Moon Kil Woong

Regulating Wall Street Like Las Vegas: Yes We Can

Most all regulatory bodies end up getting captured by the ones they are regulating just like the SEC. Regulators become extortionists for penalties in the securities business more than anything else. Seldom are individuals barred or companies banned or brought up on charges. The SEC is suppose to be that Las Vegas like regulatory body. It has largely failed.

I suppose the only way to bring them into line is to forst implement Glass Stegall so the variety of illicit activities can be curbed. Next, strictly enforce anti-trust laws so that every firm must face their inappropriate actions with losses in marketshare and defamation. Nothing works better to keep companies in line and serving the public better than good old functioning capitalism. In order for that to happen, financial companies can not be allowed to become shielded from competition ever.

Watching the USD Drop? Here's What You Should Really Be Watching

Unlike the US Japan's population has savings and does not run massive trade deficits with other countries. Thus to say Japan is worse off is not to acknowledge the major faults the US has that Japan is lacking. The author should not mistake government deficits with fiscal solvency. The US has a much harder time selling its bonds than Japan has ever had.

10% Unemployment: Good or Bad for the Market?

Well 10% unemployment is good in the sense that at least it's not higher. As for a rally if unemployment dips below 10%, yes we might see a 30% rally if it drops 30% before then. If it does it next quarter I don't think it will affect things much. What matters more is how much more funny money and depreciation the government and Federal Reserve will put up with.

Devalue currency by 10% and you may see another 20% rally in the market. Whoppee, and in the meantime those who actually have cash will be crying over their loss in purchasing power. The government certainly isn't encouraging savings or fiscal prudence are they?

The New Version of Depression Apple Selling

Al loud as the administration would like to clang their bells and symbols saying everything is better the simple facts are that things are not. Prosperity is not valued in GDP but quality of life, economic security, health, and a sense of direction (usually a job). On these points we are failing miserably. Just walking around and talking to fiends and neighbors proves that.

So far, aside from more government spending thanks to a stimulus that's not a stimulus (it's porkus and fattening bureaucracy) I don't see any reason 2010 will be better than this year.The government has yet to come up with a single free market private sector growth catalyst that shows signs of promise for a brighter 2010.

Sure the tech sector is promising as always, but even it is suffering from weak demand as businesses cut into their capital expenditures this time around. A lingering or double dip recession seems more and more a reality in my mind.

Analyzing the U.S.'s Four Largest Banks

An excellent conclusion. What the US is financing is not banks in the traditional sense of the word. All these banks are not doing banking more than running their own casinos with government guarantees and free Federal Reserve money.

Banking is aggregating the depositors money and using it as capital to allow them to back loans to businesses, homes, and commercial property. Nowadays they won't write a home loan unless they can dump it to the Mac and Maes and they certainly don't need the capital to back the already bloated commercial property market. And every businessman knows that they won't lend businesses a dime these days unless you don't need it like always.

So what are they doing with the money? Well keeping a lot in reserve to cover their still hidden derivatives (That's understandable. You can't fix an egg that's already broken.) Goldman has learned to corner the market on the market (Ingenious little Goldman.) The rest are piling into the Goldman equity trap buying equities or driving up non-core inflation by speculating in commodities (Little do they know that they are cutting their own throats because their actions inevitably cause inflation that they can't afford), and many are buying US bonds and junk bonds (They are essentially the same these days and will only exacerbate their losses when interest rates rise). So the author is right to say the last things these banks should be doing is borrowing more money.

However, on that note maybe they should be doing what they are doing. In a sense they have nothing to lose given the taxpayer always pays. Greed is great when risk is subsidized.

Bernanke: Same Old Play Book

I see no difference between Greenspan and Bernanke aside from the fact that Bernanke seems even more economically accommodating towards fast, free, easy money. To that, I'd say we will be at zirp until our economic hell freezes over similarly to Japan but without the thrifty population, positive trade surplus, and social safety net Japan had going into their lost decades.

The Unemployment Rate in Perspective

I remember when all the analysts mirrored the government and said unemployment shouldn't reach more than a tad over 8% and should drop after 6-9 months. Now all the analysts are once again lapping up the bologna the government throws out. What use are they? Do they have a logical, independent, analytical brain in their head?

I would like to see their justification. Charts like these show that this decline bears no resemblance to recent past declines. Furthermore, although theoretically the spike up should end there is no indication it will end in the 10% range. I give this analyst credit not to call the top range but still.

As for GDP, real is not the word I would call it when you devalue the dollar over around 13% to get slightly over a 3% increase not to mention that all of it was government fat and temporary wasteful one time stimulus. So I wonder, if they predict further growth in GDP does that mean they expect the dollar to dip how much further? Do they expect cash for say refrigerators, lawnmowers, and computers? How much longer will this have to continue before it all gets magically better? And why won't it just melt down into a soviet socialist type heap?

Personally, I would like one of these analysts to explain how it all gets better mid 2010 when the market realizes about that time all the stimulus money is about to end? Are they presupposing a $2-3 trillion dollar follow on stimulus. I'd like to hear how they care going to sell that to foreign bondholders? Believing that without a second stimulus the downturn will end to me sounds like lunacy. Throw these analysts out by the ear.

Robert Samuelson on Debt in First-World Nations

Sadly this is of little surprise to any economist who has been looking disappointedly at the US and their unsustainable volume of deficits for a decade. This instability is only accelerating both in the level of spending, extent of absolute dependence the country's economy is on the government, and the decline in it's population's ability to save, pay taxes, or pay for themselves.

The US seems to be running a simulation on how quickly the wealthiest nation on earth can become a pauper nation. The answer is looking like somewhere around 12-20 years.

Commercial Real Estate: Evidence that It's Ready to Come Crashing Down

Sadly, I suspect a large percentage of commercial property loans and bond risk has already been transferred to the taxpayer via the Federal Reserve's backstop system. However, full details are not forthcoming.

As for the Treasury, it would seem that even the repaid TARP money will not be enough for them in the future or they would not be fire selling their assets to the likes of Goldman. I don't believe for a moment that Geithner does not realize the extent of looming real estate problems that are still growing behind the synthetically rosy numbers due to government tax credits, faked interest rates by the Mac and Maes, and rising losses banks are having to deal with in real estate asides from the housing market which the government has already approved to let banks essentially cheat on the accounting as to how much loss they are facing.

Furthermore the taxpayer can't seem to catch a break. If assets the US buy goes up they give them away. And if they go down we keep taking hits. Goldman's point on this matter was well said when they completed their last deal with Geithner. It is as follows:

The CEO of Goldman Sachs, Ivana B. Richmore, remarked “This transaction solidifies the long standing relationship between our firm and the US Treasury, which over many years has been very beneficial to both parties, or at least to us."

Really, we are getting sick of the smug remarks of bankers who continue to take taxpayer money and then make veiled jokes as to how stupid the government is. It's true that they are stupid, that's why they have no business being in the private sector at all, but it is our money.

The only reasonable thing to do is make Obama eat his commitment not to give a single penny more in bailout money and prevent the wholesale giveaway of American assets to private banks. Revoke Goldman’s deal and block further bailouts to Fannie Mae, Freddie Mac, and every other rotten financing business out there. When the next hurricane hits lets make sure the taxpayer is not the one standing outside in the rain. It's time for those responsible to take the drenching. We call it capitalism. It's about time the US government learns about what that means.

How Warren Buffett Is Smarter than the G20

I agree with leftfield. Buffet's assets are still heavily skewed towards economic growth in sectors such as banking, insurance, and consumer products. His bets on commodities seem like minor hedging more than anything else.

However, the author is right that the G20 has multiple screws loose. They are one of the most ineffective groups ever assembled. Furthermore, none of them can ever say no or back away from doing things to give each of their economies short term perks. Thus central bankers around the world always make the economic marital vows, "We will depreciate and debase during good times or bad, in economic sickness or health, until revolution or death do we depart."

Sentiment Overview: A Scarcity of Bulls

Doesn't these sentiment indicators usually drop after September and then rise in January into Summer. How much is cyclical? And if it's cyclical what does it really say right now asides from people fret about Christmas season until afterwards?

Obama's Plan A Failed, But Plan B Looks Promising

Restricting imports from Asia will blow low inflation out of the water. Expect huge levels of inflation. Furthermore, if asia spend as wildy as the US who would buy our debt? Certainly not us. People fail to realize that Asia can't spend like a drunkard and buy the US's debt at the save time. The rules of economics apply. You got to have money to loan money.

The proverbial, "you can't have your cake and eat it too" certainly applies to US economic policy when dealing with Asia. Until the US stops partying like a madman there is nothing Asia can do to help them. The US will keep on suffering their periodic economic hangovers from drinking too much of the green stuff (it must be dollar absenthe) no matter what the rest of the world does. A trip to AA is badly needed.

Is the Hated U.S. Dollar About to Rally?

A rally in the dollar for a day a week or two will not change the long term trend driven by lax monetary policy. The only way to reverse that is to let interest rates move back to their normative value which is most definately above zirp.

Consumer Credit: Dreadful

It is much easier to manipulate just about anything than consumer credit yet they even successfully did that with cash for clunkers. Bravo...

Anyway, anyone who thinks that a strong recovery is on its way read them and week. Recovery so far is only in the public sector, overseas, and due to commodity inflation thanks to a watered down dollar. All of these things don't inspire domestic confidence, are unsustainable or have nothing to do with domestic demand, and won't stimulate consumers to borrow more. Furthermore, the added cost of commodity related products, lower wages or no wages, and higher government costs is or will make it that much harder for consumers to save as well.

All in all, consumer spending helps reveal the ugly truth.

Why Gold Is Rising

It is understandable that the US currency should devaluate against just about everything given their overly lax money policies and a spineless Federal Reserve. However, it is strange that gold should rise against European currencies given their announcements to end QE which is needed before you raise rates. As easy money central bank policy leaves it should drive up the price of their currency against gold and other commodities.

If this continues unabated it is a bad global signal of inflation. This would make Australia's central bank correct in assuming inflation is coming and that they need to raise rates sooner rather than later. I wonder when the US will realize that fact. Historically it would be wise to assume that will be a long time after the fact.