be allocating so much of what is essentially government money."

But Wait: Only 23% of voters now identify themselves as Republicans. But then, only 30% called themselves Republicans in 2004 when Bush was re-elected.

Correction: If you continue to be befuddled by the money Washington is handing over to the bankers, let Sen. Dick Durbin (D-Ill.) explain it to you: "(Banks) frankly own the place."

Wednesday, April 29, 2009

SAR #9119

"I have no particular regrets." Alan Greenspan

Lifetime Guarantee: Not only have you probably bought your last gas guzzler, you've bought your last car. Actually, you've probably bought the last of a lot of things.

Stress? What Stress? Citibank, BofA and others are not so much stressed as simply lopsided, lopsided because the cure for their stress is to put some of the money from their left hand pocket into the one on the right side. Converting preferred to common stock is accounting, it is not raising more capital.

Just In Time: Don't look for improvement in the flood of foreclosures; it will get worse. The surge of alternative mortgages, from interest-only to option pay adjustable rate mortgages dating from 2005 - 2006 will start failing in large numbers in 2010.

Optimism: Predicting an unemployment rate of only 10.5% come December is as optimistic as can be believed.

Shiller Shallying: The Case-Shiller index for February is down 18.8% y/y, but for the first time since January 2007 the index didn't set a new record. Prices are still falling and will probably decline for some time. As the housing decline enters the year of the “Prime-Bomb,” ever more homeowners will flounder causing damage which is very hard to underestimate calculate.

Wrong Question: Instead of "Is America's Transportation System Sustainable?” the question should be "Is America Sustainable?" Same answer.

Ray of Sunshine: Research in Greenland now suggests that huge quantities of methane locked up in frozen clathrates are less susceptible to global warming than was previously feared. While methane emissions from wetlands and peat bogs is increasing, the danger from a massive release from clathrates has been downgraded.

Before and After: Original headline: "TV can drive away feelings of loneliness". Improved version: "Watching TV drives away feelings."

Street Value: In California, a bank foreclosed on three nearly-completed new houses. Rather than spend any money to finish the homes and try to sell them, the bank simply had them bulldozed.

If a Train Traveling 50 mph leaves... Given: Consumer spending generates 70% of US GDP. For at least a decade, much discretionary spending was credit based. US customers are vastly in debt. US customers are generally not credit worthy because of low wages, high debts, growing unemployment and gigantic house payments. It will take many years for the debts to be paid. A sustainable economy must be based on earned income. Question: How far must US GDP fall to reach a sustainable level? Write your answer on your Citbank Visa bill and send it to Vikram Pandit.

Take-Home Test: What do the vast majority of commercial real estate backed loans of the 2003 - 2007 vintage have in common? (a) Negative equity, (b) More debt than value, (c) Many will default, (d) The borrowers will file for bankruptcy, or (e) The Tooth Fairy will save them.

Light Beer: One of the "benefits" of mandating the use of bike helmets is that fewer people will ride bikes, thus cutting the number of bicycle-related head injuries. The percent per rider is the same, but the overall total is less. Research indicates that helmet laws are counterproductive and interfere with evolution.

'Never': In a couple of years, house prices will stop falling. They will never ever recover - at least in inflation-adjusted terms. 'Never' here is defined as "within our lifetimes."

Porn O'Graph: Leveling off?

Tuesday, April 28, 2009

SAR #9118

Has the democracy bubble popped? John Carney

How Will They Do That? According to Federal Reserve policy notes, the current interest rate should be -5%. In that very few folks, other than my Aunt Vi, would agree to giving you $100 on the promise that she'd get only $95 back, how can they accomplish this? Hint: Rhymes with Printing Press, Printing Press.

Six of One... Fox says it will air 'Lie To Me' instead of Obama's press conference.

Fatted Ox: Apparently the people of the world are saved from starvation - the IMF is going to print a new kind of money. Apparently on edible paper.

Half-Off is not a Bargain: New York City's tax revenues have decreased by half; its public services will follow.

Summerstime: Assistant Chief Cheerleader Larry Summers expects the economy to continue to decline, with “sharp declines in employment for quite some time." Krugman thinks Larry's a bit optimistic. And the Economist isn't too cherry either: darker days lie ahead. Despite the scale of the slump, no conventional recovery is in sight. Growth, when it comes, will be too feeble to stop unemployment rising and idle capacity swelling. And for years most of the world's economies will depend on their governments.

Daily Grin: Former Citi chairman Sanford Weill insists that he and his unindicted co-conspirators earn the immense sums they siphon out of the system. Straight face and all.

It's Later Now: The Republicans made fun of the Democrats wanting to spend some money on pandemic flu prevention. Why, that's as silly as worrying about hurricanes and storm surges. Why waste $870 million now when "we can deal with that issue later."

Say it With Flowers: Consensus is that someone (at the Times, if not Goldman Sachs?) is not best pleased with Little Timmy.

Slideshow: Commercial real estate prices are plummeting, down 21% y/y. The ride's just beginning.

My Way... Jay Bybee's explanation for facilitating the Bush administration's desire to torture was just this: He wanted to be a federal judge. And now he is. Works for me.

Strange Idea: How much would a house be worth if it was worth what it cost to build it?

Yes, But... Now that the treaty removing US troops from Iraq's cities is coming into force, it's time to renegotiate exceptions to the June 30 deadline. The US will be keeping combat troops wherever it wants, some by "exception" to the treaty, and some by renaming them "trainers" or civil action units or death squads.

Inside Out: As you suspected all along, "financial markets operate on the principle that, at our core, we’re all basically shit: selfish, self-interested creatures."

Get Smart: The only electricity use I can schedule is the dishwasher. I run the AC when it's hot, the lights at night, the TV when I want to watch it and so on. There'll have to be a large price difference to encourage me to set a timer to do the laundry.

Brothers Grimm: "Bank regulation by law is supposed to be carried out by the independent banking agencies without any political interference.” Good one!

Let's Try This Again! The idea behind the HomeSaver Advance loans was that Fannie Mae would give unsecured loans to delinquent homeowners to help them pay Fannie Mae for missed mortgage payments, magically bringing the mortgages current. What could possibly go wrong? Everything. 98% of the $464 million has been lost. Don't worry, they've got a new plan.

Déjà vu: In the next year or so, shoddy corporate loans will reprise the role originally played by subprime mortgages, as companies begin a wave of defaults on junk bonds and iffy loans.

Porn O'Graph: It don't take many folks not to make nothing.

Monday, April 27, 2009

SAR #9117

People used to die of consumption; now whole economies do.

Bull, Market: Insider selling is reaching a crescendo. Directors and senior officers have dumped $353 million worth of stock in this month, 8 times more than they bought. I don't usually sell stock I think is going to increase in price, but I'm an amateur.

Voices of Experience: Veterans are again warning that military adventures in Afghanistan are doomed. American veterans, Russian veterans; even Rudyard Kipling.

Mystified: Jamie Dimon calls TARP money "a scarlet letter." Why is he still running our bank? If the firm would have failed without taxpayer money, then the taxpayers should own every penny of profits until we are paid back. You broke it, I bought it, it's mine. Capitalism.

Dieting : Farmers around the world are cutting back on potash because its price has skyrocketed - which will result in higher prices for food, either because they use the fertilizer, or because they don't.

Market Values: AmEx reported big and growing losses on its credit card operations and dropping spending by their cardholders. It stock went up. Can't wait until the write-offs reach 10%.

Opening Salvo? "Emanuel Says Obama Has '100% Confidence' in Fed Chief Bernanke."

Universal Salvation: The government said that some distressed banks will need to raise more cash, but that none will be allowed to fail, and "government must do whatever is necessary to save them."

Inquiring Minds: The US deficit will be over $2 trillion & it will need to be financed domestically - nobody nowhere's got an extra trillion or two. Explain how that's going to happen without the Fed monetizing the debt and pumping up inflation.

Dominoes: Kazakhstan's largest bank is no longer trying to repay its $11 billion in foreign debt. Next?

Along Came a Spider: An Air France plane enroute non-stop from Paris to Mexico City was refused entry into US airspace and force to divert to Martinique. It seems journalist Hernando Calvo Ospina was on board. , He's on the US no-fly list. Paranoia are US.

Spin: "Although home resales were down in March, one can make a reasonable argument that resales are bottoming ..." Also, new residential homes sales showed a 30% y/y decline and a 75% drop in sales from the peak. Been down so long, looks like up to me.

Quiz: Which system is better (a) capitalism (b) socialism (c) communism (d) none of the above. How come these things never include (e) fascism or (f) theocracy ?

Stupid is as Stupid Does: Canada claims that under NAFTA California is not allowed to mandate lower carbon fuels. Under Clinton the US apparently signed away its sovereignty and called it a good thing. Meanwhile, Dow is suing local governments in Canada for their pesticide bans (and they don't think Michelle should grow organic, either.)

3 Dog Night: Spain's unemployment rate has reached 17.5%, the number of jobless having doubled in the last year. But I kind'a like the music.

Cheerleaders: The overall health of the economy is a non-sequitur, all that matters is that traders can make a buck today - never mind that the entire system is going down the drain - all that matters is trading profits. We cannot consume our way to prosperity, we have already devoured ourselves. The inflation/deflation argument is but mental masturbation. We really are in uncharted waters and there is a hole in the hull. The only question is which poison will kill us first. Those who claim they will save us are the ones who poisoned us in the first place. Ah, but a loose translation.

A Dump is Also a Location: The value of the commercial properties underlying about $1.2 trillion in securitized fantasies has fallen 35 - 50% for those falling due in the 2010-2013 time period. It's called 'credit exposure'. Falling is a good description.

Porn O'Graph: The build-up.

Saturday, April 25, 2009

SAR #9115/Weekender

When's the credibility/credulity bubble going to pop?

Tempus Fugit: Two weeks ago, Mr. Geithner told us all of the banks were just swell. Last week , "the vast majority" were okay. Today the Fed stands ready to "save" any that failed the stress test. Next week all but Citi and JPM will be beyond help....

Party Pooper: US manufacturing forgot to take part in the rally as durable output fell 0.8% in March. New 1st quarter orders were down 27% y/y.

Proof: Bush, Cheney & Company wanted to invade Iraq, but Iraq had no connection to 9/11. So, remembering that the North Koreans tortured Americans to get them to make false confessions, they had people tortured in order to get them to confess that Sadaam supported Al Qaeda, had WMD, financed and directed 9/11. All of which they knew were not true.

Rebound? Once the economy stops falling, where does new demand come from and how do we pay for it?

Say Goodnight, Gracie: First China was buying up oil leases. Then African land. Lately its been reinvented SDRs. Now China says it has increased its gold holdings by 75% in the last few years. Talk about yellow peril.

Trouble, Dude: This spring, teenagers' spending is off 14 percent. Must be at your house.

Reconcile: Javed Iqbal was sentenced to over 5 years in jail for a TV broadcast in NYC and "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press..."

Asked and Answered: Martin Wolf: "Is the worst behind us?" No.

Junior G-Men: When I was a kid you spied on the neighbors, now instead of watching them, you watch what they're watching. Big fun & a marketable skill.

Another Scam: Congress is moving towards a bill that would give those who trade in their old clunkers $1,500 to $5,500 as a discount on a new car. This will act to drive up the price of clunkers and delay the purchase of new cars until the bill is passed. Then a lot of perfectly good cars that have been paid for and have already polluted the skies in their manufacture will be replaced by unpaid-for cars that will cause immense new pollution in their manufacture while running up billions more in Federal deficit.

Job Security: Apple is laying off 1,600 'geniuses'. Most of my friends are safe

Because: "America is more than a collection of policies. We are, or at least we used to be, a nation of moral ideals. In the past, our government has sometimes done an imperfect job of upholding those ideals. But never before have our leaders so utterly betrayed everything our nation stands for. "

Discuss: "US Existing-Home Sales Fall Despite Continued Price Declines". So, since interest rates are way low, what's the problem, why aren't you out there buying a house?

Recursive Justice: Obama is edging away from the Nurenberg defense, as public disgust forces him to shift his stance on waterboarding and the investigation of those who authorized it. Will he appoint a special investigator to investigate what's going on in his name at Bagram today, too?

Self Adjusting: Russia says there is no reason to intentionally cut oil output today because there will be a serious shortage in two to three years, no mater what.

Slow and Steady: Atmospheric CO2 continued its rise last year, reaching 386 ppm - the highest in over 600,000 years. Concentrations of atmospheric methane (25 times worse than CO2 as a greenhouse gas) resumed its rise after reaching a 10 year plateau.

Porn O'Graph: The 50 States of unemployment.

Friday, April 24, 2009

SAR #9144

There is a very thin line between inflation and theft.

Economics 101, Day One: A corporation must inform shareholders of all materially significant financial data. It's called fiduciary responsibility, it's a matter of law, and Bernanke and Paulson are not included in an exculpatory footnote.

Nutshell: "George W. Bush, Dick Cheney, Donald Rumsfeld and a host of other top officials deliberately, willingly, and with malice aforethought, established a system of interrogation using brutal techniques that they knew were against the law."

Six of One... GM will shut most of its facilities for a minimum 9 weeks this summer. Sumer will begin in mid-May, just like school break. Maybe teh UAW will run a day-camp.

Field of Play: If it was just sub-prime, we'd be near the bottom. It's not, we're not. Option Alt-A and Prime each make the former look like tiddlywinks. California (where fads start) now is seeing new records set as prime loans collapse. Prime is turning out to be ground chuck.

Misfortune's 500: Fortune 500's profits have dropped 85% from 2007. One, Exxon Mobil, produced over 45% of the net profits of the whole group last year.

Pre-Need Alibi: General Guns-and-Money Petraeus has started laying the groundwork for acceptance of his alibi for screwing up US in Afghanistan even worse in the coming months.

Prognosis: Auditors report that nearly one-quarter of publicly traded companies may not live out the year.

Let the Guessing Begin: Make me an offer on banks' post-stress-test needs. Okay, we've got $1 trillion from the agency down front, do I hear $2, who's got 2, 2 anyone...

One Damned Thing... Put 'Caribbean tsunami' on the list.

Explication: Paul McCulley of PIMCO : "In order to stop this downward deflationary spiral, we need the political will to socialize losses from which privatized gains have already been made." Translation - I'm done. You can get the bill now, leave a good tip.

Truth? A national study found that more than one in four kids drop out of high school. Makes ya proud.

Bang the Drum: Clinton says Pakistan's government is abdicating control to the Taliban. She apparently sees some fine distinction there. The Pakistani government has not abdicated, it has but recognized reality - a strange concept for a government. War there, war soon.

Charge It: Capital One expects US credit card losses to soon exceed 10% of the outstanding balance. Outstanding isn't the term I'd have used.

Shut Up and Listen: We don't listen thoughtfully to the other guy's point of view often enough, even when we should. Mr. Franks is a socialist-democrat or a democratic-socialist or something like that; he's also pretty thoughtful. Go read.

The Little Engine that Did: From 2001 to 2005, housing provided 30% of GDP growth and 50% of employment growth. What time's the next train?

Breaking Broken News: There are a lot of disgusting things about Fox News, starting with the obvious - it's not news. But the worst thing is people watch it. No one ever went broke underestimating the American public.

What's Wrong With This Picture? From day one, the TARP program depended on Wall Street acting responsibly, on their own, without adult supervision.

Porn O'Graph: Bank capitalization and derivative exposures.

Thursday, April 23, 2009

SAR #9113

Anything that makes a few rich and many poor is a crime.

Wish I'd Said:
Stop the madness - starve the beasts, start the revolution.

Migrant Workers: The Taliban, recently arrived from their homeland in Afghanistan where they had lost their jobs, are settling in and becoming successful in their new homeland, without abandoning their traditional culture.

None of the Above: Do you worry about deflation, hyperinflation, global climate meltdown, global financial meltdown, recession, depression, peak oil or more summer reruns? Maybe you should join Solari in worrying about a Slow Burn.

Full Faith, Half Credit: Credit traitors traders are shorting the bonds of major US banks, betting that the banks will default on their paper because the US government's ability to support them all forever is limited. Haven't heard Bernanke nor Geithner's cure for this, but I suspect it's to print more money.

Now You See It: The IMF said the bailout of British banks will cost the taxpayers 13.4% of the country's GDP. Then it un-said it.

Proportion: What ratio would Mr. Cheney use in justifying torture? One bit of good information for every 10, 100, 1000 or 10,000 sessions ? Does it matter if it's done with dogs, tasers, whips, slaps, water-boarding? Is there a conversion factor? Do three dog attacks equal one "walling"? What's an acceptable 'success' rate? Is it above the level of chance? Can I quote you?

Recycling: Economist, March 6, 1999: "Drowning in Oil." Newsweek, April 20, 2009, "Cheap Oil Forever, Why Prices Will Keep Falling."

Clarification: Common Sense, Thomas Hoening, Simon Johnson, and Joseph Stiglitz - among others - advise that breaking up the insolvent big banks is the only way out of this particular woods. So why don't we do it? Because it is not in the narrow interest of a few Wall Street Banks who dominate the discussion in this country and control Washington.

Forest/Trees: Which is more revolting, that our leaders permitted torture or that they seem to have taken sadistic pleasure from encouraging it?

Changing Places: Fannie and Freddie report that the number of prime mortgages 60 days+ delinquent rose to 743,686 in January, from 497,131 in December. The number of non-prime delinquent loans is 485,365. Troubling, isn't it, the way being unemployed affects your credit rating.

Believe It or Don't: Japan has become a net importer as its trade surplus dropped 99% in March.

Interesting Taxes: Government safety-nets are costing more, tax receipts are AWOL, the Federal budget is already a trillion in the red and there is no joy in Mudville, for the folks have got to pony up another $1.5 trillion. And that's just this year. Scouting reports for next year are not encouraging.

Fish and Foul: The economic situation may stabilize. That's not the same thing as 'happy days are here again.'

Guesstimation: Population growth and the use of fossil fuel energy are direct correlates. Pretty soon the availability of fossil energy is going to suddenly decrease quite sharply. In 500 words or less, what does this imply for population size? Usual prizes.

Information Overload: The headline reads: Iraqi militia kill gays with anal glue torture. Tacky.

Eye on the Prize: Federal examiners held regional banks to a much higher standard than they did the big insolvent pets who've been getting all the moolah, by not questioning the make-believe values the big guys put on their toxic crap legacy loans, while randomly deciding that the smaller banks individual loans will decay 20% or more.

Porn O'Graph: Oil prices, GDP, and recession.

Wednesday, April 22, 2009

SAR #9112

Facts do not change beliefs; nor vice versa.

Real Trouble: Yes, Caterpillar and Dupont are having losses, but look: Coca-Cola profit dropped 10%. It's getting serious out there.

We've Only Just Begun: People are circulating petitions to impeach Judge Jay Bybee for his defiance of the constitution and common decency in giving legal cover to torture. When do we start the ones to indict Bush?

Toxic Numbers Quiz: What is the next number in this sequence: $1.4 trillion, $2.2 trillion, $2.7 trillion, $4.1 trillion, ________ .

Greed Is Good: The reason Washington can't get the banks to lend is that the banks know there are going to be some real bargains to scoop up as the depression deepens , so they're saving their your money to make Big Bucks.

Roller Coaster: The US trade deficit has narrowed sharply, as US customers keep the plastic in their pocket. Of course Japan and China are not thrilled about this. The problem is that the US taxpayer cannot start buying and borrowing again without a significant and real increase in the median wage. Of course Wall Street and the Fed are not thrilled about this.

Summer School: For those (like me) who still don't understand that derivatives are our friends, here's another explanation of these strange beasties.

Deficit Spotted: The sun has a serious lack of sunspots, only a few solar flares, and is the dimmest it has been in a century - all of which have astronomers baffled. If it lasts, it could counteract some of the man-made global warming and provide an opportunity for us to mend our ways. Nah, never happen.

Bank Profits 4 Dummies: A do-it yourself guide to prettying up a balance sheet.

Really, Really Bad Idea: Facing pressure to crack down on crime amid a record budget deficit, Oakland is joining other U.S. cities that are turning over more law-enforcement duties to private armed guards. Blackwater?

Spoilsport: After housing prices finish going down, down, down, they may just lay there, exhausted.

Yeah/Boo: Increasing sea ice in the Antarctic has been cheered by some as evidence that global warming isn't global. Scientists, on the other hand, say that the increase in Antarctic sea ice is a result of the Ozone hole. I know you think we beat that one back in the 80's, but it is a long, slow slog; we've slowed the rate of growth of the ozone hole, but it's still there, still dangerous. Just like CO2.

Viva la difference: Former IMF chief economist Simon Johnson says the difference between the USA today and a failing Banana Republic is that there were sufficient resources to rescue Banana Republics.

Off the Range: Another FRB President is wandering around, sayin' stuff. Dennis Lockhart, President of the Atlanta Federal Reserve Bank, warns that the worsening commercial real estate market is a serious threat to progress towards an economic recovery. If all of these regional FRB guys are so damned negative, how come Bernanke keeps getting unanimous votes?

Pot vs Kettle: Newt Gingrich claims the Democrats are undermining traditional marriage by advocating marriage for gays. Gingrich feels marriage should be limited to those who have been divorced less than three times.

Stressing the Positive: Tiny Tim says the vast majority of US banks are healthy. Only those he's spent $750 billion rescuing are zombies. But he has a plan. See the illustration.

Fulcrum: An IMF analysis shows that when a nation's debt to GDP ratio reaches 60%, the probability of that nation slipping into a deflationary black hole approaches 100%. The US budget's predicted shortfalls will be enough to put the US over the tipping point.

Porn O'Graph: House that again?

Tuesday, April 21, 2009

SAR #9111

There are no perfect answers; I'd settle for plausible.

Hat Trick: Bank of America made a profit by selling off an asset - shares of China Construction Bank - and by taking a $2.2 billion credit because their bonds are rated less and less likely to be paid. And, of course, they got gazillions of bucks from the taxpayer.

Turf: Does the big guy on the block have any idea that his days are numbered. And its a reasonably small number...

Blagojeviched: A wiretap caught Jane Harman, D-Cal, telling a suspected Israeli agent that she would lobby Justice to reduce espionage-related charges against two officials of the American Israeli Public Affairs Committee, the most powerful pro-Israel organization in Washington. In return it was suggested efforts would be made to promote her to chair the House Intel committee. They have no shame, they have no common sense. Best question - in that this happened a few years back, why is it being leaked now?

Accessory: If your next new car comes with a loan, it'll also come with an engine shut-off device. Miss a payment and Snidely can disable your car from the comfort of his computer.

Conjugation: As temperatures approach a global 2.5ºC rise, heat stress on forests will cause a reversal in their role as "carbon sinks" and trigger a release of vast amounts of carbon dioxide. From carbon sink to carbon sunk.

Comming Events: The good news is "House Prices Are Finally Approaching Fair Value." The bad news is that it will take until 2011 and the downward drop will overshoot by at lest 10%.

Excellent Question: 'What Good Are Economists Anyway?'

Pockets: I put my money on the desk. A twenty, two $5's, a $1 and 34 cents in change. $31.34. Then I put the $20 in one pocket and the rest in another. A few minutes later I put the money back on the table and counted it. $31.09. Lost a quarter. Funny, when the financial giants do this they somehow end up with more money.

Strengthening the Economy: You'll be proud to learn that Goldman Sachs is using your tax dollars to sue a website that criticizes them. No, not us - but we could use the publicity.

Say It Isn't So: Obama is gathering a bunch of the silverbacks in an attempt to find ways to cut $100 million from the budget. The budget deficit is reported to be $1.9 trillion. If it takes them an hour to figure out the $100 million in savings, it'll be a net -$128.3 million for the hour.

Rumors & Gossip: "Stress test results leaked, everybody fails." Who knows, maybe it's just a trial balloon. Or ballooney.

Splitting Hairs: Krugman points out that part of Ireland's problems stem from the fact that "In Ireland you had key government officials with close personal - and, in some cases, financial - ties to the people inflating the bubble. And there are complaints that despite the crisis that hasn’t changed." In the US it's the other way around.

Race of the Bottoms: The Baltic Dirty Tanker Index has caught up with the Baltic Dry Index; it now possible to charter a tanker that cost $70,000 a day last January for less than $8,000 a day now.

Wait, There's More: American International Group on Monday says it’s reached a pact with the U.S. Treasury to swap classes of preferred shares in a deal that could give it access to nearly $30 billion in funds in return for some limitations on lobbying and compensation . Perhaps that should be 'More is Blackmail.'

Porn O'Graphs: A cornucopia of depressing charts.

Monday, April 20, 2009

SAR #9110

The pendulum swings.

Take A Memo: Khalid Sheikh Mohammed was waterboarded 184 times in a single month. These acts of irrational sadism were filmed, and the videos were delivered directly to the White House. No wonder Bush choked on a pretzel.

Piracy: Redeploying Seal Team 46 to the real Heart of Darkness.

Appointment, Not Anointment: The White House stands behind Rattner as Auto Czar because "he's not likely to face any criminal or civil charges..." Obama keeps selecting the same sort of people - rich, powerful, shady grifters. This one seems to have paid his taxes.

Over There, Too: German wholesale prices fell nearly 1% from February to March and are down 8% y/y.

Reprise: We've noted this before, but it's worth repeating every time they assert it: The Federal Reserve doesn't have to tell the US taxpayer how it spent $2 trillion of public money because it is a private bank. As such it has no obligation to tell the public anything at all about what does with our money.

Good Question: "Why Are We Cutting Public Transit Funding?"

Let Me Count the Ways: Stiglitz & Bilmes' new book starts: "By now it is clear that the US invasion of Iraq was a terrible mistake." We all know that, but the enumeration goes on and on and might well serve as a cautionary tale. Not much plot, terrific character development.

Blabbermouths 'China Says U.S. Needs Adult Economic Supervision'

Another Question: Would the economy run into demand constraints even with unlimited supply? Is there a biologic/neurologic limit to wants, a limit to how much 'new' can humans tolerate?

Enlightenment? (A) The Bank for International Settlements says there are about $700 trillion in outstanding derivatives. (B) Global stock markets total market capitalization is about $30 trillion. Somehow I'm supposed to believe that A is okay and not a threat to B because (C) the $700 trillion is a make believe number, the real number is a lot smaller. But (D) No one has the faintest idea what it really is. Or maybe I didn't understand the explanation...

Point of View: A nurse who secretly filmed the neglect and ill-treatment elderly patients were receiving has been fired from the hospital for misconduct. She took time off her duties to take the pictures.

Now and Then: The bustling economy of the early part of the decade was based on our spending our mortgage equity. We don't got none no more.

Advice: Don't invest in things that will only be profitable when and if the economy returns to normal, unless you live in Oklahoma. Also, it's quite possible to live on less money as long as you spend less money.

Homestead Act II: An interesting suggestion on how to put the stimulus money to good use.

Bonanza: Last fall, VerSun Energy opened a 110 million gallon a year corn ethanol refinery, one of the largest in the country. VeraSun lost about $500 million in 3Q09. Two months after opening the refinery, designed to run 24/7, it closed. Make an offer.

Porn O'Graph: We've got 1.6 of everything, in inventory.

Saturday, April 18, 2009

SAR #9108/Weekender

Human advances have mostly resulted from desperate acts of trial and error.

Wish I'd said: The Obama administration’s plan to fix the U.S. banking system is destined to fail...“All the ingredients they have so far are weak, and there are several missing ingredients,” Stiglitz said in an interview. The people who designed the plans are “either in the pocket of the banks or they’re incompetent.”

Now They Tell Me: Billionaire Jim Rogers "Diversification is something that stock brokers came up with to protect themselves, so they wouldn't get sued. Henry Ford never diversified, Bill Gates didn't diversify. The way to get rich is to put your eggs in one basket, but watch that basket very carefully. And make sure you have the right basket. You can go broke diversifying. Ask anyone who's diversified in the last three years. They've lost money."

Diagnosis: California's real problem is that it is the largest economy in the world that cannot print its own money. Yet.

Myth: Is there any truth behind the claim that 'higher income individuals' create jobs, invest in new business and innovate? As far as I can tell, they take the money and run. New businesses, new jobs, and innovation mostly seem to happen in small run-down buildings and garages, especially garages.

Discuss: "This Market Is Ridiculous" Essays, please; compare and contrast with other markets, 2500 words. Usual prize.

Now You See Them... Among the brand names that will probably soon go away - besides Chrysler - are Crocs, Borders and The Hartford Steam Boiler Inspection and Insurance Company.

Words, Words: Citigroup surprised everyone and managed to report a profit, even though it ended up with a negative EPS. And the market applauded. Think what would have happened if Citi had actually made a profit.

Question & Followups: Did the twenty-year expansion of the US financial system accomplish anything productive? How much of Wall Street's supposed productivity was an illusion? Did these folks add any value at all?

Paradigm: Fiat, like the US Governement and everyone else involved, wants to solve the auto crisis by squeezing the workers. If they can lower the average cost per worker to say $3.82 and hour, who is going to have enough money to buy one of the cars? Is the solution to our massive household debt the further pauperization of the worker? Apparently, even Best Buy refuses to learn from Circuit City. Best Buy is cutting knowledgeable senior sales associates' pay by 25 to 50%. Smart.

Junkyard Dogs: About 1 out of 3 foreclosed homes has been damaged to the point it no longer qualifies for a mortgage. Maybe that's what some 600,000 foreclosed houses are not on the market.

Scare Tactics: Whenever you see an article that says, "The future cost of Social Security and Medicare is $47 gadzillion dollars... " Stop. The cost of taking care of old folks is going to go up a bit. We'll pay it. Relax.

Smoke, Mirrors: Citigroup discovered that the more unlikely you are to make a profit, the less your bonds are worth. If you ruin your credit sufficiently, you can book the loss as a gain and claim a profit. Don't ask me, it's America.

Porn O'Graph: Job losses on parade.

Friday, April 17, 2009

SAR #9107

"Don't count your recoveries before they're hatched." Paul Krugman.

As Goes Wal-Mart... CEO Mike Duke says Wal-Mart's customers are under a great deal of stress, fear unemployment, and are paying with cash - which leads him to believe the recession will not be V-shaped and a quick recovery is not likely. But what's he know, he's only using his 140 million US customers as a basis.

Trust Me. Mr. Bernanke, who has yet to pull the rabbit out of any of a dozen hats, says that he can wave his magic wand and make inflation disappear. Don't believe him.

Book Bucks: Research shows that charter schools do only a slightly better job than public schools academically. But they cannot do it at anywhere near the cost of the public schools; most fail financially. So much for the efficiency of the profit motive in education, which was the basis for the privatization propaganda.

Definition: Optimist - one who believes our civilization may not collapse outright, but will only gradually fade away, like the Romans.

Preview: Barry Diller, who has made a buck or two investing, says the chaos and destruction in the finance sector has yet to invade commercial real estate, corporate debt, over-leveraged acquisitions and re-capitalizations. But it will.

IOU an IOU: Arnold, a known deadbeat, wants to borrow some more money and promises that if he can't pay it back, his Uncle - the well known counterfeiter - will.

Losses Loom: With foreclosures up 46% y/y as the indulgent 'moratorium' expired, it will take about six months for the losses to show up on bank balance sheets. This year's expected 3 million foreclosures will show up somewhat sooner in a neighborhood near you.

Banks Against America: Mr. Bush was wrong, the true axis of evil is centered on Wall Street, not Iran.

Stirred, Not Shaken: The last time the earth warmed and the polar ice melted, the oceans rose nine feet in a few decades. The report suggested this a was "a distinct possibility within the next 100 years." Like so many things, most of them unwelcome.

Conundrum: General Growth Properties generally didn't grow. The nation's second largest mall owner (200 malls) filed for bankruptcy.

Lonely Star: Texas's Governor Goodhair Perry says Texas has the right to secede, and should do so. Fine, but they've gotta take all the Bush family with them.

Eager Beavers: NSA has been intercepting American's private e-mails and phone calls on a scale far beyond the 'legal' limits set last year. These warrantless violations of the constitution are not illegal acts, according to NSA, are but the result "unintentional overcollection".

Shiftless Pikers: JPMorgan reports that prime mortgage delinquencies could cost them $500 million in write-offs in the current quarter. Seems that, unexpectedly, the unemployed can't keep up their payments.

Porn O'Graph: Sales on Troubled Waters

Thursday, April 16, 2009

SAR #9106

The death spiral for the oil age has begun.

Remember the Alamo: "The Treasury secretary, who oversees the IRS, didn't pay all his taxes. Neither did five other top nominees for the Obama administration, or their spouses."

Quote, No Comment: "Goldman Hid $1.3B of Losses in 'Orphan Month'"

Consumers Don't Take Hint: Dr. Ben and Tiny Tim have applied massive injections of money into the financial system, yet the consumers over in the real economy - a term that should suggest something - continue to not consume and not borrow and not to spend. Silly idiots are paying off debt. Didn't they get the memo? Maybe we should quit trying to save insolvent banks and make some effort to save the customer.

The End is Dear: The cheap water era is ending in California, as increases in price fail to increase supply. You'd think the stuff was limited, like oil.

Shortcut: Go read Ilargi's intro at today's Automatic Earth, so I don't have to repeat it here.

Propaganda Alert! The Heartland Institute, a global climate change denialist group, has issued a press release denying global climate change. This is not news, it is not science. But it will play both on TV news, especially FOX.

Since Forever: US industrial production has fallen 13.3% since the recession began in 12/07. This is the largest percentage decline since VE Day, back when the US had industries.

Most Likely to Suceed: To prevent the worst possible result from our current carbon emissions/global warming actions we must greatly reduce economic activity, reduce the average per-person carbon footprint of all 7 billion of us to that of an African villager, and reverse the positive feedback loops we have set in motion. The only one we've even started is the reduction in economic activity. Thus, absent those steps, none of the rest of which will ever happen, the best we can hope for is a 10-15ºF rise in US temperatures, five plus feet of sea level rise, the US Southwest a permanent Dust Bowl, and acidic seas bereft of life. That's the best we can hope for.

Grinding to a Halt: Mortgage applications fell a seasonally adjusted 11% last week, even as prices continued to fall and mortgage rates dropped.

Asked & Answered: "Are the good times really over?" Yes.

Make Haste: We are going to run out of things - things like oil, wood, water. Maybe doom isn't around the corner, but neither are substitutes for oil, wood, and water. But if we don't find replacements for these things before they're gone, what word will we use to describe what happens next?

Milestone/Millstone: In February, China reduced its holdings of US debt by $13 billion. Has China decided to stop buying US assets? Or are they broke and just can't? Either way, down's down.

Evergreen: House prices continue to drop, mortgage failures up 24% - hit new high, Franco is still dead and credit card charge-offs continue to rise.

Discuss: The Fed is printing money to cushion the economy's crash. More money, less production leads to higher prices for the fewer goods. Can Bernanke catch the falling knife? Pick either the affirmative or the negative and submit a coherent rant. Usual prizes.

Sick 'em: The US spends more than twice as much on healthcare per-person than any civilized country. The French not only have a superior healthcare system, they spend more on social programs than the US does - from universal childcare to tuition-free higher education. And they get good results. They just don't pay 30% of the costs to insurance companies for doing unnecessary paperwork. Sacrebleu.

Porn O'Graph: What April 15th buys.