Tuesday, September 30, 2008
Monday, September 29, 2008
Rarely do I find mys elf in agreement with Krugman
But after the brilliant House Vote (not!)
But what are we to expect of Congress?
In a political year - politics are more important than the economy ?
OK, we are a banana republic - Paul Krugman - Op-Ed Columnist - New York Times Blog:
"So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.
As a friend said last night, we’ve become a banana republic with nukes."
Friday, September 26, 2008
Core of the North American Craton.
Rocks May Be Oldest on Earth, Scientists Say - NYTimes.com:
"A swath of bedrock in northern Quebec may be the oldest known piece of the earth’s crust."
Nuvvuagittuq supracrustal belt,Ungava Peninsula, North East Coast of Hudson Bay.
A few degrees East of Due North of here.
Should be centered here
May be 4.28 Billion years old.
This message has been sent to the DNC
Farce of Congress on the "bailout"
I hereby call on all members of Congress to resign
Neither party deserves to lead or even participate in the current situation
We need, as Jefferson foresaw, a "republican" Senate, and a "democratic"
Currently we have neither, just a bunch of political hacks with open pockets
I say fie on both parties, both houses
Of course my message got a serious read
So far, no reply from Republicans, but did get this from Democrats :
From: Joe Biden firstname.lastname@example.org
Date: September 26, 2008 5:30:10 PM EDT
Subject: Tonight's debate
Now that John McCain has decided to participate in tonight's debate, don't forget to tune in and watch at 9:00 p.m. EDT.
This is a great opportunity to come together with your friends and family and hear Barack's plan to take our country in a fundamentally different direction.
But before you watch tonight's historic debate, there's something just as important that you can do right now.
I'm about to make a big request -- and I wouldn't ask if it weren't so important.
In the final weeks of this campaign, supporters like you will be traveling to the nearest battleground state to do the kind of work that will decide this election -- knocking on doors, talking to undecided voters, and getting out the vote on Election Day.
Will you sign up to travel to a battleground state and spend one, two or even three weeks helping to win this election?
Face-to-face contact with voters is the single most effective way to deliver the votes we need to win.
It may be a tight race, but we have something John McCain doesn't: a whole lot of passion and enthusiasm for change. I've seen it in the towns and cities I've visited in every corner of the country.
But it's up to each of us to make sure we turn this energy into votes on November 4th.
Don't let this election be decided by political stunts or distractions. Join your fellow supporters, roll up your sleeves, and help carry this campaign to victory.
Make a difference by traveling to a state where the race is extremely close and help put us over the top:
Supporters like you are the only reason we've come as far as we have.
Now, we're counting on you to get us the rest of the way.
Thanks for everything you're doing,
Nice to be listened to
Throw them all out, sweep the Capitol clean and start new
Get "Real" republican Senate - wise men (and women) with a check on a democratic House.
This game of election year chicken is just plain chicken-shit.
Hellfire and Damnation on both "parties" and all of the influence peddlers.
Talks Implode During a Day of Chaos; Fate of Bailout Plan Remains Unresolved - NYTimes.com: "
“If money isn’t loosened up, this sucker could go down,” President Bush declared Thursday as he watched the $700 billion bailout package fall apart before his eyes, according to one person in the room.
It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington."
Wednesday, September 24, 2008
William H. Gross, the manager of the country’s largest bond mutual fund, has a solution for that: He is offering to do it free."
Financial crisis coming so close to the election ... Perfect Storm
Politicians given a trainload of red meat just in time to make an impression in the press.
And we hardly hear anything about the Presidential Campaigns
BTW - right now, it's Ron (abolish the Federal Reserve) Paul
A bit later - at least one good suggestion : gains from handling assets (selling at a profit) should be used to reduce debt, not given to politicians for more spending.
Best for the government to buy at market price, wait, then sell at a better price later.
Buy low, sell high
BTW Warren Buffett is saying the same thing right now
Economic Scene - Issue Is Payback, Not Bailout - NYTimes.com:
"The first thing to understand is that a bailout plan doesn’t have to cost anywhere close to $700 billion, so long as it’s designed well. The $700 billion number that you see everywhere is an estimate of how much the government would spend to buy deteriorating assets now held by banks. Eventually, the government will turn around and sell these assets, for a price almost certain to be greater than zero. So this $700 billion is very different from $700 billion spent on a war or on Medicare."
"More than a year before it 'broke the buck' with losses that spread chaos through the financial system last week, the Reserve Primary Fund began loading up on a type of short-term debt that the money-market fund had long shunned.
Even as Bruce Bent, the fund's founder, told shareholders in a July 2008 letter that the fund had 'unwavering discipline focused on protecting your principal,' Reserve was gobbling up commercial paper. By May of this year, 54% of the fund's holdings were in commercial paper, up from 0.9% about a year earlier. Exposure to drab but safe certificates of deposit plunged.
While the run on money funds that was ignited by the fund's losses has eased, Mr. Bent's failure to follow his own advice on the virtues of conservative investing is having catastrophic consequences for Reserve's money-market funds, managed by Reserve Management Co.
The firm lost 90% of its assets, which had fallen to $8.5 billion as of Monday, down from nearly $86 billion at the start of September, according to iMoneyNet Inc. Reserve faces at least two lawsuits over its disclosure of losses on soured Lehman Brothers Holdings Inc. securities and indefinite suspension of further redemptions."
"The de facto nationalisation of Fannie Mae and Freddie Mac made implicit guarantees explicit and doubled the US government’s gross liabilities, to just over 80 per cent of gross domestic product. This is substantial, even compared with highly indebted Europe and Japan.
A huge budget deficit is set to raise federal debt further. Among other rescue measures, the $85bn cost for the American International Group bail-out and the $700bn for the proposed fund to buy up toxic assets will weigh on federal debt. Yet the overall cost of the crisis to US taxpayers is not known, nor is there any alternative to government intervention at this juncture. An enormous bill looks likely.
In the long run, however, the net impact on federal debt will be much smaller than the gross sums, as few of the assets now purchased will prove worthless. Nevertheless, government finances will be more constrained than previously expected. Proposed tax cuts and spending plans by the presidential candidates look more implausible by the day."
Tuesday, September 23, 2008
Goldman to Raise Capital, With $5 Billion From Buffett - NYTimes.com: "Berkshire Hathaway, the conglomerate run by Mr. Buffett, will receive perpetual preferred shares in Goldman, said the spokesman, Lucas Van Praag. The preferred stock will pay a 10 percent dividend.
Goldman will also issue $2.5 billion in common shares.
In addition, Berkshire Hathaway will receive warrants to buy $5 billion in common stock at a strike price of $115 a share, which are exercisable at any time in a five-year period. Goldman shares closed Tuesday at $125.05, up $4.27."
Maybe more "rational" activity on the street - at least for a while.
Shift for Goldman and Morgan Marks the End of an Era - NYTimes.com:
"Goldman Sachs and Morgan Stanley, the last big independent investment banks on Wall Street, will transform themselves into bank holding companies subject to far greater regulation, the Federal Reserve said Sunday night, a move that fundamentally reshapes an era of high finance that defined the modern Gilded Age."
Then there are the "little guys"
From today's WSJournal:
"Don't tell these guys that the investment-banking model is finished.
While the biggest U.S. players are exiting from the pure-play investment-banking scene, about a dozen smaller investment banks remain. Analysts expect them to survive and keep the stand-alone business model alive, albeit at a much more modest level than on Wall Street.
Institutions, such as Piper Jaffray Cos., Minneapolis; Raymond James Financial Inc., St. Petersburg, Fla.; Thomas Weisel Partners Group Inc., San Francisco, and Jefferies Group Inc., New York, have a different business strategy that relies less on risk-taking than that of the more-prominent investment-banking firms.
Some analysts suggested that these boutique investment banks resemble in some ways the businesses that Goldman and Morgan Stanley had 25 years ago, when they were much smaller private partnerships. The focus was advising on mergers and acquisitions and stocks and bond underwriting. Only later did the larger investment banks begin to rely on prime-brokerage services to hedge funds and proprietary trading to power their earnings.
For the most part, Fox-Pitt's Mr. Trone says, the smaller firms don't participate in these higher margin but more volatile businesses. The result is less explosive profitability but cleaner balance sheets. For one, the smaller firms typically have leverage at a rate of about one or two times to 1, says Mr. Ryan. That compares with more risky borrowing rates of 25-to-1 or 30-to-1 at Wall Street firms."
Sunday, September 21, 2008
In Lansing for weekend, and got this just before coming downstate
"At Fritz' doctor appointment yesterday, he was told there is nothing more they can do and there is no need for him to return to the doctor. Fritz and Tina are working with Hospice (for approx. 1-1/2 weeks) and they have distributed morphine. Fritz is loosing significant control of his left side and is struggling with his fear and feelings at this time."
In short - DAMNIT
Good "kid" (Ok so he's 41 or so, I've know hinm since he was about 5)
Sometimes "the son I never had" but only sometimes
All I can say is the he knows (approximate) time, most of the rest of us don't
Cool thing : family polished up one of the racers, and it sits in the living room (my girls might recall that I did same with one back in the early 70's)
Waves of remorse
Life goes on
Friday, September 19, 2008
Paulson runs the show
1) Bear run on Goldman pisses him off (he came to Treasury from Goldman), he goes nuclear on shorters (via SEC)
2) Paulson know where all the levers are
3) Paulson let Lehman fail to put fear of god on the street
4) superb timing - Friday, option expiration
This adds to volatility and will likely further juice the market
So, who was behind the raid?
Overseas interests - possible, but sorta Financial Tom Clancy stuff
Hubris - most likely - and why Lehman went down, maybe AIG as well
Political ? did anyone want to make the Administration look even worse?
Likely just a combination of events and factors
Going forward, the financial will have changed, and, to my mind, for the better.
Time to pay attention to real world business, not obscure derivatives and instruments to removed from reality.
Sharing of risk is good, creating unnecessary risk is not.
Fee based trading is highly questionable.
Fee for true service is OK, fee for sake of fees causes problems.
Closing prediction - I expect some hedge funds to fold this weekend
Sec bans Short Selling of financial institutions
LONDON (MarketWatch) -- The U.S. Securities and Exchange Commission early Friday issued an emergency order prohibiting short selling in financial companies. The regulator said it was acting in concert with the U.K.'s Financial Services Authority, which made a similar ban on Thursday. The SEC said the action was taken "to protect the integrity and quality of the securities market and strengthen investor confidence." The order halts short selling in 799 financial institutions, the SEC said. It is effective immediately and will end on Oct. 2
Wednesday, September 17, 2008
Last March, it was Bear Sterns, toast and the handwriting was on the wall.
The discount window was opened for investment bankers ... whoops. Take government money and you get government oversight.
No longer would Wall St. be as much fun ... nor as lucrative.
Some learned, and some didn't
Lehman for one, Dick Fuld (CEO) chose to play chicken with Hank Paulson (Sec of Treas) ...
Merril Lynch was swept up by Bank of America, now Morgan Stanly is under attack (from short sellers)
So what gives?
I question the model of Investment Banking.
Many companies don't need their services, they are sitting on plenty of cash.
Shops like Lehman ended up trading obscure instruments that often were so strange that almost nobody really knew what they were.
As one contact told me "every financial disaster always can be traced to group think"
Is there a good reason for Investment Banking in today's financial world.
Yes, but likely much smaller than just a few years ago.
Here's some more insight into the Credit Crisis
Credit and blame | The Economist
FT.com / Columnists / Martin Wolf - The end of lightly regulated finance has come far closer
FT.com / Comment & analysis / Comment - Modern history’s greatest regulatory failure: "Modern history’s greatest regulatory failure
By Roger Altman"
What's brewing, restrictions on trades, restrictions on shorts
Note that I believe in shorting, but the old way, on upticks, with borrowed shares.
Tuesday, September 16, 2008
Monday, September 15, 2008
Investment banks have gone from capital raising to trading increasingly obscure instruments.
FT.com / In depth - Investment banks’ future questioned:
"Not surprisingly, the crisis has once again raised serious questions about the viability of investment banks that are not part of a larger institution.
“This is a tough time to be an investment bank,” a senior executive at a US commercial bank said on Monday. “Given the events of the past few months, it is difficult to argue that it is better to be monoline at anything, be it investment banking, credit cards or insurance.”"
Posting from WSJournal, although it may disappear in time
I concur - and have not been interested in fiancial stocks for quite some time.
They are a good place to be when rates are falling, but not otherwise.
Big part of the problem is that these companies have had to try to create a reason to exist, and created products that nobody understood.
Layer on borrowing from the government (FED opened the discount window after Bear Sterns) and you get government oversight.
Life goes on, banks fail, folks still buy cereal
R.O.I. - WSJ.com:
"But the reality is that the banking sector is not America. Wall Street is not America. Things may turn down for a while and times may get tougher. But life, work and the economy will go on -- even without Lehman Brothers. And this is not so new after all.
Yes the news is scary but don't panic.
The collapse of Barings in 1994, Long Term Capital Management in 1998, 9/11, and the WorldCom panic of 2002: These things happen quite often. And when you are slap bang in the middle of them, they always feel terrifying.
Someone in finance said to me quite casually the other day that this was 'much more terrifying than 9/11.' Really? Are people kidding? Right now, there is no reason to speculate on banking stocks. There never was."
Played chicken with Paulson and lost.
They had months to work at cleaning up their own mess.
Goodbye "too big to fail"
No tears here.
AIG ... something for Warren Buffet???
Lehman Files for Bankruptcy; Merrill to Be Sold
"In one of the most dramatic days in Wall Street’s history, Merrill Lynch agreed to sell itself on Sunday to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, filed for bankruptcy protection and hurtled toward liquidation after it failed to find a buyer."
Friday, September 12, 2008
Struck me as disloyal and classless.
Also, the few times I saw him on the traditional "coach show" for local TV, I don't recall him smiling.
Following has a bunch on his contract at "Bama"
Op-Extra Guest Columnist - The Throwback - Nick Saban’s Fine Print - Series - NYTimes.com:
snippet - much more in the piece
"Nick Saban also gets bonuses if his players do what they should presumably be doing as students at the University of Alabama:actually graduate. But since we all know that doesn’t happen nearly as much as it should, Nick Saban gets a little push. If the team’s graduation rate is in the top fifty percent of teams in the conferencence, he gets $50,000; if the graduation rate is in the top 25 percent, he gets $100,000."
Saturday, September 06, 2008
Settled on ... The Johnny Cash Show (suppose I could link to Amazon, but not now)
Rolled through the first season (1969, a year of turmoil)
From first show with Dylan, through Sachmo, Stevie Wonder, James Taylor, Pete Seeger, Marty Robbins, Carter Family, Waylon Jennings, CCR, Neil Young, Tammy Wynette, George Jones and others ... whooee
And we only got through the first disc, more to come
I recall friends who refused to watch the first weeks, writing him off as a hick/redneck singer
Well, so glad I got to see most of the shows, and this collection is wonderful, benchmark performances for me.
Dylan/Cash duet of Girl from the North Country trough Bad Moon Rising (CCR), Stand by your Man, Long Black Veil (Joni Mitchell), Brown Eyed Hansom Man (Waylon Jennings)
Tuesday, September 02, 2008
I agree, just a question of timing and peak price
From June 30th:
Oil Prices: Wilbur Ross: Run-Up in Oil Prices Is a Bubble - Futures and Commodities * US * News * Story - CNBC.com:
"The dramatic rise in oil prices is a bubble, famous turnaround investor Wilbur Ross told CNBC Monday, noting that there is no apparent supply problem with crude."
At the time Spot Crude was trading near $145
This morning, post Gustav fears, it's $108
Will we see it under $100 soon?
Will this affect the Election?
Doc Searls Weblog : It’s the Mind, stupid
|…the choice of Sarah Palin as their vice presidential candidate reflects their expert understanding of the political mind and political marketing. Democrats who simply belittle the Palin choice are courting disaster. It must be taken with the utmost seriousness…|
David Brooks - What the Palin Pick Says - Op-Ed - NYTimes.com
John McCain is not a normal conservative. He has instincts, but few abstract convictions about the proper size of government. He’s a traditionalist, but is not energized by the social conservative agenda. ... a McCain administration would not be like a Bush administration.
The main axis in McCain’s worldview is not left-right. It’s public service versus narrow self-interest. Throughout his career, he has been drawn to those crusades that enabled him to launch frontal attacks on the concentrated powers of selfishness — whether it was the big money donors who exploited the loose campaign finance system, the earmark specialists in Congress like Alaska’s Don Young and Ted Stevens, the corrupt Pentagon contractors or Jack Abramoff.
So the slam dunk Democrat win, the virulent anti-Bush, Dems can't loose election may get more interesting after all.
Evidence of close race is here:
IEM 2008 US Presidential Election Vote Share Market Price Graph
Monday, September 01, 2008
Gustav makes landfall, drops to Cat 2 storm
Three years ago, Katrina was Cat 5
Gustav Threatens New Orleans, "The Mother Of All Storms": "'It's amazing. It makes me feel really good that so many people are saying, 'We as Americans, we as the world, have to get this right this time,'' New Orleans Mayor Ray Nagin said late Sunday. 'We cannot afford to screw up again.'"
Maybe Gustav is "grandson of all storms?"