APM

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 ...

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?

Cramer Grilled on Jon Stewart

I found Cramer entertaining to watch. When I am too lazy to do any thinking, I just put him on, like watching a dog do the tricks.

I just do not follow him and do the tricks myself.

To be fair, I actually heard more bearish comments from Cramer than almost any other hosts on CNBC. So to saw him humiliated on TV and took blame for the entire CNBC team, I actually felt a bit sorry for him.

But I did like what Jon Stewart said about having two games going on, one is for public, about keep investing into 401K and pension for the long term, the other is for the industry, all about quick trading and short term profits.

This has been my suspicion all along. Remember what was the promise to the workers thirty years ago ... be loyal to the company, work hard, and we will take care of you with pension. Now they changed the rules, and kicking people off the pension plan (if it still exists) after thirty years of service.

So what's the story for the working bees today? Save regularly over thirty years, put the savings into 401K and IRA (because income tax rate may be lower), diversify (between bonds and stocks only), and you will be fine when you retire ...

What if it is all a hoax? What is preventing them (the government and business) from changing the rules after thirty years?

And judging from the recent events, I would say they definitely will change the rules to screw up the savers again.

So make sure you really spread your savings, into other countries, into other asset classes beyond stocks and bonds.

Mark-to-Market: The Bogeyman of the 1930s Is Back

The purpose of the mark-to-market rule is not only to force the banks to recognize loss when it happens in the market, but also to serve as a cautionary measure, so the banks will be more careful with their investment in non-liquid assets.

For the second purpose, I see its value. And given the current mess, I would stay it is working just fine.

Yes, mark-to-market may exacerbate the current situation and lead to more bankruptcies, but it is not the cause. The cause is the excessive risk taking even in the presence of this rule. Instead of causing the situation today, the rule exposed the problems earlier, and helped to avoid a even more desperate situation down the line.

Just ask yourself, if the mark to market rule was not restored in 2007, would we have avoided the fundamental problems that are manifesting themselves in the situation today? If these problem are not exposed today, would that be a better scenario for the financial industry and the economy in the future?

So did the rule lead to the financial crisis we have today, or was it reintroduced to curb the excessive risk taking and accounting irregularity that was the root cause of the mess today?

Chinese Are Likely to Halt Purchases of U.S. Treasury Debt

This kind of attitude is exactly how the US has lost its leadership in the world.

Lead by example, like Dr Paul would say.

On Mar 13 08:53 AM LogicalSinger wrote:

> << I request the U.S. to maintain its good credit, to honor its promises
> and to guarantee the safety of China’s assets.>>
>
> No problem, Premier Wen, we will honor our promises... just as you
> honored your promise to introduce democracy to China, a promise made
> back when our country opened its borders to your products. You can
> count on us, pal! (toothy grin and wink)

World War III: U.S. vs. China?

Hence to fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.

-- Sun Tzu (400-320 BC)

Obama Placing the Economic Cart Before the Horse

But, but ... it would be so painful to the candlestick maker to forgo the free steak and bread, to cancel his vacation, and do some real work to continue or improve his production of candlesticks.

What about the idea of "Sharing the wealth"? Wouldn't that make the life better for the unfortunate candlestick maker?

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."

How the World Almost Came to an End on September 18, 2008

The numbers don't add up. This seems to be the same old fear mongering.

According to the story ... Fed noticed the withdrawal at 11 am, when account holders withdrew 550 billion in the past two hours, and it was estimated that the total withdrawl will be 5.5 trillion before 2 pm.

So assume the withdrawal started at 9 am. From 9 am to 2 pm is 5 hours. So the estimated withdrawal rate will be 1 trillion per hour on average, especially for the last three hours (11 am to 2 pm), it will be more than 1.6 trillion / hour.

Wow.

... and the disaster was held off by raising account guarantee to 250K.

This implies that the withdrawal happened mostly in small accounts. Assume 50% of the withdrawal was from personal accounts with less than 250K, that will be 5.5 trillion x 50% / 250K, which is about 11 million.

I think the assumption is quite conservative. So that means, on that day, people are withdrawing from or closing at least 11 million MM accounts. That mean it is likely to be an uncoordinated effort of millions of individual investors.

Then after the announcement, most of these millions of people hear the Fed's new guarantee within three hours and decided not to withdraw. Information sure travels fast!

And among these investors, a lot them didn't cash out their brokerage accounts after losing 40% in the stock market, and suddenly started worrying that MM fund is breaking the buck with a less than 1% loss?

Wow.

Also, according to the report form New York times on the next day ...

"Money funds held more than $3.4 trillion in investor funds, as of the most recent industry tally released Thursday, down almost $170 billion from the previous week."

So is it 3.4 trillion, or 5.5 trillion? and every cent will be taken out?

Obviously, we have not heard the real story, or the full story. Or maybe I have missed anything obvious?

Black & Decker to Leave China for India?

So in 2001, labor cost in India and Vietnam was more expensive than in China? Why didn't they move the production to those places then?

China's competitive edge is not just low cost. It is the combination of cost, skills, and strong work ethic of its workforce.

Bearishness at 20 Year High: Big Bounce in the Waiting?

If 70.27% bearish sentiment indicates a rebound soon, and the previous record was 67%, what happened in the last couple of months when it was 68%, 69%, or 70%?

What makes 70.27 a magic number?

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.

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.

Just Pay Off Everyone's Mortgage

Hit the "Easy" button, and reboot the Matrix.

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%.