So much for that one

Over the top "Yellowstone Club" goes down ...

Big Sky Journal - Economy Crashes the Gates at a Club for the Rich - NYTimes.com: 

"But the sense of refuge was an illusion. The global financial crises have stormed even these gilded confines: This month, the Yellowstone Club filed for bankruptcy protection."

As the transition continues

Oh My!
Tom Friedman starts to whistle another tune?
Bush was right in idea, wrong in execution?

Geopolitics do count?

Op-Ed Columnist - Obama’s Iraq Inheritance - NYTimes.com:

"I don’t think it’s reasonable to expect Iraq to have relations with Israel anytime soon, but the fact that it may be developing an independent judiciary is good news. It’s a reminder of the most important reason for the Iraq war: to try to collaborate with Iraqis to build progressive politics and rule of law in the heart of the Arab-Muslim world, a region that stands out for its lack of consensual politics and independent judiciaries. And it’s a reminder that a decent outcome may still be possible in Iraq, especially now that the Parliament has endorsed the U.S.-Iraqi plan for a 2011 withdrawal of American troops.

...

If Iraq can keep improving — still uncertain — and become a place where Kurds, Sunnis and Shiites can write their own social contract and live together with a modicum of stability, it could one day become a strategic asset for the United States in the post-9/11 effort to promote different politics in the Arab-Muslim world."

Another one bites the dust?

Over $100,000 "toy" awaiting battery miracle.
Moore's law doesn't apply here, or why SiValley isn't Detroit.

Only the Rich Can Afford It. Should Taxpayers Back It? - NYTimes.com:

"Tesla says it cannot move forward on plans to bring out a second-generation car, a less expensive sedan seating five, without federal funds. It’s also counting on rapid improvements in the core component of its powertrain — a thousand-pound pack of lithium-ion batteries — but such improvements don’t happen at the pace Tesla needs them to happen.

Tesla’s backers in Silicon Valley can be forgiven for hoping for a miraculous technical breakthrough, because Moore’s Law makes miracles appear in the Valley every day: costs drop by half every two years, again and again and again. The law is actually a rule of thumb, not a scientific law, and is based on the recurring doubling of transistors placed on an integrated circuit.

Unfortunately for Tesla, batteries are based on chemistry and have nothing to do with Moore’s Law. Lawrence H. Dubois, chief technology officer at ATMI, a semiconductor industry supplier, said, “With batteries, you can’t just squeeze more energy into a smaller and smaller space the way you can squeeze more transistors.”

Heading for a record

Longtime tradition, eat lots of turkey and fixings, turn on the Lions game and take a nap...

Now we skip the turn on the game part

Are the 2008 Detroit Lions the Worst Team in NFL History? - NFL FanHouse: 

"The Lions are rapidly closing in on immortality and an 0-16 record. Dating back to last year, Detroit is 1-18 in its last 19 games."

Priorities

Sometimes you just have to wonder what some folks were thinking...

A Rough Ride in Collectible Cars - WSJ.com:

"Or maybe they just ran out of money. Amid the broad economic deterioration of recent months, spending on extravagances like antique cars has slowed. In many cases, people can no longer afford even to keep their collections, says David Gooding, president of Gooding & Co., a Los Angeles car auction house.

In the past year, many collectors who used home-equity loans or other credit to buy the vintage convertible or muscle car of their dreams have had to sell as the housing and credit markets have declined. The same factors have kept new collectors from entering the market. As a result, many staple collector cars like 1957 Chevrolets, 1940 Fords and 1960s Pontiac GTOs are selling for half what they commanded two or three years ago."

Sticker Shock

Had get gas before heading downstate
Glen Arbor is always expensive (one station) but at $1.98 I could stand it
Best guess was $1.75 in Traverse City
Saw $1.66 on way, in Cadillac

but

Got to Lansing, and $1.58

Heading into a holiday week

Lansing peaked at $4.25 last July

Been a long time coming

Over 15 years ago, I recall working to help diversify

But others kept coming back to auto stuff

New Economic Fears Arise in Michigan - NYTimes.com: "State officials see Michigan as being, at least in part, the victim of a globalized economy and an automobile industry that failed to keep up with consumer demand. But others see a much broader explanation rooted in the state’s inability to diversify its economy.

“We put all our chips on a poker hand called durable goods manufacturing, particularly the autos,” said Charles L. Ballard, a professor of economics at Michigan State University. “In the middle of the 20th century, every time we turned over the hand it was four aces, a straight flush. If you have an undiversified economy based on a sector that’s booming, great.”

That is not the case anymore."

It's hitting the fan

Looney Dunes: Quality of Research:

"Meredith Whitney, who in turn called out Citi as a failing model"

This morning :

U.S. Approves Plan to Help Citigroup Weather Losses - NYTimes.com:

"Federal regulators approved a radical plan to stabilize Citigroup in an arrangement in which the government could soak up billions of dollars in losses at the struggling bank, the government announced late Sunday night."

"Citigroup’s shares have been hit particularly hard. A year ago they were trading at about $30; on Friday they closed at $3.77."

Oh yeah - and dividend goes from 16cents annually to 4cents
for the next 3 years

Settlement of Central Asia

I've always been interested in pre-historic trends and migrations...

The Dead Tell a Tale China Doesn’t Care to Listen To - NYTimes.com: 

"The Tarim mummies seem to indicate that the very first people to settle the area came from the west — down from the steppes of Central Asia and even farther afield — and not from the fertile plains and river valleys of the Chinese interior. The oldest, like the Loulan Beauty, date back 3,800 years."

Quality of Research

Michael Lewis (Liar's Poker) on Wall St.
Long piece but the quote below gives insight to street "insight"

I'd been looking for copy of comments by John Gutreund on how work on the street isn't that noble - not serious like medicine or teaching. Fun, but not serious ...

The End of Wall Street's Boom - Portfolio.com:

"He was hired as a junior equity analyst, a helpmate who didn’t actually offer his opinions. That changed in December 1991, less than a year into his new job, when a subprime mortgage lender called Ames Financial went public and no one at Oppenheimer particularly cared to express an opinion about it. One of Oppenheimer’s investment bankers stomped around the research department looking for anyone who knew anything about the mortgage business. Recalls Eisman: “I’m a junior analyst and just trying to figure out which end is up, but I told him that as a lawyer I’d worked on a deal for the Money Store.” He was promptly appointed the lead analyst for Ames Financial. “What I didn’t tell him was that my job had been to proofread the documents and that I hadn’t understood a word of the fucking things.”"

The above bit was about Steve Eisman, who coached Meredith Whitney, who in turn called out Citi as a failing model (read the whole thing... it's gory)

And this is why I try to invest in real companies that do real things, provide real services or better yet, make real goods, that real people want and need.

More Perspectives

Posted this

Perspectives

Then spotted Sir Bob Gledof: (Mickey Mouse?)

Lexus : The hybrid debate blog : Could hybrids help reduce our thirst for oil?:

"UK politics would change significantly if hybrids were able to reduce our dependency on foreign oil and gas. Our foreign policy, in particular, would be completely different. After all, who's interested in Saudi Arabia or Libya without the oil? And would we still be so involved in Iraq? No.

It's a resources-based economy we live in, and our primary reason for getting involved in the Middle East is to get hold of its resources. We may still want to go there on holiday, of course, but our political relationship with the region would change utterly. Perhaps the
only thing that wouldn't change there, as a result of lower Western oil-dependency, is the Israel/Palestine situation.

But the reality is that we need to do much more than change the type of car we drive to make an impact on climate change. In the UK, we'll soon have to scramble for more nuclear power. On this issue, I don't care what anyone says: we're going to go with it, big-time. We may mess around with wind and waves and other renewable energy sources, trying to make them sustainable, but they're not. They're Mickey Mouse."

Not so fast Ivan

A little behind in posting this one, it's from late Oct.
Bottom line - Russia is history, not the future.

Put it real simply - Russians die early.
Layer on collapsing oil prices (how's your budget Mr. Putin?) and the threat shrinks.

Undefensible borders, declining population, struggles over power (aka "mafia") and they can be a nuisance but not a real threat.

Op-Ed Contributor - Rising Ambitions, Sinking Population - NYTimes.com:

"To international audiences transfixed by Moscow’s military swaggering in Georgia or dazzled by the newfound oil wealth of the Russian petro-state and its billionaires, this notion of an unstoppable Russian ascent may seem plausible, even compelling. To anyone who pays attention to population trends, however, it is absurd.

Russia is in the midst of a genuine demographic disaster from which its rulers have no obvious exit strategy. Although the Russia’s fortunes (and the Kremlin’s ambitions) have waxed on a decade of windfall profits from oil and gas, the human foundations of the Russian nation — the ultimate sources of the country’s wealth and power — are in increasingly parlous straits."

Earlier :

Russia: U.N. Warning on Population - New York Times:

Article Tools Sponsored By
By REUTERS
Published: April 29, 2008

Russia is doing too little to reverse a critical decline in its population driven by increasing alcohol abuse, poor diet and social change, a United Nations report said. Karl Kulessa, the United Nations Population Fund’s chief in Russia, said Russia’s population could fall to 100 million, from 142 million, in 40 to 50 years. Russia lost 400,000 to 650,000 people a year from 1992 to 2006. Life expectancy for men among the population of 142 million was 55 years in the 1990s, nearly 20 years less than in Western Europe. “There is no reason to assume that Russia can recover from the crisis and stabilize its population,” the report said. “The authors of this publication do not share the optimism of government officials who claim that Russia will succeed in halting the population decline by 2015 and increase the population to 145 million by 2025.”"

Market comment(s)

Art Cashin quotes:

“A lot of people think these tulips are coming back. Many are not.”

True

GM as Health Care Company

Some perspective on the Detroit Execs before congress...

So many quips - like "hard up for cash..."

GM Spends $17 Million Per Year on Viagra:

"GM provides health care for 1.1 million employees, retirees nd dependents and is the world’s largest private purchaser of Viagra....Given the large number of aging autoworkers in the U.S., the industrys Viagra tab and bill for other erectile dysfunction drugs is certain to continue rising. Neither Ford nor Chrysler will disclose the amount spent on erectile dysfunction drugs."

Thankful that I'm independent

Pandering to the dumb is just plain ... dumb

The decline of the Republican Party | Ship of fools

"Political parties die from the head down"

Republicanism’s anti-intellectual turn is devastating for its future. The party’s electoral success from 1980 onwards was driven by its ability to link brains with brawn. The conservative intelligentsia not only helped to craft a message that resonated with working-class Democrats, a message that emphasised entrepreneurialism, law and order, and American pride. It also provided the party with a sweeping policy agenda. The party’s loss of brains leaves it rudderless, without a compelling agenda.

...the degeneracy of the conservative intelligentsia itself, a modern-day version of the 1970s liberals it arose to do battle with: trapped in an ideological cocoon, defined by its outer fringes, ruled by dynasties and incapable of adjusting to a changed world. The movement has little to say about today’s pressing problems, such as global warming and the debacle in Iraq, and expends too much of its energy on xenophobia, homophobia and opposing stem-cell research.

The piece above is link-able to th Economist
Not sure if WSJournal will keep the following open, so I'm posting, in full, copcopyrighted material.

The Perils of 'Populist Chic' - WSJ.com: "The Perils of 'Populist Chic'
What the rise of Sarah Palin and populism means for the conservative intellectual tradition."

Finita la commedia. Many things ended on Tuesday evening when Barack Obama was elected the 44th president of the United States, and depending on how you voted you are either celebrating or mourning this weekend. But no matter what our political affiliations, we should all -- Republicans and Democrats alike -- be toasting the return of Governor Sarah Palin to Juneau, Alaska.

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Getty Images

Sarah Palin

The Palin farce is already the stuff of legend. For a generation at least it is sure to keep presidential historians and late-night comedians in gainful employment, which is no small thing. But it would be a pity if laughter drowned out serious reflection about this bizarre episode. As Jane Mayer reported recently in the New Yorker ("The Insiders," Oct. 27, 2008), John McCain's choice was not a fluke, or a senior moment, or an act of desperation. It was the result of a long campaign by influential conservative intellectuals to find a young, populist leader to whom they might hitch their wagons in the future.

And not just any intellectuals. It was the editors of National Review and the Weekly Standard, magazines that present themselves as heirs to the sophisticated conservatism of William F. Buckley and the bookish seriousness of the New York neoconservatives. After the campaign for Sarah Palin, those intellectual traditions may now be pronounced officially dead.

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Corbis

William F. Buckley

What a strange turn of events. For the past 40 years American conservatism has been politically ascendant, in no small part because it was also intellectually ascendant. In 1955 sociologist Daniel Bell could publish a collection of essays on "The New American Right" that treated it as a deeply anti-intellectual force, a view echoed a few years later in Richard Hofstadter's influential "Anti-Intellectualism in American Life" (1963).

But over the next decade and a half all that changed. Magazines like the Public Interest and Commentary became required reading for anyone seriously concerned about domestic and foreign affairs; conservative research institutes sprang up in Washington and on college campuses, giving a fresh perspective on public policy. Buckley, Irving Kristol, Nathan Glazer, Daniel Patrick Moynihan, Gertrude Himmelfarb, Peter Berger, Jeane Kirkpatrick, Norman Podhoretz -- agree or disagree with their views, these were people one had to take seriously.

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Associated Press

Jeane Kirkpatrick

Coming of age politically in the grim '70s, when liberalism seemed utterly exhausted, I still remember the thrill of coming upon their writings for the first time. I discovered the Public Interest the same week that Patty Hearst was kidnapped by the Symbionese Liberation Army, and its pages offered shelter from the storm -- from the mobs on the street, the radical posing of my professors and fellow students, the cluelessness of limousine liberals, the whole mad circus of post-'60s politics. Conservative politics mattered less to me than the sober comportment of conservative intellectuals at that time; I admired their maturity and seriousness, their historical perspective, their sense of proportion. In a country susceptible to political hucksters and demagogues, they studied the passions of democratic life without succumbing to them. They were unapologetic elites, but elites who loved democracy and wanted to help it.

So what happened? How, 30 years later, could younger conservative intellectuals promote a candidate like Sarah Palin, whose ignorance, provinciality and populist demagoguery represent everything older conservative thinkers once stood against? It's a sad tale that began in the '80s, when leading conservatives frustrated with the left-leaning press and university establishment began to speak of an "adversary culture of intellectuals." It was a phrase borrowed from the great literary critic Lionel Trilling, who used it to describe the disquiet at the heart of liberal societies. Now the idea was taken up and distorted by angry conservatives who saw adversaries everywhere and decided to cast their lot with "ordinary Americans" whom they hardly knew. In 1976 Irving Kristol publicly worried that "populist paranoia" was "subverting the very institutions and authorities that the democratic republic laboriously creates for the purpose of orderly self-government." But by the mid-'80s, he was telling readers of this newspaper that the "common sense" of ordinary Americans on matters like crime and education had been betrayed by "our disoriented elites," which is why "so many people -- and I include myself among them -- who would ordinarily worry about a populist upsurge find themselves so sympathetic to this new populism."

The die was cast. Over the next 25 years there grew up a new generation of conservative writers who cultivated none of their elders' intellectual virtues -- indeed, who saw themselves as counter-intellectuals. Most are well-educated and many have attended Ivy League universities; in fact, one of the masterminds of the Palin nomination was once a Harvard professor. But their function within the conservative movement is no longer to educate and ennoble a populist political tendency, it is to defend that tendency against the supposedly monolithic and uniformly hostile educated classes. They mock the advice of Nobel Prize-winning economists and praise the financial acumen of plumbers and builders. They ridicule ambassadors and diplomats while promoting jingoistic journalists who have never lived abroad and speak no foreign languages. And with the rise of shock radio and television, they have found a large, popular audience that eagerly absorbs their contempt for intellectual elites. They hoped to shape that audience, but the truth is that their audience has now shaped them.

Back in the '70s, conservative intellectuals loved to talk about "radical chic," the well-known tendency of educated, often wealthy liberals to project their political fantasies onto brutal revolutionaries and street thugs, and romanticize their "struggles." But "populist chic" is just the inversion of "radical chic," and is no less absurd, comical or ominous. Traditional conservatives were always suspicious of populism, and they were right to be. They saw elites as a fact of political life, even of democratic life. What matters in democracy is that those elites acquire their positions through talent and experience, and that they be educated to serve the public good. But it also matters that they own up to their elite status and defend the need for elites. They must be friends of democracy while protecting it, and themselves, from the leveling and vulgarization all democracy tends toward.

Writing recently in the New York Times, David Brooks noted correctly (if belatedly) that conservatives' "disdain for liberal intellectuals" had slipped into "disdain for the educated class as a whole," and worried that the Republican Party was alienating educated voters. I couldn't care less about the future of the Republican Party, but I do care about the quality of political thinking and judgment in the country as a whole. There was a time when conservative intellectuals raised the level of American public debate and helped to keep it sober. Those days are gone. As for political judgment, the promotion of Sarah Palin as a possible world leader speaks for itself. The Republican Party and the political right will survive, but the conservative intellectual tradition is already dead. And all of us, even liberals like myself, are poorer for it.

Mark Lilla is a professor of humanities at Columbia University and a former editor of the Public Interest.

Perspectives

Busy few weeks
Got back from Fritz's funeral, and headed to

Michigan's Future: Energy, Economy, Environment

2.5 Day event - I skipped Sunday

Richard Heinberg was keynote speaker and panelist.

While I don't buy into all the "Peak Oil" he has some interesting perspectives
Esp. that it isn't the end of oil, just changing cost structure(s)

On the other end of the spectrum (but trying to play off the topic) we had Ellen Brown, with Web of Debt - THE COLLAPSE OF A 300 YEAR PONZI SCHEME: THE REAL DEBATE IS CRONY SOCIALISM OR FINANCIAL SOVEREIGNTY:

In between, good stuff on Wind (same plant as Boone Pickens, place in Lake Michigan, could generate 50% more electricity) and Nukes (head of DTE on why we have to build new).
Some discussion of new law on "net metering" to the advantage of "alternative" sources of electricity

Side topics on local sourcing, from energy to food, and such topics as permaculture.

Tumbling Dice

With apologies to the Stones (YouTube - ROLLING STONES - Tumbling Dice (1972))

GSE's are OK ( Fanny Mae/Freddie Mac)

What They Said About Fan and Fred - WSJ.com: "House Financial Services Committee hearing, Sept. 25, 2003:

Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing."

Not all the blame falls on crooks on Wall St.

More: and I love the Maxine Waters bit ...

House Financial Services Committee hearing, Sept. 10, 2003:

Rep. Barney Frank (D., Mass.): I worry, frankly, that there's a tension here. The more people, in my judgment, exaggerate a threat of safety and soundness, the more people conjure up the possibility of serious financial losses to the Treasury, which I do not see. I think we see entities that are fundamentally sound financially and withstand some of the disaster scenarios. . . .

Rep. Maxine Waters (D., Calif.), speaking to Housing and Urban Development Secretary Mel Martinez:

Secretary Martinez, if it ain't broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?

Intellectuals

Maybe only those who can read and write should be allowed to vote?

Nah, then we might not have the sorts of idiots we usually get for Congress, left and right.

"... according to polls, Americans are approximately as likely to believe in flying saucers as in evolution, and when one-fifth of Americans believe that the sun orbits the Earth."

Op-Ed Columnist - Obama and the War on Brains - NYTimes.com: 

"An intellectual is a person interested in ideas and comfortable with complexity. Intellectuals read the classics, even when no one is looking, because they appreciate the lessons of Sophocles and Shakespeare that the world abounds in uncertainties and contradictions, and — President Bush, lend me your ears — that leaders self-destruct when they become too rigid and too intoxicated with the fumes of moral clarity."

Cause for concern

The Olympics are over, there is turmoil in western markets, the miracle didn't last.

In the long run, maybe for the good, at least for the west.
The Chinese demand for raw materials were skewing markets as was the need to put Asian savings to work ... one of the many triggers of the credit market blow up (too much savings looking for places to invest).

Chinese Economy Is Showing Signs of a Slowdown - NYTimes.com:

"SHANGHAI — Each new forecast of China’s economic fortunes predicts slower growth than the forecast that preceded it.

Christmas orders were down 20 percent this year, as big retailers and toy marketers grew gloomy about the holiday season.

Just as China attained supercharged growth that astounded much of the world, it appears to be slowing more sharply and more quickly than anyone anticipated."

Closing of a chapter

Remembering Fritz who passed away early yesterday.

Fine young man.
Accomplishments speak for themselves
Such as here: Cycle News

Growing guestbook here: Guest Book - Fritz Jon Kling

Some "names" in racing visiting

Smells of the Season

We've had a stretch of "Indian Summer" this week
Had the S2000: Vroom out with top down a few times.

Smells of Autumn
Leafs slowly molding, along with faster decomposition when some folks burn them...



Most are down by now
Time to start the leaf blower and tidy up

Last Dance

Sunday before last
"Father - Bride" dance

My lovely daughter Whitney
Thanks to my other wonderful daughter Nicole for the shot



not quite "dancing with the stars" (VBG)
But a special moment

Most interesting comment

Caught Bill Moyers on NPR "Fresh Air" a few min ago.

He voiced concern that Obama will not be able to cope with the troika (my term) of: finance, politicians (and lobbyists) and media that he views as ruling America.

Audio to be here later today : Fresh Air from WHYY : NPR

"Democratic Lobbyists already circling Washington"

I find it interesting that he includes the media.
My contention that they have fueled the fire of the Wall St. problems.
Much of the media is from NYC, and see the financial problems from a local perspective.

Yup

Early this AM, about 8:30

Won't reveal my vote's

Day of meetings ahead

Don't worry ... be happy

Fareed Zakaria on the economy

Link to video

Zakaria: President-elect won't have much time to celebrate - CNN.com

Finance vs Economic Issues

Very bright banker on the current "crisis"
It's finance, not the economy.
Quick and sure action can stem the problems.

Wells Fargo's Kovacevich: The Importance of Hitting Bottom - BusinessWeek:

"What would your advice be for the next President, who will inherit a deeply damaged financial system and a troubled economy?
Priority No. 1 is to get the economy going. This is the worst financial crisis since the Depression, but it is far from the worst economic crisis. Simultaneous with that, we have to figure out a way that we don't continue to have these bubbles. Therefore, we have to look at regulating differently. Some people have called that regulating more, some think deregulation is to blame [for the crisis]. I think it is really a matter of doing things differently than we have done in the past.

Maria Bartiromo is the anchor of CNBC's Closing Bell."

Politics

Getting caught up on my reading.
Doc sums things up pretty well.

My own politics tend towards libertarian and I have no truck with the right wing religio-control freaks.

I believe in safety nets, but not redistribution, cooperation not confrontation and demonetization.

Personal freedom's and modest government, a government to provide essential and community services, but not one that is a parent, a government which is of the people, not over the people.

Doc Searls Weblog : Back to real conservatism:

"Somewhere between Barry Goldwater and Sarah Palin, conservatism changed from a philosophical anchor — what Goldwater called a “conscience” — into a pure partisanship, defined at least as much by what and who it’s against (Liberals, Democrats, Hillary, Obama) as by what it’s for. The latter now includes a list of causes (opposition to abortion and gay marriage, religiously-defined “family values”) that bear no resemblance to Goldwater’s essentially Libertarian philosophy."

The Bloom is off the ... corn

Another mania deflated

Verasun Files for Bankruptcy Protection - Green Inc. Blog - NYTimes.com: 

"The VeraSun Energy Corporation, which accounts for roughly 7 percent of ethanol production capacity in the United States, announced that it had filed for Chapter 11 bankruptcy protection late Friday.

Shares in VeraSun were trading for pennies in anticipation of the move, which, the company said in statement, was “precipitated by a series of events that led to a contraction in VeraSun’s liquidity, impairing its ability to operate its business and invest in production facilities.”"

Creativity

Pumpkin carver

Imagination?
Nope ... it's just the little people who live in my head

The American Brand

Shirley and I caught the full interview on PBR while on the road yesterday.
Excerpt :

YouTube - Barack Obama and the American Global Image - Shashi Tharoor

Greenspan ... "Whoops"

As if bankers operate without constraints will ensure smart decisions, and assuming that competitors will not collude.

Greenspan Concedes Error on Regulation - NYTimes.com:

"A fervent proponent of deregulation during his 18-year tenure at the Fed’s helm, Mr. Greenspan has faced mounting criticism this year for having refused to consider cracking down on credit derivatives, an unchecked market whose excesses partly led to the current financial crisis."

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.

“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Simple Model

This has been around for a while, but still one of the best explanations of how the mess in subprime works... click here

The French are ... different

Clever humor/insight as to approaches to the world.

Shashi was Under-Secretary-General for Communications and Public Information, United Nations at the time of the quote.

Heard him on NPR while on road yesterday.

Shashi Tharoor - Is the United Nations Still Relevant?:
"In fact, we used to have a nasty little joke about the agreements of the Security Council on all these matters where it was said there was an argument between an American diplomat and a French diplomat and a particular problem, and the American diplomat said, 'You now how we can solve this? We can do this and this and this and we can solve it', and the French diplomat replied, 'Yes, yes, yes, that will work in practice but will it work in theory?'"

Insight - Growth in the Spring!

Being There (1979) - Memorable quotes:
"President 'Bobby': Mr. Gardner, do you agree with Ben, or do you think that we can stimulate growth through temporary incentives?
[Long pause]

Chance the Gardener: As long as the roots are not severed, all is well. And all will be well in the garden.

President 'Bobby': In the garden.

Chance the Gardener: Yes. In the garden, growth has it seasons. First comes spring and summer, but then we have fall and winter. And then we get spring and summer again.

President 'Bobby': Spring and summer.

Chance the Gardener: Yes.

President 'Bobby': Then fall and winter.

Chance the Gardener: Yes.

Benjamin Rand: I think what our insightful young friend is saying is that we welcome the inevitable seasons of nature, but we're upset by the seasons of our economy.

Chance the Gardener: Yes! There will be growth in the spring!

Benjamin Rand: Hmm!

Chance the Gardener: Hmm!

President 'Bobby': Hm. Well, Mr. Gardner, I must admit that is one of the most refreshing and optimistic statements I've heard in a very, very long time.

[Benjamin Rand applauds]

President 'Bobby': I admire your good, solid sense. That's precisely what we lack on Capitol Hill."

Nice to have

Nice to have positions like this on one's portfolio when the market has been down.
Small company, exceptional management, headed to new all time high.
NEOG : Neogen, leader in food and animal safety products


image pulled from bigcharts.com

What if

Catching some of Gov Patterson of New York on CNBC this AM

Flash - what if Elliot Spitzer was still Governor - ouch, likely we'd see multiples of the losses we've seen so far and multiple perp-walks.

Jazz for the eyes

Image cropped from one on William Claxton After Image Gallery


William Claxton, 80, Shot 'Jazz For The Eyes' : NPR Music:
"All Things Considered, October 18, 2008 - California is the land of sunlit beaches, cars and cool jazz. They all play a part in the photography of William J. Claxton, who died in Los Angeles on Oct. 11, one day shy of his 81st birthday.

Claxton was born in Pasadena and made his name with photographs of an Oklahoma trumpet player whose career took off in California: Chet Baker. In fact, Claxton's moody images helped propel Baker to stardom."

"Claxton called his photographs "jazz for the eyes" and likened his camera to the jazz musician's axe. He told music journalist Don Heckman, "It's the tool that you would like to be able to ignore, but you have to have it to convey your thoughts and whatever you want to express through it."

read on

Images and nice soundtrack here:
William Claxton Photography

Peggy Noonan on the debate

I tend to agree...
Race to the bottom.

It'll be an interesting few years coming up.

Declarations - WSJ.com:
"There is now something infantilizing about this election. Mr. Obama continued to claim he will remove wasteful spending by sitting down with the federal budget and going through it 'line by line.' This is absurd, and he must know it. Mr. McCain continued to vow he will 'balance the budget' in the next four years. Who believes that? Does even he?"

Slippery Slope

Looney Dunes: Looney Dunes: Interesting Prediction:

"Will we see it under $100 soon?" (Sept 2, 08)

Guess so:



Longer term

Words of Wisdom

Op-Ed Contributor - Buy American. I Am. - NYTimes.com:

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now." ... Warren Buffett

Thougth So

BBC NEWS | Health | Internet use 'good for the brain':

"For middle-aged and older people at least, using the internet helps boost brain power, research suggests.

A University of California Los Angeles team found searching the web stimulated centres in the brain that controlled decision-making and complex reasoning."


Tip of the hat to Doc Searls

F-king Genius's

Brilliant investment technique, concentrate all your holdings in a company you run, then add to risk via margin.

While I use margin, I have a bit of diversification.
Lesson - managers egos can drive them to severe errors in thinking.

Margin Calls Prompt Sales, and Drive Shares Even Lower - NYTimes.com:

"“That suggests that there may be other cases where chief executives who are controlling shareholders or the company’s major shareholder with the same problem,” Mr. Vogel said. “These people present themselves as financially savvy and not subject to great risk associated with debt. But in fact it seems that that is not always the case.”"

Such as :

On Friday, Aubrey K. McClendon, the chief executive of Chesapeake Energy, issued a statement saying he had been forced to sell all of his 33.5 million shares in Chesapeake because of a margin call. And Sumner M. Redstone, the chairman of Viacom and CBS, disclosed that he would sell $400 million in shares in those companies to pay down a loan.

Major Investment no-no

Well, since I didn't go to cash at the top, or anywhere near it, take my advice with a large grain of salt.
But, that said, I agree with the idea of holding positions for the long term.

What this piece also misses is the tax cost of market timing.
I've got a few losses, but very few.
Likely will do some tax trades before the end of the year.

Your Money - Switching to Cash May Feel Safe, but Risks Remain - NYTimes.com:

"By fleeing for the comfort of safe and insured, however, investors with a time horizon beyond a few years may be doing real damage to their long-term finances. If you’re tempted to make a big move to cash right now, you’re doing something called market timing. It’s an implied statement that you’ve figured out the right moment to get out of stocks — and will also know the right time to get back in."

Maybe... just maybe

Those With Sense of History May Find It’s Time to Invest - NYTimes.com:

"The four most dangerous words for investors are: This time is different."

Flashback

I recalled the other day, putting together HeathKit radio's with my father

I don't think that the shortwave was this model, but close
Learned a bit about assembly, a little about electronics, circuits, and picked up sputnik signals (late 1957)



Dad : not sure that I ever thanked you for this experience

Great App

Could be truly great app
Filter's your outgoing emails when you might be guilty of EUI
Emailing Under the Influence


Google launches Mail Goggles to save you from yourself | Webware : Cool Web apps for everyone - CNET

Perspective

Good perspective

As Dire as the Times May Seem, History Isn't About to Repeat Itself - WSJ.com: "Remember that we've been through tough times before. The Internet bust was almost as extraordinary as the 1929 crash: Between early 2000 and late 2002, the tech-heavy Nasdaq index fell almost 80%. You may recall the speculative real-estate lending that resulted in almost 2,000 bank failures between 1987 and 1991, and the Dow plunging 22.6% in one day in 1987. While none of those were pleasant, you're still here.

Stay the course. You know this, but it's a time to return to the basics. Live within your means. Reduce your debt. Keep saving -- and investing. When the cycle turns, and it will, you'll be glad you did."

Any Correlation?

Could it be?

Newbie president with a congress that are charter members of the "Don't have a Clue Club" ?




Or has Atlas shrugged?

Skip the Election

Results are foregone conclusion and the Dems are justifying increased deficit.

Condemn the Bush deficit?
Naw, just justify the Obama deficit...

Op-Ed Contributor - Saved by the Deficit? - NYTimes.com: "Both presidential candidates have been criticized for failing — at Tuesday’s debate and previously — to name any promises or plans they’re going to have to scrap because of the bailout and the failing economy. That criticism is unwarranted. The assumption that we are about to have a rerun of 1993 — when Bill Clinton, newly installed as president, was forced to jettison much of his agenda because of a surging budget deficit — may well be mistaken."

Efficent Market ... yeah right

About all the efficient market and random walk theories
Bah Humbug

Note that I did start buying today ... small

Forget Logic; Fear Appears to Have Edge - NYTimes.com:

"Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed — even if the overarching problem of a crisis of confidence in the global economy is now becoming clear.

Instead, the market has become a case study in the psychology of crowds, many experts say. In normal times, it runs on a healthy mix of fear and greed. But fear now seems to rule, with investors often exhibiting a Wall Street version of the fight-or-flight mechanism — they are selling first, and asking questions later."

denouement

Doc on the "debate": Post-debate thoughtdown

I turned in after about 20 min.

Personally, I think it's over for McCain, but also that the "new" is wearing off Obama.

Either gets a crappy economy
Not a "Great Depression" but not "Happy Days" either

Add in a dysfunctional Congress and either may well be a one term holder.

Just a marker

Bought some Irwin Financial (IFC)
Started doing business with them this year, and I like them

Near the bottom
Pure speculation

We'll see what happens

Trust me ...

From a broadcast I caught on NPR this AM
History of distrust in media and government adds to crisis of confidence, as exhibited on Wall St. and in the banking community.

Who dealt this mess?

On The Media: Transcript of "Past is Present" (October 3, 2008):

October 03, 2008

"During The Great Depression, Franklin Delano Roosevelt told Americans that their faith and confidence was key to recovery. Is that the case this time around? Columbia University Provost and historian Alan Brinkley discusses some lessons of past crises."

Perceptions on ideas

Excellent post

Conservatism overshoots its limit

By Gideon Rachman

Published: October 6 2008 19:13 | Last updated: October 6 2008 19:13

The market for ideas – like the market for shares – always overshoots. Ideas become fashionable and get pushed to their logical conclusion and beyond, as their backers succumb to “irrational exuberance”. Then comes the crash.

What we are experiencing now is the bust that has followed the 30-year bull run in conservative ideas that began with the Thatcher-Reagan revolution of 1979-80.

You can get a sense of how quickly the intellectual atmosphere has changed by picking up a copy of Alan Greenspan’s The Age of Turbulence, which was published last year. Mr Greenspan, head of the Federal Reserve from 1987 until 2006, heaped praise on the magic of financial markets and decried the foolishness of those who called for more regulation: “Why do we wish to inhibit the pollinating bees of Wall Street?” he asked rhetorically. Why indeed?

Mr Greenspan was considered such a guru that last year Senator John McCain suggested putting him in charge of a committee on tax reform, adding: “If he’s alive or dead it doesn’t matter. If he’s dead, just prop him up and put some dark glasses on him.” But Mr Greenspan’s reputation is now on the slide and Mr McCain has reinvented himself as a champion of regulation – and is denouncing the “corruption and unbridled greed that has caused a crisis on Wall Street”.

This kind of ideological whiplash is what happens when an intellectual bull market crashes. The current financial crisis can be traced to three of the central ideas of the Reagan-Thatcher era: the promotion of home ownership, financial deregulation and a fervent faith in the market. Each of these ideas did sterling service for 30 years, increasing prosperity and freedom. But pushed too far – and combined – they have created a disaster.

The subprime mortgages that are at the heart of the current financial crisis expanded the dream of home ownership to people who could not afford the financial burdens they were taking on. In April 2005 Mr Greenspan praised subprime mortgages for helping to widen home ownership and hailed them as “representative of the market responses that have driven the financial services industry throughout the history of our country”.

Investment bankers, the shock- troops of the Reagan-Thatcher revolution, were allowed to bet their banks on this new market, because regulators and politicians believed so firmly in the magical and self- regulating qualities of the market.

The same process of intellectual overshoot happened with other signature ideas of the Reagan- Thatcher era: privatisation, scepticism about environmentalism and democracy promotion.

When Thatcherites first mooted privatisation it was derided as an impractical dream. But early triumphs with airlines and telecommunications in Britain created a vogue that spread round the world. That emboldened the privatisers to take on new and harder challenges, such as the UK’s railways. But failure there led to a backlash.

Similarly, when the conservative era started, foreign military engagements were out of fashion in the west. But Britain’s Falklands war and the American invasion of Grenada began to change this. During the 1990s, a series of successful military interventions – the first Gulf war, Bosnia, Kosovo, Sierra Leone – made Anglo-American political leaders much more relaxed about the use of military force. Too relaxed. The horrors that have followed the invasions of Iraq and Afghanistan will mean that the intellectual pendulum will now swing in the opposite direction.

The idea of democracy promotion has gone through a similar boom-and-bust cycle. The collapse of the Soviet empire in 1989 was regarded as the ultimate vindication of the rightwing universalism that argued that all people did indeed desire democratic, free-market systems. Advocates of the globalisation of democracy became much more assertive. A policy of providing moral support to anti-Soviet dissidents in Europe in the 1980s had, by 2003, transmogrified into a policy of exporting democracy by force of arms to the Middle East.

Once again, a successful idea has been pushed to its logical conclusion – and beyond. And once again an intellectual backlash has begun. David Cameron, the leader of Britain’s Conservatives, captured the new conventional wisdom when he said recently: “We should accept that we cannot impose democracy at the barrel of a gun. We cannot drop democracy from 10,000 feet.”

Both Ronald Reagan and Margaret Thatcher favoured growth over greenery. Mrs Thatcher hailed “the great car-owning democracy” and Reagan mused that trees were a major source of pollution. But in Britain – and, to a lesser extent, the US – climate change has turned conservatives green with anxiety. Mr Cameron, a reliable intellectual weather-vane, ostentatiously cycles to work and has adopted a tree as the symbol of the new Tory party. Mr McCain takes climate change very seriously.

The ideological roots of the conservative era lay in a reaction to the excesses of the Keynesian consensus. Now that the intellectual cycle has swung so decisively against the rightwing ideas of the Reagan-Thatcher era, it is bound to overshoot in the other direction. The joys of government regulation will quickly pall. In a few years’ time, nostalgia will set in for the go-go years on Wall Street and for the bracing moral certainties of neoconservatism.

Audacious intellectual investors should now be sniffing around. Quite soon ideas such as deregulation and democracy promotion will be a buy.

End of the Euro ?

One currency, with 27 governments
And while the US Congress looks messy ...



As screwed up as things are in the credit markets and with the US in the middle of a rare political season ( no incumbents at the top of the ticket ) markets still prefer the dollar.

note: chart source : http://www.dailyfx.com/charts/Chart.html

Moonset

shot about an hour ago, 9:25 to be exact
hand-held
clear autumn night, quarter moon setting

Handy Dandy

Spent time today helping Shirley with fall garden clean
Grass's and grass type plants get trimmed back
Tried this
Made smaller grasses a breeze
For the big one ( over about 6 ft ) I cinch with tie-down's then use chain saw



Black & Decker Power Tools: "7.2 Volt Cordless Shear / Shrubber

7.2 Volt Cordless Shear / Shrubber
Model # SSC1000
Ergonomic, Well Balanced Design Provides Superior Comfort and Control During Use
Interchangeable Blade System Allows Easy Conversion From Grass Shear to Detail Shrubber for Versatile Trimming
7.2 Volt Rechargeable Battery Delivers More Power and Longer Runtime
Precision Sharpened 4' Shear Blade and 6' Shrubber Blade Deliver Cleaner Faster Cutting

Observations

Roger on the Veep "debate"

You didn't ask about the debate, but... - Roger Ebert's Journal: "...some observations about what we observed Thursday night. They are not political. They involve such matters as body language, facial expression and vocal tone. These are legitimate subjects for a film critic. As Patrick Goldstein wrote recently in the Los Angeles Times: 'In some ways film critics are probably better equipped to assess the political theater of today's presidential campaigns, since our campaigns are -- as has surely been obvious for some time -- far more about theater and image creation than politics.' I would like to discuss the vice presidential debate as theater."

whoops

Prior post

physiology?
The one reader that follows my blather caught this
Although it could apply to gnomes, the spellcheck should have given

psychology

As for gnomes
http://looneydunes.blogspot.com/2005/10/strange-formation.html#comments

Efficent Markets ... not

Fits my thinking
Markets run on physiology, not always facts.
This is why "rocket science" always fail in the end

Op-Ed Contributor - This Economy Does Not Compute - Op-Ed - NYTimes.com:

"Certainly, markets have internal dynamics. They’re self-propelling systems driven in large part by what investors believe other investors believe; participants trade on rumors and gossip, on fears and expectations, and traders speak for good reason of the market’s optimism or pessimism. It’s these internal dynamics that make it possible for billions to evaporate from portfolios in a few short months just because people suddenly begin remembering that housing values do not always go up.

Really understanding what’s going on means going beyond equilibrium thinking and getting some insight into the underlying ecology of beliefs and expectations, perceptions and misperceptions, that drive market swings.

Surprisingly, very few economists have actually tried to do this, although that’s now changing — if slowly — through the efforts of pioneers who are building computer models able to mimic market dynamics by simulating their workings from the bottom up."

Politics

CNBC's Joe Kernen

"You have to be crazy to be a politician, so how can you expect them to do anything productive?"

Op-Ed Columnist - Revolt of the Nihilists - Op-Ed - NYTimes.com:

"House Republicans led the way and will get most of the blame. It has been interesting to watch them on their single-minded mission to destroy the Republican Party. Not long ago, they led an anti-immigration crusade that drove away Hispanic support. Then, too, they listened to the loudest and angriest voices in their party, oblivious to the complicated anxieties that lurk in most American minds.

Now they have once again confused talk radio with reality."

Interesting comment from Doc's sister, Jan:
Doc Searls Weblog : The 2012 campaign

Dr Doom turns bullish ?

Maybe, maybe not
Marc Farber on CNBC last Fri

Video - CNBC.com

Arrgh

The right is driving me left?
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."

Rock my world

Hobby interest in geology ... this is cool.
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.
Photo NYTimes

Politics, or "Thanks Joe"

Sent the following to both Democratic and Republican National parties

---
This message has been sent to the DNC

"Bailout"


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"
House

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 democraticparty@democrats.org
Date: September 26, 2008 5:30:10 PM EDT
Subject: Tonight's debate
To: jthoagland@voyager.net
Reply-To: democraticparty@democrats.org

Friend --

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:

http://my.barackobama.com/driveforchange

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,

Joe

---

Nice to be listened to

Throw 'em all out

"Republicans" and "Democrats"

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."

Kudos to Bill Gross

Saw Bill make the offer on CNBC about 2:00 PM

Managing the Bailout - He’d Do It for Nothing - NYTimes.com: 

"One of the many concerns expressed on Capitol Hill this week about the Treasury Department’s $700 billion rescue plan was how to keep the Wall Street firms that helped to create the crisis from making a killing if they are hired to help contain it.

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."

Perfect Storm

Watching Bernake before Senate committee

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.

Bailout - cont.

Follow up on the bailout BS
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."

Follow your own rules

Money Market Funds woes - background

Self explanatory

Fund That Broke the Buck Didn't Follow Its Own Advice - WSJ.com:

"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."

Bailout ... maybe not

Important point is that government will buy up paper from banks, but may be able to sell these assets into the market in the future. 

Mark to market means that if institution A is distressed and has to sell assets, at any price, institution B,  which may be stronger, has to write down similar assets.

If the government can buy for say, 60 cents on the dollar, but later sell for 80 cents. The government might even make money.

Question is, how to keep the profits out of the hands of politicians.

FT.com / Comment & analysis - Dollar rally halted on debt concerns:

"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."

Complexity

I concur, and it's time to get back to "real world" finance.

The time for "my computer is smarter than yours" trading is over.

Experts: No Quick Fix on Crisis - WSJ.com: 

"Nancy Peretsman, of investment bank Allen & Co., said the crisis exposed the dangers of not understanding complex businesses. 'We've grown these institutions that are very hard for their boards of directors to understand, very hard for their employees to understand,' as well as difficult to fathom for their accountants and shareholders, she said. 'We've gotten to a point of creating something that's incomprehensible.'"

Patience

Sweet deal, 10% yield, plus warrants... nice

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."

Is it or isn't it - the end of the world?

So last weekend, they give up on the Investment Banking Model.

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."

Saw the news today ... oh boy

Spent part of the afternoon with Fritz
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
Sadness

Life goes on

Sorry to miss today

Pre market open thoughts

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?
Nah

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

End of the World ... Posponded

Carpet Bombing the markets

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

End of the world

Meltdown on the street.
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) ...
and lost.
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.

Self Blogrolling

Looney Dunes:

Will we see it under $100 soon?
Will this affect the Election?

That was on Sept 2

This AM, trading just over $91
This is post Hurricane Ike that slammed into the Galveston area.

Time Change

For some time, I've wondered about the business model.
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.”

"

Panic?

Likely closer to time to buy than time to sell
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."

Bonfire of the Vanities

Never did like Lehman, too hard core, money oriented, fee driven, sky high levered (reports of 40:1).

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."

Never did like him

Back in '99, after a successful season for Mich State, but before the "Citrus Bowl" he bailed for a job at LSU.
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."

Flashbacks

Nada on the telly tonight so we flipped through some of our (unopened) DVD's

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

Flashback City
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)

Good stuff

Looney Dunes: Interesting Prediction

Looney Dunes: Interesting Prediction:

"Interesting Prediction
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?