APM

Why U.S. Government Should Cut Federal Workers' Lavish Compensation

I will give you an easy solution ... vote for Ron Paul, or politicians who share his ideas and policies.

Is Being Bearish About the U.S. Market Unpatriotic?

It is so easy to be patriotic these days ... there must be a manual for it somewhere. Maybe "Idiot's Guide to Patriotism" or "Dummy Book for Patriots" will hit the store soon.

You must buy it to be patriotic!

Recovery Is Underway But Double-Dip Recession Risk Remains

All the subsidies for cars and houses are again distorting the market condition, and getting people deeper into debt. Every purchase made possible by the subsidies is just a new big load of private debt on top of a new smaller load of government debt.

The house of cards are getting higher and higher. Hooray!

I know the businesses are always trying to convince their customers to spend money to "save" money, but obviously, our government believes in this idea too.

Cash for Clunker Homes Is the Real Expense to Taxpayers

Call me old school, but the price level built on historically low interest rate, massive government subsidies, and 5% down payment will not be sustainable, especially in an environment when unemployment rate is running at 10%.

The Cost of a Global Empire

In my opinion, the current economic and financial mess, in fact, was created by the explosion in military spending since the 90's, especially after 911.

Everybody is talking about how Greenspan kept the interest rate low for too long and triggered the disastrous housing bubble. But ask yourself, why did he do that, in spite of his awareness of the "irrational exuberance"?

The interest rate must be kept low to finance the runaway government spending, especially in military, when fighting two wars without any cut of spending in other areas. As you pointed out, "Americans not in the military have sacrificed nothing in the last 7 years of war. We bought SUVs, McMansions, flat screen HDTVs, Blackberrys, iPods, and Rolexes while Americans died and the cost is passed to future generations."

Are the Big Banks Gaming the Taxpayer?

You are right, this is mind boggling ... how the American people can silently accept (and some even welcome) this kind of policy from their elected officials ...

Anatomy of a Giveaway, Or Why Stocks Soared Yesterday

As indicated by the last equation of Vehicle 2010 ...

Vehicle 2010 — $500k mortgage = $720k FDIC debt - $220k Treasury equity + $0 private equity.

The loss of the private and public equity will have be instantly recognized if the vehicle needs to mark-to-market of their investment. But why would they do that? As long as the creditor (FDIC) is not in a hurry to liquidate the vehicle and recover its loan, the vehicle will just live on.

So although in reality, the private and public equity is wiped out on day one, but on paper, the vehicle will still survive. As a result, instead of zombie banks, we have zombie vehicles.

Without the pressure of being forced into bankrupt, the zombie vehicle will be collecting the interest payment of the mortgage. Given the amortization structure of a mortgage, the private/public equity will enjoy some handsome returns on their investment in the first couple of years. After the initial investment is paid back, the equity portion of the vehicle will enjoy net-gain interest income in the years to come.

Due to inflation, or even high inflation, the collateral (the house) will eventually worth its claimed 850K in the market. That's when the mortgage will be dumped back to the private market, and everybody (FDIC, Treasury, private investor) gets their money back.

The (unlikely, but possible) risk here is what if the deflation continues in many years to come and the house never gets back to its 850K paper value again? Well, the vehicle will just hold the mortgage until maturity. The private equity, once made its 65K investment back from the interest income, all the future cash flow will be positive. The treasury, as an equal partner, will show the same cash flow to the public, and claim the tax payers are making a profit on the deal also.

But nobody will talk about the opportunity cost of the FDIC loans, which at the end of the day, coming from the pockets of tax payers also. The FDIC is losing money since day one, in the form of offering a extreme low cost loan in a inflationary environment.

So back to the Extra Credit question ...
Assume the asset will decline to $500k, and that the investor knows it will. Why might he be still be willing to lose money investing in the equity of the vehicle?

Answer: They won't lost money, because the vehicle will not be forced to liquidate. They will most likely get their money back and make more in short time, by collecting the interest payment collected from their investment in the 14-times leveraged vehicle sponsored by the federal government.

The Geithner Plan FAQ

Ah ... all the effort to get back to an abnormal normalcy. Since when a 17%

That's for the clean and clear explanation. I am still confused, though, about the 850 billion debt financed by FDIC. I thought the FDIC is itself in need of equity injection, so where will this 850 billion come from?

What the Fed's Announcement Means for Gold

Thank god they are not buying up guns and ammos. Or aren't they?

Diversification is the key. Sure, they are buying up farmland, but I guess they are also buying a lot of other things, including gold.


On Mar 19 09:11 AM yellowhoard wrote:

> The billionaires are buying up quality farmland around the world.
> They'll get everyone's gold eventually in exchange for food.

Volume Gives Shorts the Upper Hand

Today's market action after the Fed announcement convinced me more that this is dead cat bounce. The fact that Fed is forced to intervene in such unprecedented scale is a good indication that things are going terribly wrong.

I was expecting the market to turn around in April when the earnings hit the news, now I am not so sure. We may see significant downward movement before the end of the month.

Jim Rogers Has Gold Coins in His Pockets

I hope he is wrong, because I am selfish. But for my children, for the future of this country, I hope he is right.

In a news conference, Rep. Frank says he's "very skeptical" that retaining the (AIG) people who made these mistakes is a good idea. "We're the owner," of AIG, he says, "and it's time for us to exercise our ownership rights."

Less talking, more action, more result, please!

Wall Street Breakfast: Must-Know News

Hmm ?? Who is going to be forced to repay the bonus? AIG with the bailout money, or the individuals who received the bonus? If it is the former, what's the point? If it is the latter, then how can this avoid the "legal fight"?


> In light of this, White House officials later said the payouts couldn't be recovered from their recipients without a legal fight that would be even more expensive to taxpayers. Instead, the Treasury plans to attach new provisions to the $30B installment of bailout funds approved March 2 in order to force repayment of the bonuses.

Wreck a Company, Earn a Bonus

You got what you wished for. See what happened in Iraq, and who is making money from the war.

> Bogus terrorist bounty. The CIA will fund this payout for any informant who provides information that distracts America from finding and killing Osama bin Laden. Bounty is doubled if the tip involves “bringing democracy” to nations that aren’t asking for it.

What's Left for Foreigners to Do with Dollars, But Spend Them in the U.S.?

A trend emerged in recent months indicated that the Chinese have been spending their USD reserves on energy and raw material resources and productions, in Russia, in the Middle East, in Africa, and in South America.

Maybe US can offer off-shore drilling rights to a Chinese company as payment for its debt obligations. Hey, it's going to create more jobs and business for the Americans!