mr freddo's Instablog Mr Freddo is an artist. He is an abstract painter who spends his day bringing his paintings to life. (and checking the markets.) Prior to painting, he was the CEO of a well known and successful San Francisco Bay Area bread bakery. mr freddo http://seekingalpha.com Look to the Future California! http://seekingalpha.com/instablog/142670-mr-freddo/13928-look-to-the-future-california?source=feed 13928 Americans, Californians, our problems are solvable over the long run if not in the short run. 

In life, one is rewarded for creating, whether a broadway play or a big mac. Our world economy is based on the interactions of those created values. Those that create extraordinary value are rewarded extraordinarily. 

In America and California, in an effort to maximize our comparative advantage, we funneled our very best and brightest minds of our generation into finance. The engineers were shunned, and engineering jobs were exported. Thus we forgot what we knew while teaching the rest of the world how to catch us quickly. 

We weren't too concerned. We kept churning out new financial products and believed that the financiers are the real masters of the universe. 

What we now realize is that a great deal of the growth in finance was based on false premises. 1. That you can take a basket of turds, squeeze hard, and create diamonds. 2. That you can alter the basis rules of personal finance and own a million dollar home with an income of $50 thousand a year. 3. That you can allow bankers to become salesmen and still not lose capital. 

To return our state and nation to greatness, we must immediately begin to build our future businesses that will create real prosperity for the 21st century. These companies will be technologically driven, will rely on domestic employment, and will start from nothing to become dominant world beaters in 20 years. They will serve as platforms of innovation spinning off new companies and creating new markets. 

These new companies will create a new class of wealthy capitalists, men and women trained to make money by taking risks, applying technology, and building strong stateside businesses that act as engines of employment for our citizens. 

So let's stop whining about who is to blame. Why we failed. Why we are doomed. WA WA WA! 

Let's start moving toward the solution, the answer, the bright light. Our clueless legislators, should start asking venture capitalists, entrepreneurs, scientists, and engineers what they need to get the pipeline of new companies rolling now so that we will have successful, exciting world beaters that employ our children and grandchildren. 

]]> Thu, 16 Jul 2009 13:28:32 -0400 Americans, Californians, our problems are solvable over the long run if not in the short run. 

In life, one is rewarded for creating, whether a broadway play or a big mac. Our world economy is based on the interactions of those created values. Those that create extraordinary value are rewarded extraordinarily. 

In America and California, in an effort to maximize our comparative advantage, we funneled our very best and brightest minds of our generation into finance. The engineers were shunned, and engineering jobs were exported. Thus we forgot what we knew while teaching the rest of the world how to catch us quickly. 

We weren't too concerned. We kept churning out new financial products and believed that the financiers are the real masters of the universe. 

What we now realize is that a great deal of the growth in finance was based on false premises. 1. That you can take a basket of turds, squeeze hard, and create diamonds. 2. That you can alter the basis rules of personal finance and own a million dollar home with an income of $50 thousand a year. 3. That you can allow bankers to become salesmen and still not lose capital. 

To return our state and nation to greatness, we must immediately begin to build our future businesses that will create real prosperity for the 21st century. These companies will be technologically driven, will rely on domestic employment, and will start from nothing to become dominant world beaters in 20 years. They will serve as platforms of innovation spinning off new companies and creating new markets. 

These new companies will create a new class of wealthy capitalists, men and women trained to make money by taking risks, applying technology, and building strong stateside businesses that act as engines of employment for our citizens. 

So let's stop whining about who is to blame. Why we failed. Why we are doomed. WA WA WA! 

Let's start moving toward the solution, the answer, the bright light. Our clueless legislators, should start asking venture capitalists, entrepreneurs, scientists, and engineers what they need to get the pipeline of new companies rolling now so that we will have successful, exciting world beaters that employ our children and grandchildren. 

]]> The Universe Is A Lot Older Than You Think http://seekingalpha.com/instablog/142670-mr-freddo/5098-the-universe-is-a-lot-older-than-you-think?source=feed 5098 Note to SA friends:  While off the subject of finance, I believe the article I am submitting is of great interest. Physicists especially are welcome to comment.  Meanwhile, I will clear a place on the mantle for the Noble Prize in Physics which is surely just a formality at this point...

Mr Freddo

May 20, 2009

 

Currently our scientists tell us that the Universe is 15 billion years old and is expanding.  ... estimate that the universe will continue to expand for hundreds of trillions of years until it uses all of its energy and dies.  The question of what happened before the Big Bang is not addressed.  The question of what happens when the universe dies is not addressed.  ... point to the need for a supreme creator at the beginning to kick off the formation of the universe.  So, according to our best scientists, the universe began 15 billion years ago for some reason, and will die in several hundred trillion years.   

Wrong!


The universe is like a beating heart.  The bang occurs at the beginning of a cycle.  The universe expands until the energy from the initial explosion is used up.  Initially, there is very little gravitational pull against the explosion.  But gravitational pull increases.  Expansion slows and then stops.  Mean... black holes have been forming in the universe with immense gravitational pull.  Event... these black holes exert so much pull that the universe starts to contract.  The contraction increases until all matter in the universe hurtles toward the ultimate contraction, a giant implosion in the super dominant black hole.  All matter is sucked into this massive black hole.  This implosion leads to the next explosion, or big bang.  

This cycle has been repeated for billions of trillions of years.  Explosion, Expansion, Contraction, Implosion.  Trillions and trillions of cycles.  

The implications of such a theory are vast and stunning.  For one thing, our universe is much older than we realized.  For another, we are even less significant than we had imagined.  

The laws of mathematics and probability will prove that with the "heartbeat" theory of the universe, there have been billions and billions of planet Earths throughout history.  Some did well, others failed or were destroyed, or destroyed themselves.  ... all civilizations are destroyed no matter how much progress they make.  They cannot escape the end of the cycle when the universe implodes.  So the universe starts fresh with every new big bang.   


 



]]> Wed, 20 May 2009 19:09:42 -0400 Note to SA friends:  While off the subject of finance, I believe the article I am submitting is of great interest. Physicists especially are welcome to comment.  Meanwhile, I will clear a place on the mantle for the Noble Prize in Physics which is surely just a formality at this point...

Mr Freddo

May 20, 2009

 

Currently our scientists tell us that the Universe is 15 billion years old and is expanding.  ... estimate that the universe will continue to expand for hundreds of trillions of years until it uses all of its energy and dies.  The question of what happened before the Big Bang is not addressed.  The question of what happens when the universe dies is not addressed.  ... point to the need for a supreme creator at the beginning to kick off the formation of the universe.  So, according to our best scientists, the universe began 15 billion years ago for some reason, and will die in several hundred trillion years.   

Wrong!


The universe is like a beating heart.  The bang occurs at the beginning of a cycle.  The universe expands until the energy from the initial explosion is used up.  Initially, there is very little gravitational pull against the explosion.  But gravitational pull increases.  Expansion slows and then stops.  Mean... black holes have been forming in the universe with immense gravitational pull.  Event... these black holes exert so much pull that the universe starts to contract.  The contraction increases until all matter in the universe hurtles toward the ultimate contraction, a giant implosion in the super dominant black hole.  All matter is sucked into this massive black hole.  This implosion leads to the next explosion, or big bang.  

This cycle has been repeated for billions of trillions of years.  Explosion, Expansion, Contraction, Implosion.  Trillions and trillions of cycles.  

The implications of such a theory are vast and stunning.  For one thing, our universe is much older than we realized.  For another, we are even less significant than we had imagined.  

The laws of mathematics and probability will prove that with the "heartbeat" theory of the universe, there have been billions and billions of planet Earths throughout history.  Some did well, others failed or were destroyed, or destroyed themselves.  ... all civilizations are destroyed no matter how much progress they make.  They cannot escape the end of the cycle when the universe implodes.  So the universe starts fresh with every new big bang.   


 



]]> What the Top Dogs are Thinking http://seekingalpha.com/instablog/142670-mr-freddo/1908-what-the-top-dogs-are-thinking?source=feed 1908 I just returned from a fishing trip with some very top dogs in the financial industry.  

Over the next year, they see continued shake-out in the banking industry with several big failures on the horizon.

They anticipate an additional trillion dollars in write-offs and a new bottom for the stock market.

They believe that we have entered a new era and there will be no return to business as usual.  The private equity game may be over and will never again reach the levels of 2005-2007.  

Luxury is dead.  Hanging out with family is preferred to hanging out with other rich people.  

Firms are staying busy with restructuring deals.

Finally, banks don't want to sell there toxic assets now that mark to market has been eased.  They can hang on to the securities now and not take the losses they would if they sold.  

Recovery will be very slow and take a very long time, at least 5 years.  

I tell you what though.  Some of these guys can really fish.  

]]> Sun, 26 Apr 2009 20:45:54 -0400 I just returned from a fishing trip with some very top dogs in the financial industry.  

Over the next year, they see continued shake-out in the banking industry with several big failures on the horizon.

They anticipate an additional trillion dollars in write-offs and a new bottom for the stock market.

They believe that we have entered a new era and there will be no return to business as usual.  The private equity game may be over and will never again reach the levels of 2005-2007.  

Luxury is dead.  Hanging out with family is preferred to hanging out with other rich people.  

Firms are staying busy with restructuring deals.

Finally, banks don't want to sell there toxic assets now that mark to market has been eased.  They can hang on to the securities now and not take the losses they would if they sold.  

Recovery will be very slow and take a very long time, at least 5 years.  

I tell you what though.  Some of these guys can really fish.  

]]> Bank Recap - Where We Stand http://seekingalpha.com/instablog/142670-mr-freddo/405-bank-recap-where-we-stand?source=feed 405  

Wells Fargo's surprise announcement today of record profits is a welcome sign that the Obama administration's strategy for repairing our financial institutions has a strong chance for success if we can avert systemic meltdown over the next 12 months.

The Fed is providing cheap money to banks to fatten there operating profits. Mark to market rules are being eased which will allow banks to push losses into the future where they may, in fact be less. As mentioned in the article, there are still a mountain of losses to be absorbed and many banks will fail. 


The strategy is to stall the crisis until banks can grow operating profits sufficiently to generate capital for the balance sheet. A very similar approach was used in the early 80's with the foreign debt crisis. Banks were given time to heal themselves. 

In the mean time, the government is prepared to soak up the toxic assets on bank balance sheets thus freeing the bank's capital for more productive uses.

With the Damocles Sword of derivatives hanging over the market, where one bankruptcy could rupture the system and bring down the entire network, it is questionable whether the old system can be saved. 

The US government is flooding the market with money and debasing the currency in an effort to kick start the economy.

The strategy is to give the economy an electro shock jolt to revive it. 

Inflation can be addressed later and would be a symptom of recovery, therefore, a sign of hope, a good problem to have versus having an economy with a heart that isn't beating and blood that isn't flowing.

Once we establish a more rational, sane regulatory structure for the derivatives market, we will begin to remove the threat of this crisis repeating itself in the future. The return of Glass Steagal in some fashion will also be necessary so that bankers get out of promotion and sales, and go back to banking.

In the future, look for a strong, bull market recovery that will be fueled by inflation. Commodities, materials, precious metals, oil, and agriculture will soar as will big tech companies that are adept at passing through price increases. 

I don't know when that future starts, of course but the cancellation of many mining and exploration projects during this downturn means that when the economy starts to recover, demand will outstrip supply for metals, materials, and oil and their prices will skyrocket accordingly.

The treasury department and the Fed are "all in" now and throwing everything they have at this crisis. The big question still unresolved is whether even the mighty US can stand up to the losses created by this financial disaster. 

I'm betting we make it to the other side but not without another year of shock and awe.

]]> Thu, 09 Apr 2009 11:13:23 -0400  

Wells Fargo's surprise announcement today of record profits is a welcome sign that the Obama administration's strategy for repairing our financial institutions has a strong chance for success if we can avert systemic meltdown over the next 12 months.

The Fed is providing cheap money to banks to fatten there operating profits. Mark to market rules are being eased which will allow banks to push losses into the future where they may, in fact be less. As mentioned in the article, there are still a mountain of losses to be absorbed and many banks will fail. 


The strategy is to stall the crisis until banks can grow operating profits sufficiently to generate capital for the balance sheet. A very similar approach was used in the early 80's with the foreign debt crisis. Banks were given time to heal themselves. 

In the mean time, the government is prepared to soak up the toxic assets on bank balance sheets thus freeing the bank's capital for more productive uses.

With the Damocles Sword of derivatives hanging over the market, where one bankruptcy could rupture the system and bring down the entire network, it is questionable whether the old system can be saved. 

The US government is flooding the market with money and debasing the currency in an effort to kick start the economy.

The strategy is to give the economy an electro shock jolt to revive it. 

Inflation can be addressed later and would be a symptom of recovery, therefore, a sign of hope, a good problem to have versus having an economy with a heart that isn't beating and blood that isn't flowing.

Once we establish a more rational, sane regulatory structure for the derivatives market, we will begin to remove the threat of this crisis repeating itself in the future. The return of Glass Steagal in some fashion will also be necessary so that bankers get out of promotion and sales, and go back to banking.

In the future, look for a strong, bull market recovery that will be fueled by inflation. Commodities, materials, precious metals, oil, and agriculture will soar as will big tech companies that are adept at passing through price increases. 

I don't know when that future starts, of course but the cancellation of many mining and exploration projects during this downturn means that when the economy starts to recover, demand will outstrip supply for metals, materials, and oil and their prices will skyrocket accordingly.

The treasury department and the Fed are "all in" now and throwing everything they have at this crisis. The big question still unresolved is whether even the mighty US can stand up to the losses created by this financial disaster. 

I'm betting we make it to the other side but not without another year of shock and awe.

]]>