Tom Armistead

A Different Approach to Economic Forecasting: A Hard Look at Whitney's Skill

I got the impression from the comments on air around the time of the interview that there was the hope that what she said would move the markets, as Dick Bove has done recently, instant proof of her prowess as a prognosticator.

As others have noted, the interview itself had little substance, certainly no rigorous analysis of the type that helped her make her original good call.

Maybe going out on her own as a lone guru was not a great idea, she may have been more effective in the niche setting provided by Oppenheimer.

Time for the U.S. Economy to Reindustrialize

Some of these people would do well to look up the story of the Triangle Shirtwaist Fire. That's how it was in this country until Unions fought for and won basic rights for workers.

Of course the Chinese just naturally do the right thing without any regulations or interfernece. I saw a photo of a shoeworker, he was gluing a sole onto a sneaker. But it was being done safely: he was wearing a dust mask. Not much use against vapors, but it looked like somebody cared what people thought.


On Nov 16 10:36 AM Bob 123 wrote:

> Tom, there's no point arguing with these right-wingers who do not
> understand how it used to be not so long ago.
>
> You got sick or hurt ? You were fired.
>
> Called up for military service ? Someone else took your job.
>
> Clean air/safe work conditions ? No problem for your employer if
> your lungs/ kidneys/ eyes or something else was shot by the time
> you were forty -- see the first item.
>
> No windows /not enough doors or too small or even barred ? -- You
> were dead if a fire broke out in the plant.
>
> Yep, oh-those-costly rules and regulations. What purpose did they
> ever serve ? Those rules and regulations were paid for in blood by
> hard-working, long suffering UNION people.
> But there are so many who did not study the history of the labor
> movement and have a clue. They did not live it, and their business
> school glossed over it.

Time for the U.S. Economy to Reindustrialize

I think he meant me...both names begin with Arm...


On Nov 16 06:49 AM Don-n-ABQ wrote:

> Who is "Mr. Armstrong"?

Time for the U.S. Economy to Reindustrialize

At the last mfg company I worked for, a group of low-skilled workers sat in a factory full of idle, antique manual Bridgeports doing light assembly work on parts manufactured in China.

There were a few CNC machines in the place, they were Kias. Kia is a Korean company, better known for making extremely competitive automobiles.

Chinese investment takes the form of building modern, productive factories. US investment takes the form of paying hedge funds to speculate in commodities, CDS, naked short-selling, and other destructive manipulations.

And those who speculate and manipulate with funds that should be invested in productive activities defend their actions with libertarian and laissez faire ideologies. The amazing thing is that the victims of this conduct worship those who defraud them, wish to emulate them, and demonize regulation which if pointed in the right direction would bring financialism to a screeching halt.


On Nov 16 12:03 AM Windsun33 wrote:

> Yeah, right. You obviously have not tried to hire any CNC operators
> or setup technicians lately. Or anytime in the past 15 years.
>
> On Nov 15 02:45 PM Tom Armistead wrote:

Time for the U.S. Economy to Reindustrialize

Those control freaks you are talking about were no where in evidence as the mortgage/securitization ponzi scheme ran its course. Nor were there any intrusive government regulations.

Everybody did exactly what they wanted, What regulatory restraints existed where methodically taken down in the name of the extreme libertarian and laissez faire ideologies that motivate discussion in this benighted forum.


On Nov 15 08:51 PM Leftfield wrote:

> "Paint the building the required color, plant the right type of trees,
> make the bathroom window the right size, no big deal." Tom Armistead.
>
> Pullease! That this once-great society has to be hobbled to the requirements
> of obsessive control freaks only is repugnant to me. Look at the
> results; we're lying, faking and stealing our way to buy a bit more
> time until the whole ponzi collapses rather than paying our way.
> Courtesy of all those regulators, lawmakers, paper-pushers we have
> so much of whose concept of orderliness and control fails where it
> really counts, such as Wall St. And, hey, what is positive about
> resultant US finances after this era of mandates, edicts, costs and
> taxes? Or the educational system?

Time for the U.S. Economy to Reindustrialize

Compliance with zoning laws doesn't seem too onerous to me.

Paint the building the required color, plant the right type of trees, make the bathroom window the required size, no big deal.

From there if you have a decent business plan and the ability to run a business, manage people, control costs, etc., you will do just fine.

I am really puzzled by the aliance of libertarian thinkers who just don't understand the concept that others have rights, with those who persist in flagellating themselves and their country because we operate at a competitive disadvantage to a socialist country that manipulates its currency in order to sustain an unfair business advantage for a state controlled economy.

It is really too wierd, the answer is fairly simple, let the Chinese work 60 hour weeks with no benefits and no rights, they can sell the resulting glut of cheap products to each other. In this country, we could import some CNC machine tools and other means of production, train people to run them, and go back to the way things used to be, with the advantage of increased productivity from using updated means of production.


On Nov 15 01:22 PM Windsun33 wrote:

> I think you totally missed the point. The "nanny" government goes
> far beyond what he said - it even gets down to the local level where
> they tell you what type and how many trees to plant, what colors
> you can or cannot use on the building, and how big the bathroom window
> must be in your business.

Time for the U.S. Economy to Reindustrialize

I am so sorry for all the hardhips you have endured. Respecting the rights of others just gets in the way of all kinds of wonderful entrepreneurial opportunities.


On Nov 15 09:13 AM Dan in mpls wrote:

> Has anyone here ever tried to start a small business???? The government
> will be your partner from start to finish. They (the government bureaucrat,
> will tell you how big a building you need, how many bathrooms you
> need, how many inches the toilet must be from the sink, how large
> a sprinkler system to install. They will assist you in designing
> your packaging, requiring labels of all sorts. They will dictate
> who you hire and how much you pay them. They will enlighten you as
> to how many hours your employees will work. They will decide who
> get pregnancy leave and day care. The list of help your business
> partner will offer is endless. Finally, once you are done with your
> startup phase and when you are successful, they will take a growing
> portion of your profits to support the legions of poor people in
> America who cannot work as they don't begin to have the skills necessary
> to hold an entry level job.
>
> It will take 20 percent unemployment, which will happen yet, before
> our business partner, the government, decides to butt out and let
> someone start a business on their own at a cost that will make American
> products competitive on the world market.
>
> America does not have the wealth it once had. I hear daily how we
> have borrowed our way to an affluent life style. Yet I have never
> once heard any practical suggestions as to how we back of the government
> intrusions that have been suffocating new businesses. The government
> has not laid off a single worker in this opening salvo of what will
> be a Great Recession. Government employees are waltzing through this
> thing unphased and strengthened. Their every missed dance step is
> on the neck of some schmuck who has an idea and a dream.

Time for the U.S. Economy to Reindustrialize

You are too polite in labeling GS, BAC, JPM et al as participants in a knowledge-based economy. Too much of their operations are in the fantasy land of financialsim, and too little in the prosaic world of utilitarian financial products, loans that support industry and the creation of productive assets.

Eamonn Fingleton's "In Praise of Hard Industries, Why Manufacturing, not the Information Economy, is the Key to Future Prosperity," written in 1999, makes an extremely good case for the need for the US to retain (or rebuild) its manufacturing and industrial base.

It also includes, in its 3rd chapter, an incisive and prescient critique of financialism. If there is one lesson coming out of the meltdown of our financial system, and any hope for constructive change, it is in the area of rebuilding a strong manufacturing capacity in the US, providng real jobs that create value.

Limiting Banker Pay - Another Downside

The answer is the banks are too big. The bigger the business, the bigger the bucks the top dog has to receive.

Cut GS, JPM, etc into ten equal size banks or trading houses and put one man at the top of each making one tenth of what Blankfein, Dimon et al make and that problem is solved.

From there you could go on to CDS, manipulation of markets, derivatives, fraudulent conduct, high frequency trading, front running, naked short-selling, insider trading, twisting, scamming, lieing cheating and stealing generally.

The retail investor has been slow to stick their head out of the bunker and get back into the game. Well doing something to level the field, and getting the government out of the game, would do wonders in that regard.

The only proper role for the government is as a referee, impartial, well versed in the rules, and equipped with an ample supply of red cards.

If Goldman Is Selling, Are You Buying?

Because GS has done so well over the course of the meltdown and recovery, it is apparent that they have a lot of insight into a lot of areas. The ethics and legality of their conduct are widely and correctly criticized and should be the topic of careful regulatory scrutiny.

When they make calls such as sell KBH short, oil is going to 250, GDP will be ???, you know they know something. You just don't know whether they are setting you and other investors up for some kind of a hosing.

My reaction when GS says something about an area I am invested in is I look very carefully at my thinking because I am pretty sure something is moving around under the water or behind the curtain.

Dinallo Has Common Sense Solutions on CDS and Regulatory Issues

Disclosure correction, I am long MBI

Bank of New York and Bank of America vs. AIG: No Winner in Sight

I spent a tedious half hour reading the decision. The transactions consisted of Master Policies under which individual certificates were issued for each loan.

UG was attempting to rescind the Master Policies in their entirety but did not have a very good case based on the wording of the policies or the conduct of the parties. UG had a right to audit or sample the underlying loans before issuing the Master Policies: however, they did not do so. So the Master Policies will stand. However, individual certificates can still be denied based on fraud.

UG was trying too hard to be "easy to do business with" on these bulk transactions and they didn't exercise due diligence. The Master Policies had provisions on how to handle fraud by the issuer so it was part of the deal.

THis is not going to blow up the MI system. All mortgage insurers routinely deny coverage in the event of fraud and that is going to continue and will be supported by the courts.

Who Owns the Derivatives Market?

Also included in the OCC report is a listing of credit derivatives total assets vs. total liabilities for the five largest players. Since these banks control 95% of the market, I would suggest that the assets should be equal to the liabilities for all the banks taken together. Right now the difference is the assets are greater than the liabilities by 49 billion, down from 64 billion for the first quarter but still impressive.

It appears that the banks always have unrealized gains on these derivative positions. Buffett noted that frequently both sides of a trade will think they are the winner, and it can go on for a long time.

Another possible motive for resisting regulation and the accompanying transparency is that it would imply an ability to match the assets on the books of one bank with the liabilities on the books of another bank or perhaps a hedge fund to see if both sides of the trade are keeping score on the same basis. It would be interesting to find out if they are or not.

Bernanke Proposes New Oversight to Manage Risks to the Financial System

The government confiscated 80% of AIG as a fee for making loans that will be repaid and generate a profit. AIG was forced to take a loss on their assets now in Maiden Lane facilities, Ed Liddy couldn't stand the pressure, paid insured parties in full and then gave the assets to the USG at half price. That sorry scenario is a good reason to have a set of rules that officials must comply with to wind down or prop up questionable financial institutions.

As far as systemic risk oversight, the SEC was supposed to be regulating GS, ML, C, JPM and LEH as CSE's: the SEC bragged before Congress at how good their oversight of systemic risk was, how every month those under supervision reported their VAR and everything was under control. Regretfully this approach of having those who were supposedly being supervised set and report their own capital requirements and risk profile was a useless exercise in self-deception.

What is needed is hard and fast capital rules, rigidly applied, together with legislation outlawing financial gambling by the use of derivatives. That would get us back to where we were before all the trouble started.

On Picking the Right Pundits

I was glad to hear about Garzarelli, she had dropped from sight. The call for 1,250 is a little higher than the 1,200 I am using right now but it is reassuring to see someone with long-term credentials thinking along the same lines.

Also glad that she is against FASB on reviving or extending mark to market.