thku4grace

Fannie and Freddie Shareholders Benefit More than Homeowners

Not curtailing Fannie and Freddie fee increases may not be part of a plan to return the GSEs to viable independent entities. It could be more about not aiding the foreclosure alternative to modification of loans. I seriously doubt the GSEs will return as independent entities, if they ever were. The GSEs do provide an important service in the mortgage market but more importantly for the Obama admin, they are easily manipulated to provide certain social benefits that aren't otherwise easily accomplished. Unfortunately, that is what got us where we are today, but they will never get their cotton-pickin' hands off the GSEs. The GSEs will always be used for social engineering.

Chrysler: Held Hostage by Cerberus

On Feb 18 01:05 PM Bob Lunn wrote:

> Cerberus is playing poker using Chrysler jobs as the stakes. I don't
> think Chrysler should have received access to public funding in the
> first place given that it’s a private company. I also don't think
> providing no risk, low interest loans to Chrysler is going to save
> that many jobs because I suspect the market for Chrysler products
> in 2009 is going to be so low that Chrysler is going to have to lay
> off major numbers of workers anyway.

I agree that Chrysler shouldn't have received access to public funding, but then I don't believe either should Ford or GM for the simple fact that these companies have been poorly managed for a long time and the current financial crisis was all that was needed to shake up the subpar performers from the market. Free capitalism is the best avenue.

> If Cerberus wants to save their investment, let them kick in the
> necessary funds and take the risk. If not, let Chrysler go bankrupt.
> If the Government still wants to try to save jobs, let the Government
> buy the assets for next to nothing, and provide the necessary funding
> to take them out of bankruptcy. This effectively nationalizes Chrysler.
> If it does become economically feasible, at some point in the future,
> sell shares and make the company public again. Using the Poker metaphor…
> CALL… show me what you got.

What I disagree with is that there should be special significance given to publicly traded firms over privately held firms. If you ask Congress they will tell you that for both companies its about jobs for the working class. I don't doubt Chrysler will likely need to lay off many workers...but so will GM and Ford. Car sales figures make it quite clear for all.
The problem I have with your post is you have colored Cerberus as a fat cat company looking for welfare from the government and thus are undeserving. That may be true but what about GM and Ford? Don't institutions and rich people own these companies too? Kirk Kerkorian had a large ownership position before he gave up and sold out. Was he the only one? I think not.
What about asking GM management to put more of their personal assets into GM? Don't they believe in their own company? Or do they only believe in it as far as government money will take them?
I mean who needs diversification? What about the UAW pension making a big investment? They have a lot to lose and yet not only will they not invest, they are even unwilling to offer much of any concessions. Why is it somehow different? Using a poker metaphor, perhaps we ought not deal off the bottom of the deck to some firms that we attach some misguided working class company mentality and deal fairly. Frankly, I would rather the Congress took the deck and went home for all 3 firms. No loans till after renegotiation through Chapter 11. But enough of the class warfare crapola.

Yahoo Appoints Icahn to Board, but TWX Non-Compete Clause Keeps Jon Miller Off

Icahn buying into Yahoo will be like Motorolla part 2.

It's Official: Jerry Yang Has Won

The sad fact is for the long term, Yahoo is a great long term----- short play. In the next couple of months it may rebound back into the low 20's but there isn't anything that will get it back to 30. Short some now, and some more if it gets to 22 or so. The Internet is a very mature market but can be better monetized by those that can identify those types of opportunities. Sadly, Jerry Yang does not have that ability, at all. This might be an early call, but the die is cast. Yahoo is done.

Rant Anniversary - Cramer's Mad Money (8/1/08)

Any regular watchers of CNBC havel seen this Cramer implosion at least a dozen times. I think an important fact about this video is part of what Cramer revealed. He was upset with the Fed to be sure, but it was due to the loss of jobs by many of his friends who had been working in the industry for 25 years. One should ask who his friends are who are losing their jobs? Cramer's 'friends' were working for hedge funds, and investment banks that didn't due their own due diligence before entering into what had been a very lucrative market, but one that had yet been unchallenged by the eventual defaults that would occur as these adjustable sub-prime loans adjusted upwards. Cramer's friends richly deserved to lose their jobs. They were irresponsible with other people's money. They didn't do the required due diligence and instead banked on the lucrative fees they made in the short term so as to fully capitalize on their bonuses year end. These guys should be working at McDonalds with the business acumen they show. So Cramer's anger is very, very misdirected. It should be directed at the sheer stupidity and greed his good friends had. But then this just goes to show you what a pompous, out of touch, greedy jerk he is.

Why I'm Buying Massey Energy Ahead of Earnings

Consolidated Energy may have a bad reputation for production problems but Massey missed earnings two and three quarters ago. Tonights earnings beat expectations substantially but only before litigation expenses. I would think the street would ignore the one time write off, but the after market hasn't been too kind.

The Housing Bill: One Step Closer to the United States of Zimbabwe?

"However, as Ron Paul points out, mortgage employees did not cause the housing crisis so it is an irrelevant provision that does nothing to address the root source of the housing crisis and is just an attempt to scape goat them"
To be sure, the blame doesn't rest on any one business or sector, but to even imply that mortgage employees didn't have anything to do with this crisis is not only laughable, but a downright lie. I would be surprised to find no evidence of mortgage companies padding Sen Paul's campaign warchest, but that's the skeptic in me. However, the alternative is that he is incredibly stupid and ill-informed. The fact of the matter is that mortgage companies like Countrywide served by their employees who sought commissions on as many new mortgages as they could throw together had aggressively pursued sub-prime and alt-a mortgages when it became apparent that both investment banks, Fannie Mae, Freddie Mac and credit rating agencies weren't minding the store. There is blame to go around but it was the mortgage company greed that initiated this crisis in the first place.

The Housing Bill: Uncle Sam Is Moving Into the Spare Bedroom

Yeah, no political axe to grind here! Ha ha! Let's get a few facts straight here. Number one, mortgage speculation is hardly the doing of the Bush administration. Alan Greenspan has a hefty amount of responsibility here. He was apprised of the developing problem with sub-prime loans, and chose to not get involved in the free market. There is been no oversight of mortgage lenders ever. This could have happened during any administration. Second, it was the Bush administration that did an annual appeal since 2001 for Congress to reform Fannie Mae and Freddie Mac. Since these GSE's buy most mortgages, do you think the situation would have developed as it has? The problem is that government regulatory powers have to be balanced between what is needed to keep markets functioning properly and allowing for innovative solutions. Congress has a tendency to do nothing or far too much, like the current bailout. My biggest problem is the fact that I don't currently own a home. Some may say that's a blessing. I disagree. While homes will get cheaper, as they should, I will bore the added tax expense of bailing out people many of whom bought outside of their means, and others who out and out lied about their income in order to qualify. Both cases were of people greedy to get into a real estate market that they thought would go up indefinitely. Many buying beyond their means knew they could potentially see their mortgage payments ratchet up considerably but thought they could sell into a great market and pocket a good return. This is what I'm paying for. Additionally, I will pay dearly to buy into a home loan due to the need of financial institutions to make up for what they are losing on these home loans. The spread between mortgage rates and comparable treasury securities will expand exponentially for years to come. There isn't any way around this. So I repeat, if you don't yet own a home, you're screwed!

The T. Boone Pickens Approach

The T. Boone Pickens approach isn't quite what some have made it out to be. Pickens of course, is leveraging his name to gain wider acceptance for his own plan of windmills in the Texas panhandle. His goal is to build enough support to get Congress to act on tax credits for his new fledging operation. However, Pickens' commercial raises a lot of other questions. I doubt that he isn't genuine in his desire to see America stop sending greenbacks to other nations. However, these commercials only highlight one of his ideas, while his biggest plan is to see government and industry move to natural gas for transporting goods nationwide. Furthermore, his statement "we can't drill our way out of this" plays to the left for support for windmills while in subsequent interviews he admits we need to drill off the coast as well as ANWAR. This is much more realistic but not supported on the left. The fact is we need to stop shipping dollars overseas, and we will only accomplish this by doing EVERYTHING. The left would have us pick out only a few potential sources for energy----solar, wind, and geothermal. With this plan, we are sure to see oil much, much higher for years to come. But that is the plan. With oil at 200, 250 a barrel, these alternative energy plans become more competitive. However, it won't relieve us of the high cost of these energy sources. Its pretty clear that at some price oil could easily send the world into a recession. As bad as that may be, we will benefit from lower oil prices do to a drop in demand. With solar, wind and geothermal, that's not the case. Companies can not cut their prices due to a drop in demand. They have to recoup their large investment. We are now locked into a lower standard of living. This is an extremely unwise plan.

Look What's Blowin' In: The New Wind ETFs

Denmark isn't quite so happy anymore. Large increase of Muslims have left the country with terrorist fear. Always had freedom of speech and the press but now finding they can not critique Muslim life, Middle eastern countries, other than Israel of course, and no cartoons of Mohammed.

No Atheists in Foxholes - No Libertarians in Financial Crises

One important point to make about the current bail-out proposition of Fannie Mae and Freddie Mac: Six or seven years ago, it was revealed that the GSE's were cooking the books. It wasn't long after that the Bush administration was harping on Congress to reform them. I heard it so many times over these last few years, I concluded that it must have been impractical or virtually impossible, or they probably would have done it by now. Now we know. It was because Fannie Mae and Freddie Mac were lobbying like crazy. Dumping loads of money on Congress. Everyone knows it takes 60 senators to get anything done in Washington. While we approach the next election, voters ought to focus on the trail of money from the GSE's to Congress. Congress needs to pay the price politically for the awful price generations will be paying for years to come.

10 Winning Stock Themes in an Obama Administration

"Globalization is a shell-game, a scam. What good is it if I pay 10 cents less for a pair of socks from China if the dude across town goes on unemployment because his domestic sock factory closes? All globalization does is shifts costs from business to goverment, and this ends up causing taxes to rise. Foreign goods should be subject to sensible tariffs to offset lack of minimum wage laws / environmental protections in the exporting countries. Level the playing field. You do that in sports-- why not in trade?"

Oh my, how incredibly uninformed can one be?
First of all I think the price difference for a pair of socks is more than 10 cents. The theory behind globalization is that different countries have different strengths. Using China for comparative purposes--we have a country with a huge population and an inexpensive labor force. Some may see it as slave labor wages but the fact of the matter is a little money goes a long way in China. One can still buy a cup of noodles on a street corner in Beijing for 7 cents. Clearly, we can't compete in easy to enter low-tech manufacturing. Applying tariffs to offset the price discrepancy was part of the prescription for the 1930's depression. I can't blame politicians of that day for their missteps as they didn't fully understand the ramifications of their protectionist policies. To spin this drivel now is incredibly ignorant. The question for Americans that have worked in low-tech industries is, so what can we do? My answer is get an education in this education-friendly nation. Take advantage of the opportunities that abound in this nation. There is a belief held by many in this nation that China is a highly educated nation, but that's largely untrue. In fact, while a good education is looked upon highly in Chinese society, and they push their children hard, only 3% of the population get a university education. Interesting coming from a country that prides itself on socialism. What a failure.
Lastly, the shift of costs from business to government---there is truth to this statement. All nations have provided support for various industries that export products overseas. China, Japan, Australia, Germany, France, Canada, U.S.....the list goes on and on. It is actually addressable through international trade laws. The problem is the length of time from infraction to remedy. There also is a problem of transparency. The U.S. is seemingly more transparent than most all other nations. Even European nations have been more capable in covering up their subsidization machine. So far, the only remedy is the expense incurred on the taxpayers. Countries can't indefinitely subsidize industry. With a globalized world, there will always be a new country with a lower standard of living that would be willing to host an foreign company seeking cheap labor.

L.A. Times: The Inconvenient Poster Child for the Newspaper Debacle

"Times journalists should strike against Sam Zell."
Yeah right! That was the same strategy UAW used to fend off those tight automobile manufacturers. Wow! That sure helped them.

"Rubinomics" Is Back

Interesting how the author didn't mention the double-digit inflation and stagnant growth Reagan inherited from Carter. Must have slipped his mind. Reagan actually left the economy in great shape. Clinton was headed down the same path as Carter with the Dems holding the house and senate, but with the upheaval of the Dems in 1994, Clinton realized he didn't want his legacy being that of not getting anything done. He wasn't a new Democrat until the contract with America bulldozed him. He still fought tooth and nail which brought back to back to back budget impasses every year. What did that bring us? Slower growth of government. It surely wasn't by his design. Then into his second term he saw the light and accepted the Republican proposal to lower capital gains taxes which brought in a load of new government revenue. Who remembers this differently? Read up on history. Yet today, Democrats take all the credit. Go figure!

Senator Dodd's Housing Solution - Cramer's Mad Money (5/21/08)

Christopher Dodd and Cramer are both wrong about this housing bill. This bill may, in fact, entice many to stop making payments in the hope of getting a lower principal loan. While there are many that can no longer make payments and have stopped or will stop with this housing bill or not, there are others that will continue to make payments because they can and because they don't have much confidence that their lender will refinance with a lower principal loan. With this bill, these payment makers will start feeling foolish to make a larger payment when they can easily follow others down the path of nonpayment so as to trigger a new deal with their lender. The devil in these details is that the lender can reject a deal and take the home back, but if this snowballs, they may find it impossible to take back such a large number of homes. One must remember that a certain percentage of people who will be failing lied about their income and thus will not be eligible for help anyway. If we add together all those who can't make their payments but still qualify together with those that can but want a better deal, the numbers could create more damage to the real estate market than if we had no housing bill at all. But let us assume that this housing bill does the job in reducing the downside of this housing market. The Senator would say that it helps all Americans, but does it? The housing bubble was created due to demand that wouldn't have existed had lenders done their jobs and qualify only those that could afford. Therefore, the housing market would never have seen the heights that it saw had it not been artificially inflated as it was. Existing homeowners saw a spike in their values that wouldn't have occurred if lenders had done their jobs. The only thing they are out is the extra property taxes they may have paid on inflated values. Last of all, this bill does a disservice to those who resisted the temptation to buy a home in the bubble environment of the housing market over the last few years and astutely raised capital over these years for a larger down payment after the bubble bursts. Shouldn't these responsible people be reimbursed for the potential loss of opportunity? Why is this segment of the population being mistreated? Who are the true beneficiaries in all of this? The politicians! This is an election year and it will surely buy votes with a bill that will not help the current situation but will likely be forgotten in the next election cycle.