TruthSayer

More from Geithner - no more AIGs: "Any firm that puts itself in a position where it cannot survive without special assistance from the government must face the consequences of failure. The proposed resolution authority would not authorize the government to provide open-bank assistance to any failing firm."

So easy to talk about the future....yeah no more too big to fail...we will no longer bail them out (but wait until I am not in charge so I dont have to make the hard decisions).

California: Entering Inflationary Depression

Let us not forget the failure of the California Energy Policies....They have ignored available indigenous fossil fuel opportunity e.g. offshore production. They dont want cheap fossil fuel from other regions to enter their grid e.g. coal. They have chosen to push forward into renewable - which only a fool/dreamer could tell you its cheaper excluding the externalities.

The huge solar push they have is DOA. Natural gas prices climbed due to it was the only nearterm demand choice for states like CA. So without letting the market settle and develop towards the demand they used it as an excuse to venture into the renewable space by extrapolating cost figures of nat. gas not wanting to understand market dynamics and behavior for renewables also apply to fossil fuel in that mankind in the states would develop and nuture the advancement of technology when given a demand and/or price signal. Now we have a plethora of new supply - shale gas with a proven technology and know how.

So CA resident go ahead and develop and procure your $200/MWh power....ignore the $4-$10/mmbtu gas supply which produce $28-$70/MWh power.....even worse residents can buy a microturbine and run gas power for $60-$150/MWh and disconnect completely from the electric grid - solar wont be able to say that.....

Now to the externalities which a significant portion of society is pushing on to the public for which the public has little internalization of the issues at hand. We will save the planet from change......change for the better or worse irrelavant (net it maybe for the worse but not necessarily for you)....oh and you wont tangibly know this until 2100 and beyond....its for your kids and grandkids....I can buy this I just dont see the general public buying....Goodluck selling this when you have double digit unemployment and your concern about living the next day beyond your means.....

CA is a debacle please let us learn not follow like lemmings.....

Lehman's Collapse, Revisited

YEP the mistake was lehman only if your circle was too small. Draw the circle larger it was the bailout of Bear.

By the time lehman came around - since they were bigger they did not prepare for bankruptcy - why should they Bear got bailed out.

The bankruptcy of Lehman could of been better managed but it was a result of not preparing due to the anticipation of a bailout per Bear.

So if Bear did not get bailed out - can you let lehman collapse to - and my answer would be yes. You would do something similiar to S&L it would be orderly and backed by US govt. temporarily - it would not be a bailout but would be an orderly bankruptcy. All players would of prepared well in-advance. All said that was another dimension.

Another hindsight would be Lehman was GS biggest competitor - GS rules our govt. how convenient Paulson didnt save Lehman. Funny I was watching Star Wars Episode 2 with my kids how interesting the Chancellor reminded me of Paulson - played both sides in the end to ultimately put him on top.

Revisions, Revisions

U need to keep this data series updated...its AMAZING! again today - 9/24 - Initial Jobless Claims: 530,000 vs. consensus of 550,000 and last week's 551,000 (revised from 545,000). Continuing claims fell to 6.138M from 6.261M.

Fed Open Market Committee: Economic activity has picked up. Fed will purchase $1.25T of agency mortgage-backed securities and up to $200B of agency debt, gradually slowing the purchases to complete them by end of Q1 2010. Maintains federal funds rate at 0-0.25%, and conditions are likely to warrant "exceptionally low levels ... for an extended period." Resource slack means inflation will remain "subdued for some time."

Wow...we get what we deserve...no outcry no change...

They say its all good we are on the way to recovery. I ask then why buy $1.25 Trillion of MBS? I didnt know it was the govt. fudiciary responsibility to buy MBS. It must be a policy of no loser left behind...no large bank to fail....

Commodities probably the only logical fundamental play. You could by the most expensive/high risk stock - those currently are the winners but thats got to blow up eventually. Then you look at the treasury yields still low - as China and Japan play chicken with the US thinking they can keep the yield low in order not to increase the value of their currency meanwhile we stick it to them by writing more debt....Another contradicition if we are recovering why settle for 4.2% yield in the 30 yr treasury when the market will get you 12%+ and Shanghai index probably 20%+

I would title this time as "A confluence of paradoxical ambiguity" subtitled the new consumer -- the US govt.

What's the U.S.'s Energy Policy?

Well I will be meeting with Dr. Chu next week....I suspect he will still focuse on the great big hope - Renewables.

What is even sadder than you commentary of oil prices is the fact you focused on last year price and just the price of crude oil....Lets look a little farther back for crude oil 2003=31 2004 =42 2005=56 2006=66 2007=72 2008=99 Now lets look at wholesale gasoline prices in cents per gallon 2003=87 2004=117 2005=160 2006=183 2007=204 2008=247 2009 YTD= 151

Now you got to ask yourself whether the consumer really did adjust to the 2005-2008 runnup - particurlarly since the consumer was running on credit and home equity. Employment levels (people in workforce) are now at 2005 levels - in essence we have lost all the job growth that we had. This maybe a shock but the current price we are paying is VERY high given the supply/demand balance and the economic well-being of the country. How is this occuring - our alternatives are limited and the weakness of the dollar allows the commodity prices to rise as the rest of the world is growing - yes the rest of the world is growing faster than the US.

The current price is taxing on the US consumer. Just wait by next year you will see prices being compared to 2009 which will be 50+% higher - Jan 10 vs. Jan 09 - on a nominal basis.

Okay so what does that mean with energy policy....well the administration has the big push for reduction of CO2 via renewables. I wont argue the issue of global warming here, but go on with the logic. Oh and lets not forget other issues healthcare, 2 wars, and other knick nack items (bailouts etc...) Renewables is not and cannot be cheaper than the current fossil fuel choices outside the externality cost of CO2. So what are they doing well govt. subsidies. Okay so adding to all the other "minor" cost we have this push for alternative technology. The alternative technology option will look VERY poor if we continue to promote or develop fossil fuel - so they probably wont do this. This then binds us back to ignoring our own resources so prices can rise.

Follow the logic...the ultimate energy policy direction is a convergence of alternative technology economics with current fossil fuel markets. So lets think about this in terms of power - existing coal disptach cost around $30/MWh - Wind with govt subsidies $100/MWh - carbon cost or whatever you may want to call it will need to be close to $100/ton - translated to gasoline an additional $1/gallon. But fret not the results of this will be saving the planet for the future generations - you will suffer a bit but think about the kids in the future.

Ford: Defying the Odds

Congrats on your call - Ford at 7.03 in the pre-market.

More from Goldman Sachs (GS): The firm says that with the $318M in dividends it paid on its $10B TARP investment (and the $1.1B it paid to redeem warrants), U.S. taxpayers have gotten a return of 23%.

As a US taxpayer I am glad we got a 23% return, but what could of it been if we held the warrant or sold it in a public auction.

How to Profit from the Commercial Real Estate Fallout

SPG a good buy? I dont understand the logic. SPG earnings based on expected mall rental rates, continued tenants, and low financing. With vacancies rising, rental rates falling, and underlying finance cost rising how do those supporting a long position in SPG?

SPG is showing P/E of 26. Forward P/E of 8 - using $6 earnings est. - which is good assuming the underlying included the issues above....how ever I doubt that. If you read their guidance and outlook in the Q's they continue to tout growth...where there is no growth. The competition of vacant retail space and the lower consumer spending will lower rents for everyone including SPG.

The Bull Case for Simon Property Group

mdpath - your right I should disclose.

I was short SPG got out in low 30's now I am rebuilding my short position in SPG. I am long SRS - selling calls on the rise owning calls on the fall. Short VNO - okay that covers disclosure of the subject -CRE. I wont go into the rest of my port.

The Bull Case for Simon Property Group

Looks like there are no supporters for your analysis.

I will have to agree with the commentors - SPG is in for trouble. It maybe that SPG is the prettiest horse in the glue factory - nonetheless it will feel pain. I would even venture to say if we do continue on this fake/delayed rebound, people will likely jump on things that are exploding - financials/technology/... - versus the obviously painful commericial real estate play. Real estate in general is clearly understood to be overbuilt.

Encouraging Similarities to the End of the 1973-4 Bear Market

Funny to think we can suggest this recession can closely represent 1973-1974 when all we have put in and all the wealth lost is causing many to pronounce this as the Great Recession and a small potential to be a great depression. The govt. is spending propotionally more than WWII recession/depression.

The top 10 monthly gains in the market resided in the 1930's. The bottom of the market was not until midyear 1932. Now I am not saying we are in a great depression or even have a strong probability I am just moving from one fact to another. Did you know - the March gains dont even show up in the top 10. Another perspective - 1Q1930 saw a 15% gain vs 4Q1929 - only to see by the end of the year it was down 40% from 1Q1930. Okay so lets say we are not in a great depression maybe only 50% as painful as the great depression - this would suggest a retrenchment of 20% by year end.

My main point is be careful comparing this to another period without comparing the scale of the issue to the other period.

Commercial property prices fell almost 15% in 2008 amid the credit storm. The move back to 2005 levels erased three full years of gains.

Did you know? During Japan's lost decade commericial value fell 80%

Peter Schiff Answers His Critics

The truth is investing is hard - and its really all about timing. I have predicted so many things in my career from the asian financial crisis which lead to the oil collapse in 1998 - dig deep I had my 10min of fame in the press - to the impending doom of the real estate market - to now our current situation. You would think I would be the richest man alive. Well it does take money to make money and being at the right place at the right. Lets look at some examples: I was shorting Toll brothers starting in 2006 - however they kept lying every qtr how things were well and I just couldnt bear the dividend and stock loss I was taking. Now look - but net I lost money on that trade. Lets look at 2008 - I started shorting natural gas in May and June - margins were a pain in the rear as it shot to $13 on irrational exuberance - i couldnt bear it anymore and I lost - now look $4.50/mmbtu. Now dont be all sad for me I did make money in other areas its just you cant win it all the time particurlarly in the short term. As a good trader friend once told me "the market can be illogical longer than you can be solvent"

Lossing money does not mean your wrong in the longterm - just bad timing and not enough money in my case. If you read my articles I have publish - I do hope Peter and I are wrong but the facts are clear if your read the writing on the wall without any preconcieved notions. I estimate there will be need to be at least $15 trillion dollar of deleveraging in the US market. I will end on a good note - one of my article leaves hope of a silver bullet Peter and I could be missing - some sort of PC like revolution to propel productivity. Let me know if you do see one - I am on the watch.

GMAC Bailout Flaws: No Appreciation of History

GM failure is relative just like many other things. There are many alternatives and this is not a black and white issue.

I do not think a collapse of our auto manufacturing would occur. This is just like any other manufactured item. If you have too much supply you will have some pain as you transition back to equilibrium. Orderly bankruptcy with government backing is one gray alternative. This is used by almost any other manufacturer when they hit tough times. The US government could of backed all loans to suppliers to prevent the cascade of collapses. They could even promise to back all warranties as the transition was being made.

A truth - this goes for not just GM but the banks - Avoiding bankruptcy helps mainly current shareholders and the executive team.

GMAC plan is trying to prop up demand. You cant believe the solution is to prop up people buying cars when they dont need one and/or cant afford it? WHY is it the solution for many is to go back to living beyond our means? Its not sustainable.

On Dec 31 09:29 PM sr9web wrote:

> Ok, so what would you recommend? Let GMAC fail?
>
> Get real, you have no f'n idea how bad things will be if GM fails
> and GM needs GMAC.