Oregonrain

The Fourth Branch of the U.S. Government: Goldman Sachs?

Lets face it..the Goldman gang is running the place. There is no question about it in my mind. What to do is the question.

Design A Country Rescue Package Here (Comment Competition)

To be sure what is being done now is monetary insanity. At the same time I do not see another option other than letting everything fail. Perhaps in the long run this will be shown to have been the best course in the long haul. But...as Arete says...it is counter-intuitive.

At the same time, it is essential that there be plans in place to pull back the levers of the throttles on the speed printer going on at the Fed. It will take higher taxes and cutting social security and other retirement plans and of course the medical programs. That is the only place where you can pick up the kind of money you need (hundreds of billions) in short order. Everything else in the Federal Budget (other than the pentagon which we will need and interest on the debt) is not worth the effort. It just simply does not get you the savings you need fast enough.

The people who argue that it can all be done with either tax increases or spending cuts simply do not understand the issues. As people say, "for every complex problem there is an easy and simple solution." It just happens to be wrong.

To the extent money is spent it has to be directed at high pay back areas. Education, R&D and infra-structure. As Jeremy Grantham says..real wealth is measured in the will of a nations people, the knowledge they hold and their resourcefulness. it also helps to have good land and water. We are still a rich nation.

On the Calif situation....I think they will need to make some major cuts to their budget. I think the number I heard is $23.0 billion short fall. Maybe some small "bridge loan" makes sense given how large a part of the national and international system it is. But, the people of that State have spoken. "No New Taxes." Ok...good on them. Time to cut the services...no more messing around. Once the pain becomes unbearable and it will.... it might be time to consider the loan. Until then....No.

The problem in the country has been that the demigods have told the public you can have it all. Huge tax cuts...all the services and wars you want..no problem.

This can be solved. It just takes reality...not slogans and the scapegoats like 'welfare." The idea you can cut taxes to ZERO as one commentator expresses and "solve" the problem shows you how far this kind of lack of thinking has gone.

I will admit that letting it all fail is an option. Let the real crisis begin. It is an intellectually defensible position. I just do not think the nation or the world for that matter would be a nice place for a long time if we go there.

Warnings from the President: This Is a Bear Market Rally

When this guy talks about "international money speculators" is he talking about the same people Nixon used to talk about on all those tapes...

You know who.....

Connecticut AG: 'Time to Shatter Old Boys Club of Ratings Agencies'

If there ever will be a "Best of Tyler Durden" this article will surely be featured.

"Fight Club was the beginning, now it's moved out of the basement, it's called Project Mayhem."

Jeremy Grantham: Collapse is Over, But Monumental Challenges Remain

This guy has been about as perfect in his calls as anyone though this. He is a bit early sometimes but he freely admits this. He is not a market timer but a value investor. . But when the S&P hit around 650 in March he was yelling BUY. So..whatever he says I would listen very carefully. One of the best ever.

Goldman Sachs: Why Aren't Trading Profits Raising Any Red Flags?

This one goes way over the head of a small business person in Oregon. Could someone try to give a brief ( or otherwise) explanation or point to a link that does. What I have been able to tell...GS is using a special position/ government program or NYSE "program" to in essence screw the little guy. Wow that never happens.

My understanding is that the goal is to push equity prices up in order (at least in part) to allow the financial service companies (especially GS) to do their deleveraging at inflated sale prices. Who would have thunk that??? Thanks.

Asia Is Decoupling

Good observation Edward...I hope you are right. I just went long in an emerging market ETF VWO. We shall see.

Chrysler Lenders (Non-TARP) Come Out with Guns Blazing

This is good stuff..Tyler..thanks. Hey good thing the judge has a life time appointment (I think).

If I were the judge I would say to the "non-Tarp lenders"...so what is your plan? Are you going to grab the collateral (as they probably have a right to do) and then what? Are you just going to have a fire sale?

They will end up owning a lot of well...I think crap would be the technical term. Or is this just a stickup play? You know hold out long enough to either destroy any chance of the company moving ahead for a few more cents on the dollar? (shakes head YES)

I know I know...that is their job. But really, who here thinks the secured creditors really want to execute on the collateral and sell it in a fire sale let alone try to run this POS.

So my prediction is that there will be push back by the judge as there should be...these guys will get some more money...as maybe they should...and the whole thing moves ahead. Then it crashes in the next year or so.

Nouriel Roubini: Will the global imbalances return along with the economy?

The issue here is to think about Roubini is saying. First, if you read between the lines I think he is backing off his typical "the sky is falling" point of view. Here is the quote:

"Can export-led growth countries increase consumption, or are we going to see large imbalances in the global economy return when the recovery will be in full swing?"

I do not follow him that closely but it seems to me that this is one of the first times I have seen him concede that there might be a recovery.

He then appears to state the the recovery could take two paths. The first being a return to what existed prior to the crisis. Namely, China and others having large trade and payment surpluses and funding large US deficits. Certainly that seems like a reasonable guess.

Then he asks...is there another way? And of course there is. That being to see China and others stimulate domestic consumption to correct what he sees as the imbalances which helped cause all this.

Anyone who does not concede that the imbalances in the terms of trade and payments was not one of the factors that brought us to this point simply has their head in the sand or has not really thought this out.

The ever increasing demand for US debt instruments (mortgage back securities, T-bills) from China and around the world was one of the factors that drove "demand" for our paper. They had tons of dollars coming in which they needed to put to work.

Wall Street sales people aka investment bankers never want to be without a "product" for long when there are buyers about. They were more than happy to cook some up. As the demand continued to increase the quality went down.

Roubini is simply asking if it might be better to try to stimulate domestic consumption in emerging markets so as to not do this cycle again. Can anyone seriously take issue with that? I guess you can if you thought "Great Bubble 2000's I" was great and look forward to "Great Bubble 2000's II)

The Bankruptcy Carve-Out Problem on Agency Deals

Ok...starting to get it. My understanding (and it is not deep) is that the bill in Congress (which allows for bk cram downs on mortgages) will only apply to debt taken on by the homeowner as part of the "original acquisition." Not sure if this is the case but in essence this means that all the refinancings were money was taken out or 2nds and 3rds would not be subject to the "hair cut." That might impact this analysis.

The Bankruptcy Carve-Out Problem on Agency Deals

Tyler is on a roll. I am not smart enough to understand a word of this. I will read it a few more times ...taking time to sound out some of the words.. but it likely makes a ton of sense.

Mark to Market: Time of Death 8:45AM, April 2, 2009

I like Tyler's style as well.

First, the truth is that probably no more than say 20% of the American public know what a balance sheet is let alone know how it works. I think many of you would agree that I am being nice here. I know I was one of them (that had no idea) even though I had run a very successful private company.

Then one day "BIG Corp" came to town and said...hey let us pay you millions. Perfect! Now I am at Big Corp and the first company they give me to run the first day the controller comes in to tell me that "hey our balance sheet is really clean." I think to myself for one second..I wonder what she meant.

Next thing I know...I am running a major portion of BIG Corp...and same controller tells me to watch out .....major portions of the companies balance sheet/s have "problems." Again..at first...I wonder what that means.

OH..WOW. You mean you can cheat your P&L with that balance sheet thing! I felt like Gomer Pile and the Pentagon. My "moment of Zen" came to me when I had dinner with the Regional Controller who was leaving to take a new job (a short time after my promotion) and he told me he was leaving because "its just not fun anymore now that you are here...we can't be as creative." I wanted "creative people" I just wanted them in the design department not in accounting.

I mean when you are work in the real economy running real businesses when you don't have any cash you cannot make the payroll...and things stop real fast. The sad truth is that many many people have no idea what this change means. But, I concur it is a license to lie cheat and steel. And I also concur (and it is very sad) that that is nothing new. But the whole "system" became "infected" with this kind of thinking..and the higher up you went (on average) the worse it was and is.

Now the accountants...the outside ones were a total joke in that time...late 90's early 2000's. I mean a total joke. The operators who were cheating using their balance sheets were more afraid of the internal audit people than PW. Eventually it caught up to all of them. I think that the AA experience produced enough "shock and awe" that even some of the most "creative" accountants decided that people could actually go to jail for what they were doing and decided that being some Con's "bitch" was not really high on their list of things to do.

The answer is simple...hey we will just make the rules more "flexible." This is tragic and eventually there will be hell to pay...but..not today.

Go Tyler...

CDS Recoveries: Down and Out

Yeah...CDS....that is the ticket.

I mean really, if you are not on one side or the other of a debt trade on say Lehman these should be "taken out and shot." I can see no economic reason to have CDS short of a hedge if you are in a position. Then fine. But short of that it is just pure gambling. In 1929 they had this type of thing for equities and they called them "bucket shops."

In insurance you have to have an insurable interest. Which is to say you cannot buy insurance on a street person. The same concept should govern these.

Jeremy Grantham: Reinvesting When Terrified

I have been following this guy for about two years now. I have done nothing but make money. He is the real deal.

He called the top and has more or less called the bottom. He is of course too smart to say it is a bottom as we could easily sink back again.

But, I will say this...when he became ever so much more positive in his Jan newsletter I hung in a bit longer with my shorts...I am not after all moving billions around...but...went long about a month ago with SSO.

Thanks you thank you (again) Mr. Grantham. For all the people who have "thoughts" on CNBC and on here...I have found this guy to be dead...nuts...on. I highly highly recommend that Seeking Alphas pay close attention to him

Wells Fargo: John Stumpf's Letter to Shareholders Is a Must-Read

I read parts of the Wells letter. You know to me it sounded like they had had a great year. Until of course you look at those nasty numbers. I have made money darting in and out of this stock. As of now and for a long time I have been out.

They have performed better than their peers for sure...but overall I think this is just more bla bla bla...from a CEO to tell the truth.