VennData

Book Review: Great Depression Ahead

...and a few years ago he wrote a book The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2006-2010.

It's called being an opportunist.

Wall of Waiting Cash Could Drive Equities Higher

Folks who say "money on the sidelines" do not understand money.

Folks who do or don't "bet a recession is coming" and invest that way will have to make numerous correct guesses for the rest of their lives to beat the indexes. It defies logic they will outperform consistently.

Sit tight, dollar cost average in, rebalance... anything else is speculation.

Holman Jenkins' WSJ Editorial Shreds the Administration's Auto Policy

Holman Jenkins predicted Obama wouldn't bankrupt the automakers and he was wrong. Each work he's tried to re-write his partisan take on Obama and the automakers, and each week he's been wrong. In this article...

Holman Jenkin's claims that getting rid of GMAC is getting rid of a "profitable" line of SUVs. Not only are SUVs not profitable now - nothing is - but Chevy has the same SUVs that are in the GMAC line and if the status quo for gasoline prices holds - it might not - then Chevy can sell the big-margin SUVs, without the GMAC fixed cost, dealer network etc.

Holman Jenkin's asks "Wasn't TARP supposed to be about restoring healthy banking?" Healthy banks need healthy customers, which GM and Chrysler are not; they can't pay the loans back. So Obama's being too tough on the banks, right? Isn't that the opposite of "...Mild...?" So why call him "...Mild...?"

Then he claims "...prerogative[s] ...conflicts with prerogatives..." but ask "why would GM bond holders... want any part of this." The "any part" would be equity in the recapitalization, but that's what lenders get in a recapitalization. It's better than "no part" to the people who came hat-in-hand to his predecessor, and has now taken firm control of the negotiation.

China's Gold Reserves Almost Doubled

So much for the global central bank conspiracies. Until they decide to sell.

GM Default: Who Didn't See This Coming?

Holman Jenkins, partisan scribe for the Wall Street Journal claimed a couple of weeks ago "GM Bankruptcy? Tell Me Another"

online.wsj.com/article...

His desire to be highly partisan gets in the way of rationale thought. His article today on GM is another poorly-argued attempt to make Obama look as bad as possible. Simple sophistry:

online.wsj.com/article...

Government's Handling of Economic Crisis - Einstein Would Call It Insane

When consumers and business stop spending, government has to step in. It's not insane, it's economics that has worked in the past.

"Not everything that counts can be counted, and not everything that can be counted counts."

-- Albert Einstein

On Elephants and Tea Parties

How can so may supposedly pro-business commentators miss the idea that lending today isn't a guarantee to get your money back? Banks are businesses, remember? The people who complain about not getting credit are the problem in our over-indebted culture.

The reason banks need money, and then cut credit is those said-same people aren't paying their bills. If all the citizenry were paying their bills, the banks would be fine. Since they're not, the economy is de-leveraging.

The stop-gap measures are that the government must step into maintain banks so that what lending the banks do do, has sufficient capital. Oh, and to people the banks have decided are good risks. Not the G-20-like protesters on tax day complaining about everything under the sun.

If you want the dominant US banking system components collapse so we can cede international finance to the Chinese and Japanese that's your choice, not mine though.

Barney Frank Has Declared War on Moody's

To think Frank started this belies history.

www.ct.gov/ag/cwp/view...

The problems here is that Moody's ratings are not apples to apples with their corporate ratings. The default rate on municipalities is incredibly low compared to corporations. The gov't is right to expect a change.

Also the Nationally Recognized Statistical Rating Organizations artificially limits the rating agencies recognized in the US.

www.investopedia.com/a...

The ratings agency system needs to be opened up and allow more competition which will be the prime driver of the Frank hearings especially the corrupt municipal departments.

The fact is muni defaults are rare, "In 1999 Fitch Ratings published its first study of municipal defaults, which was updated in 2003.2 The latter study covered 2,339 cases of municipal defaults worth $32.8 billion between 1980 and 2002. It found that the cumulative default rate on bonds issued through 1986 (as they approached or reached maturity) was 1.5 percent, while the cumulative default rate on bonds issued between 1987 and 1994 was 0.63 percent."

www.publicbonds.org/pu...

...yet municipalities pay huge fees for these ratings.

As for Moody's their latest call was stating GE is no longer AAA,

online.wsj.com/article...

and the stock has gone no where but up since then.

Their business model is unsustainable. The Frank hearings hopefully will address this.

Marc Faber's 10% Prediction? Gimme a Break

I predict: The government will continue to change the rules.

Like that's something new.

Is the Government Deliberately Trying to Lose Money on Its General Motors Investment?

Getting rid of Wagoner, the worst performer CEO in recent US corporate history, and his enabling board-buddies was a good thing for other shareholders.

To the US, congrats for the hardball. The gov't grows a set.

Rich Guys Can't Dance

Once inflation hits, they'll be plenty to choose from

Ideological News Dominates Prime-Time Cable Now

I suggest nudity, but that get's you right back to just another sort of dichotomy.

Commercial Real Estate: What Hancock Building's 50% Sales Price Means

Day murved it from Shicargo de udder day, dincha member?

Financial Times Debunks Citi's Memo

Citi stock has gone from a dollar to a buck forty in a few days. The VP-leaked memo is just part of this war to save the bank. Remember, the US gov't has already agreed to back stop $306B of their bad assets.

Far from "debunking," the FT has built a case against, the case "for" is quite strong as well.

Bank Liabilities: Why the Discussion Isn't Explicit

Most non-trust bank preferreds are non-cum. The only reason the gov't is suggesting that the banks continue to pay those dividends is so that during the upcoming six month window, capital can be brought in.

The gov't is willing to take rough treatment in their common positions to make sure that new preferred investors know they'll get paid.

Recapitalization scares away new capital which is what they need. So you can't do that.

Nationalization isn't politically palatable since the big banks have assets globally and you can't bail out Korea and Dubai. So you can't do that.

The problem isn't the gov't coerced the banks to lend to deadbeats, it's that the way they ibank arms structured the subprime (the Fed study showed 98% of the subprime investments were non-CRA) in products that have zero value in a severe downturn.

The only alternative for the post-stress six month window is new preferreds.