Fighting Yoda

Where Bank Regulation Is Headed

What regulation or reform - everything is forgotten.

Good comments from Bank of China Ltd. Vice President Zhu Min today: " Wall Street are suffering from “over confidence” and are “myopic” in the face of a continuing financial crisis. “It’s not only over-confidence, it’s over- myopic. This is too much.” “You go to Wall Street, the people feel the crisis never happened,” Zhu said in a Bloomberg Television interview today in Dalian, China.

This essentially sums it up - big salaries and bonuses are back. If bonuses look bad simply quadruple the salaries.

With promotion of Geithner and reappointment of Bernanke it has been made official there is no accountability - Ponzi schemes and bubbles is the official economic policy. All that are willing to promote bubbles, green shoots and that kind of stuff are in (think Goldman).

The Liquidity Canard

Wall Street itself is a canard, everything it does is a canard. Wall Street business model is simply speculate - bubbles and Ponzi schemes- get fools to buy with the sole intent of selling to the greater fool.

Higher liquidiy simply means more fools have rushed in with borrowed/levered or Ponzi'd money - what does that mean - time to rush or time to run. We once again are in bubble that is growing bigger - we have the same players saying the same things - happy days are here again BUY BUY BUY. The final result will be exactly the same- one more bust.

Private Equity Releverages with a Vengeance

The Ponzi scheme bubble business is back. Of course the Fed and Treasury are going to backstop everything - everyone wants one more bubble and all losses will be wiped out.

Hype springs eternal.

Take Advantage of Weakness in Metals and Mining

Recession and Deflation is never good for commodities. We have both. China will stop supporting commodity prices (likely already has), producers will stop cutting production - price declines will accelarate.

Un-American Government Intervention

Free markets and rule of law, contract and property laws made America great, all that is going by the wayside. The argument seems to be we have to destroy capitalism, or at least put it on hold, to save it. We can’t be fair weather capitalists. Govt. interference, oversight and regulation has always been there, we got into this mess due to excessive intervention “the GSEs”, and lack of meaningful oversight – repeal of Glass-Stiegel, non regulation of CDS etc markets.

Peter is right now we are totally into “crony capitalism”, on one side we have AIG style bailouts on the other we have Chrysler style bond holder cram downs. If you notice most of the bond holders were “TARP” banks which caved in without even a fight – that shows the extent of mafia control. The only one left to fight was a teachers union. Wall Street banks have shown they are spineless and lack principle- they simply believe in cronyism. Wall Street will go with anything that preserves their bonuses – Goldman, PIMCO etc exemplify this. They don’t care about principles or nothing simply a fast buck. Wall Street is simply a Den of Thieves – shameless crooks – will do anything to steal your money.

Ken Lewis also showed how much of a strangle hold the Govt. has – he backed off every allegation in the testimony. “I was threatened but I think it was well intended”. “We were forced into the Merrill purchase, but it was a great buy”.

Now with major sectors of the economy nationalized – financial services and banking (AIG, Citi, GSEs, …), auto companies, healthcare in a couple of months, what next.

Chrysler cram downs were achieved through the courts; I thought the courts were independent and not subject to political pressure. If courts cave in this way, democracy itself is in peril.

Schadenfreude: Finally, Countrywide's CEO Getting What He Deserves

The regulators and the Fed are lot more to be blamed. Mozillo is a private entrepreneur trying to maximize profits, he also is not an economist or a regulator- it was not his job to stop the economy from imploding.

Consumer Confidence Index Encourages an Economic Rebound

"Consumer Confidence Index Encourages an Economic Rebound". It should be the other way around - Economic Rebound Encourages Consumer Confidence Index. That is where the problem lies - cart before the horse.

Is There Any Limit to Bank Arrogance?

Banksters have taken over. We are back to the era of robber barons, with the difference Govt. is now on their side. When AIG people demand bonuses and actually get them, we have a problem.

Is There Any Limit to Bank Arrogance?

Banksters have taken over. We are back in the era of robber barons, with the difference Govt. is on their side. It is beyond arrogance when people at AIG demand and get bonuses.

Well capitalism as we knew it or imagined it to be is all gone. We have this new thing- worst of both capitalism and socialism - privatize the profits and socialize the losses.

Obama is going to distrubute a lot of wealth and make us all very poor.

FDIC Won’t Rule Out Banks as Buyers of Toxic Assets

The ultimate in self dealing, double dealing- this was feared all along since the beginning. Banksters have taken over. Just stay away - Obama socialism and corruption will kill us all.

America: The Land of the Fleece Scam

Per WSJ, the latest is banks want to buy their own securities under PPIP. The ultimate self dealing - banks can sell at high price get it financed by tax payer - book the profits, the buyer can incur losses - dump is on the tax payer.

This is what was feared when the program was proposed, it was expected banks would be restricted form doing it, but they could still doo it through front companies. Now all semblance is of fair dealing is given up. We should simply declare US as a banana republic and be done with it.

Housing's Big Picture Isn't Pretty

At least today’s Case-Shiller numbers continue to point a dismal picture – 20 city index down 2.17% MoM, down 18.7% YoY.

Some markets like Phoenix fell 4.5% MoM, even a sedate market like Minneapolis fell a whopping 6% MoM.

So no end in sight.

Housing's Big Picture Isn't Pretty

Stone Fox:
" fund is up 50%+ over the last 6 months and all I hear is the negatives"
Your fund is also is likely down 50% over last 2 years. Regarding the future we will see, let us know.


On May 25 11:29 AM Stone Fox Capital wrote:

> If incomes don't go up as you suggest, then interest rates will stay
> insanely low. Either way, home prices are unlikely to drop that much
> more.Unemployment isn't an issue to that great of an extent. Your
> only talking about 5% of the population that has been impacted. The
> real issue is with the 90%+ that is employed. Getting them to have
> the confidence to buy a house is so much more important.
>
> This website continues to be too negative. My fund is up 50%+ over
> the last 6 months and all I hear is the negatives. Wake up people,
> the world hasn't ended!
>
> On May 24 03:26 PM Dave T wrote:

Housing's Big Picture Isn't Pretty

Another piece of brilliant and simple analysis by Peter Schiff. Totally agree with the views - home prices are way above trend lines of inflation and rent equivalence. Also home ownership is still way too high - still at 67% vs. historical averages of only 63%. The existing inventory, and deluge of additional foreclosures will put even more pressure on prices, job losses putting a dampener on demand. Yes I think home prices have to correct another 20/30% more from current levels - we will get another Case-Shiller bright and early on Tuesday morning.

However would beg to differ with Peter on his inflation call. I think inflation is unlikely in the near future at least 1-2 years - too much surplus capacity (high supply) and too little demand (job losses, and no credit availability). All the money printing the Fed is doing is to pump supply of money, but lack of credit (the multiplier) is offsetting the increase in money supply. The classical liquidity trap - loss of velocity of money. All the recent data is definitely pointing to disinflation at least.

Bank of America Shares Now Worth Less

Rajib:
Don't buy stocks when they hit their highs.


On May 20 10:42 PM Rajib Banerjee wrote:

> I bought BAC for 11.10 per share and saw it grow till 12.23. I am
> optimistic and will hold it for long. Any suggestions ?